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Here's a question that will probably get me downvoted: what exactly is it that costs so much money in startups? Is it servers? Is it paying awesome brogrammer

by itmag 15y ago

Here's a question that will probably get me downvoted: what exactly is it that costs so much money in startups? Is it servers? Is it paying awesome brogrammers the exorbitant wages that they oh so deserve? Is it paying for marketing? Or something else? I kind of need to know which one it typically is, since I am planning to start a startup. If it's wages, then, well, I am going to do real great since me and my partners are used to working for scraps in Sweden anyway. But if it's something else then we might be hosed unless we get outside funding.

billpatrianakos 15y ago
You took the words right out of my mouth. I've brought this up before and it seems that people are very aware of this and actually agree with us. A startup can run with a single server and a coder for $20,000 and that's being generous. The money helps you build momentum and get marketing to get users. But if you lack a product or lack a model that will actually generate revenue then the funding is worthless. You end up with a bunch of failed startups, burned VCs and a bust bubble. Then all the good startups that actually have a working product and a viable profit making model will be punished by all the guys who wanted to get in on trendy Startupland and burst the bubble for everyone else.
- itmag 15y ago
  Also, why is it seemingly always a bunch of crap that gets funded by VCs? Is there no one who will take a step back and fund tech that levels us all up for the long haul? Investors: enough with social shopping, Facebook for cats, and crowdsourced geo-optimized micro-lattes already. Fund something that truly creates WEALTH. Prime example: http://opensourceecology.org/wiki/Global_Village_Construction_Set http://opensourceecology.org/wiki/Global_Village_Constructio...
  - billpatrianakos 15y ago
    It seems like they're disconnected from reality nits like there' this Silocon Valley bubble that the VCs are living in. I'm up on all the trendy tech news too but I'm out in Chicago so maybe I'm able to see things differently from the outside. Haven't they figured out that unless your some huge corporation like Google you can't break into the social space. It's already been dominated by the big 3 (Facebook, Twitter, G+). Social is becoming cliche and its actually turning people off now. That's not to say the startup party is over, it's just that now that we have entertainment and novelty all squared away they can focus on other things. Dropbox for instance is a company that's not exactly serving a humanitarian purpose but they're doing awesome things that are going to change the way we work with our devices. Spotify I think is also worthy of the money because it has given us something a lot of us have dreamed of: access to pretty much any music, on demand, for free. Like on demand radio. Again, it's not helping people in profound humanitarian ways but they're doing awesome things (opinions on artists pay and all that have nothing to do with what I'm talking about here so please don't go off on that tangent). But instead of finding these truly unique and innovative companies they throw money at exactly what you said, Facebook for cats and other lame wannabe sites with founders who think they're next in line to dethrone Zuckerberg because it's cool to be a billionaire. I think there are still people who get it and they're smart about where they put their money but far too many are getting into this like some gold rush. They invest based on "oh tech startups are trendy and they'll make me rich no matter who they are" kind of thinking. Honestly, I'd totally forgo funding for something I can do on a shoestring budget (and I am) and I'm the end come out with a better product that I'm in control of completely. That's real success. Funding has its place but it's being abused nowadays.
rdouble 15y ago
The main costs are salaries and servers.
- billpatrianakos 15y ago
  I'm honestly asking here because I have some experience writing web apps and I know your infrastructure (servers and code) need to be able to withstand the pressure of all the users and you also have to take security into account but couldn't you just either code the app yourself to start with (or hire someone for a few grand, maybe $10k) and use something like a VPS for about $5k a year or less if you use Heroku or so,etching like AWS if you have few users at first? I mean $50 million dollars? Really? For something that's massively successful this makes some sense but when you start to see companies that merely have ideas or half baked products being valued in these ranges you wonder if you really need that much money to run. Then you start to wonder, even if the startup does become wildly popular what do you do about generating revenue? Many of these guys have no plan to actually make money which makes the investment baffling. You can always hope to get swallowed up by a bigger company amd make a buck that way but how likely is it? The market is just flooded with these things. I have a great case in point: I'm working for some people to build a social network for sharing dating stories. It's a real niche but we can't charge for a freemium model because there's nothing valuable enough to charge for. It's a decent idea and the site will surely get some use and maybe even become popular but I doubt its worth investing in. The creators came into this thinking it would be some internet sensation they'd get rich off of and the way things are going I'm beginning to think that if we were in Silicon Valley that maybe a few VCs would be dumb enough to buy into it! I think that's sad.
  - rdouble 15y ago
    You don't need much money to start out but the costs add up rather quickly if you have any significant traction. Heroku is one of the more expensive options. You will be hard pressed to find anyone good anywhere on the planet who will work for "a few grand, maybe $10k." $50M is a lot for a half-baked idea, but why worry about what other people's are doing wrong?
    - 15y ago

by itmag 15y ago

billpatrianakos 15y ago

You took the words right out of my mouth. I've brought this up before and it seems that people are very aware of this and actually agree with us. A startup can run with a single server and a coder for $20,000 and that's being generous. The money helps you build momentum and get marketing to get users. But if you lack a product or lack a model that will actually generate revenue then the funding is worthless. You end up with a bunch of failed startups, burned VCs and a bust bubble. Then all the good startups that actually have a working product and a viable profit making model will be punished by all the guys who wanted to get in on trendy Startupland and burst the bubble for everyone else.

itmag 15y ago
Also, why is it seemingly always a bunch of crap that gets funded by VCs? Is there no one who will take a step back and fund tech that levels us all up for the long haul? Investors: enough with social shopping, Facebook for cats, and crowdsourced geo-optimized micro-lattes already. Fund something that truly creates WEALTH. Prime example: http://opensourceecology.org/wiki/Global_Village_Construction_Set http://opensourceecology.org/wiki/Global_Village_Constructio...
- billpatrianakos 15y ago
  It seems like they're disconnected from reality nits like there' this Silocon Valley bubble that the VCs are living in. I'm up on all the trendy tech news too but I'm out in Chicago so maybe I'm able to see things differently from the outside. Haven't they figured out that unless your some huge corporation like Google you can't break into the social space. It's already been dominated by the big 3 (Facebook, Twitter, G+). Social is becoming cliche and its actually turning people off now. That's not to say the startup party is over, it's just that now that we have entertainment and novelty all squared away they can focus on other things. Dropbox for instance is a company that's not exactly serving a humanitarian purpose but they're doing awesome things that are going to change the way we work with our devices. Spotify I think is also worthy of the money because it has given us something a lot of us have dreamed of: access to pretty much any music, on demand, for free. Like on demand radio. Again, it's not helping people in profound humanitarian ways but they're doing awesome things (opinions on artists pay and all that have nothing to do with what I'm talking about here so please don't go off on that tangent). But instead of finding these truly unique and innovative companies they throw money at exactly what you said, Facebook for cats and other lame wannabe sites with founders who think they're next in line to dethrone Zuckerberg because it's cool to be a billionaire. I think there are still people who get it and they're smart about where they put their money but far too many are getting into this like some gold rush. They invest based on "oh tech startups are trendy and they'll make me rich no matter who they are" kind of thinking. Honestly, I'd totally forgo funding for something I can do on a shoestring budget (and I am) and I'm the end come out with a better product that I'm in control of completely. That's real success. Funding has its place but it's being abused nowadays.

rdouble 15y ago

The main costs are salaries and servers.

billpatrianakos 15y ago
I'm honestly asking here because I have some experience writing web apps and I know your infrastructure (servers and code) need to be able to withstand the pressure of all the users and you also have to take security into account but couldn't you just either code the app yourself to start with (or hire someone for a few grand, maybe $10k) and use something like a VPS for about $5k a year or less if you use Heroku or so,etching like AWS if you have few users at first? I mean $50 million dollars? Really? For something that's massively successful this makes some sense but when you start to see companies that merely have ideas or half baked products being valued in these ranges you wonder if you really need that much money to run. Then you start to wonder, even if the startup does become wildly popular what do you do about generating revenue? Many of these guys have no plan to actually make money which makes the investment baffling. You can always hope to get swallowed up by a bigger company amd make a buck that way but how likely is it? The market is just flooded with these things. I have a great case in point: I'm working for some people to build a social network for sharing dating stories. It's a real niche but we can't charge for a freemium model because there's nothing valuable enough to charge for. It's a decent idea and the site will surely get some use and maybe even become popular but I doubt its worth investing in. The creators came into this thinking it would be some internet sensation they'd get rich off of and the way things are going I'm beginning to think that if we were in Silicon Valley that maybe a few VCs would be dumb enough to buy into it! I think that's sad.
- rdouble 15y ago
  You don't need much money to start out but the costs add up rather quickly if you have any significant traction. Heroku is one of the more expensive options. You will be hard pressed to find anyone good anywhere on the planet who will work for "a few grand, maybe $10k." $50M is a lot for a half-baked idea, but why worry about what other people's are doing wrong?
  - 15y ago