3 ms·

I don't want to be a jerk to kids in their early 20s who are bootstrapping their startup idea, but reading this account would actually confirm for me why this t

I don't want to be a jerk to kids in their early 20s who are bootstrapping their startup idea, but reading this account would actually confirm for me why this team wasn't ready to be accepted into YC or a similar program. A big part of the onus of the original product, at least, as it was launched, was that it was "watermark free" and the way it was "sold" to end-users was that it was a free service. Now, I can understand the initial rationale here -- you want to get users, you start with free, and assume you'll pivot to paid options/add-ons at some point or get sponsorship or other revenue streams, or pretend it's still 2009 and that startups with no revenue can obtain ridiculous valuations and then be acquired by Yahoo or whatever. The problem is, it's no longer 2009 and investing strategies have changed. Revenue has replaced users as the important growth metric for lots of investors. (There are exceptions, I'm aware, but this is a general trend we've seen over the last few years. Don't worry founders, the pendulum is bound to go back in the other direction in another few years.) Now, I don't know what the team's original business plan was for this service, but based on the YC letter, it appears that they said "we'll start charging eventually" and that led to the question about why you aren't already trying that now, when you have 35,000 MAU. A fair question -- and one that really represents more of a question about business plan rather than lack of MRR. But the team read this as "if we can show MRR, we can prove we're ready" -- except that wasn't and isn't the problem here. Yes, it's impressive that the team was able to hack together a payment gateway and offer a pro product in a weekend and obtain $500 in revenue (should be noted that this isn't recurring and it won't be clear what the actual recurring revenue is for several months), but the fact that it was done so haphazardly, and honestly, for what looks like the wrong reasons (it wasn't about "this is best for the business" it was about "this will get us into YC"), is the biggest red flag. If you want to change a fundamental part of your product (no watermarks) and make it a pro feature to entice users to pay, you're welcome to do that. It may or may not work for existing users, and it's possible there are better ways to extract revenue/add value. The truth is though, this was an idea done at the last minute to try to secure placement in an accelerator, it doesn't appear to be born out of actual business rationale for the product.

zergblush 7y ago
As a heavy app user, I absolutely abhor the bait and switch, on top of annoyances such as in-app subscriptions (I don’t mind one time in-app purchases for keeping permanent feature upgrades). In this case, it sounds like their users may have been feeling baited and switched, having invested their time into the product only to have to pay to continue using it without watermarking. If my understanding of the above is accurate, then they may have already destroyed their trust relationship with their current users..
- mbf1 7y ago
  I don't think the users are feeling baited and switched. They got something for free that most people charge for, and in exchange for early testing got watermark-free level service. Eventually, everything free needs to be paid for. $50 per year is reasonable. By posting about their project and having that carried on ycombinator, they maybe got the biggest audience of sympathetic users they could ask for. It's a great bit of viral marketing, and I expect they'd see a spike in interest from independent investors as well as a spike in paid memberships.
bksenior 7y ago
This read like a business school professor. All young businesses are a fluid experiment "out of business rationale" is a hindsight fluff statement. If rationale informed effective product then a lot more people were successful. Additionally, odds are that the best thing for the business (and founders) would being admitted to YC over any product change they could possible make. They had non zero odds and I think it was a clever plan all things considered. If YC is looking at founders above everything else and less product, these young dudes seem to be cut from the cloth.
- filmgirlcw 7y ago
  > If rationale informed effective product then a lot more people were successful. That's not necessarily true, as plenty of businesses fail because they don't have a business plan for their product. The world is littered with great products that failed because there was no business plan or the business plan wasn't sustainable. Obviously, having a business plan doesn't make a successful product (and I never one intimated otherwise), but in this case, the feedback from YC was about the business and not about the product. >Additionally, odds are that the best thing for the business (and founders) would being admitted to YC over any product change they could possible make. If by "best thing" you mean "could raise money to fund the product in absence of a business plan" -- you're probably right. Getting into YC or a similar accelerator would make raising money easier for sure. But getting in doesn't guarantee funding or success in any way shape or form. >They had non zero odds and I think it was a clever plan all things considered. If YC is looking at founders above everything else and less product, these young dudes seem to be cut from the cloth. I disagree that they had non zero odds. They were rejected and given a reason why. The response to that rejection didn't actually answer the critique by YC (and the founders don't seem to have understood what that critique was). You're right that the product doesn't always matter when it comes to who gets funding, but in this case, being "clever" just further proved that they didn't actually understand that core feedback, which is wholly independent of product. Look, I hope these guys try again. I also hope they take up the offer for office hours and take that feedback into perfecting their business model and their product strategy so that they are more successful next time.

zergblush 7y ago

As a heavy app user, I absolutely abhor the bait and switch, on top of annoyances such as in-app subscriptions (I don’t mind one time in-app purchases for keeping permanent feature upgrades). In this case, it sounds like their users may have been feeling baited and switched, having invested their time into the product only to have to pay to continue using it without watermarking. If my understanding of the above is accurate, then they may have already destroyed their trust relationship with their current users..

mbf1 7y ago
I don't think the users are feeling baited and switched. They got something for free that most people charge for, and in exchange for early testing got watermark-free level service. Eventually, everything free needs to be paid for. $50 per year is reasonable. By posting about their project and having that carried on ycombinator, they maybe got the biggest audience of sympathetic users they could ask for. It's a great bit of viral marketing, and I expect they'd see a spike in interest from independent investors as well as a spike in paid memberships.

bksenior 7y ago

This read like a business school professor. All young businesses are a fluid experiment "out of business rationale" is a hindsight fluff statement. If rationale informed effective product then a lot more people were successful. Additionally, odds are that the best thing for the business (and founders) would being admitted to YC over any product change they could possible make. They had non zero odds and I think it was a clever plan all things considered. If YC is looking at founders above everything else and less product, these young dudes seem to be cut from the cloth.

filmgirlcw 7y ago
> If rationale informed effective product then a lot more people were successful. That's not necessarily true, as plenty of businesses fail because they don't have a business plan for their product. The world is littered with great products that failed because there was no business plan or the business plan wasn't sustainable. Obviously, having a business plan doesn't make a successful product (and I never one intimated otherwise), but in this case, the feedback from YC was about the business and not about the product. >Additionally, odds are that the best thing for the business (and founders) would being admitted to YC over any product change they could possible make. If by "best thing" you mean "could raise money to fund the product in absence of a business plan" -- you're probably right. Getting into YC or a similar accelerator would make raising money easier for sure. But getting in doesn't guarantee funding or success in any way shape or form. >They had non zero odds and I think it was a clever plan all things considered. If YC is looking at founders above everything else and less product, these young dudes seem to be cut from the cloth. I disagree that they had non zero odds. They were rejected and given a reason why. The response to that rejection didn't actually answer the critique by YC (and the founders don't seem to have understood what that critique was). You're right that the product doesn't always matter when it comes to who gets funding, but in this case, being "clever" just further proved that they didn't actually understand that core feedback, which is wholly independent of product. Look, I hope these guys try again. I also hope they take up the offer for office hours and take that feedback into perfecting their business model and their product strategy so that they are more successful next time.