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Huge congrats on the business and personal accomplishments. Can you talk a little more about the two paths for AR? Specifically, talk about the math behind gro

Huge congrats on the business and personal accomplishments. Can you talk a little more about the two paths for AR? Specifically, talk about the math behind growing it organically and why you couldn't grow it to $N million / year (or even $NN million / year) in the next five years without taking money? From my perspective, you'd be crazy to take investment right now, but I haven't run the numbers and maybe there's a hard ceiling on your growth rate if you don't. EDIT: The "crazy to take money" part is because of you saying this: Things I really enjoy other than money: my kinda quirky work-life balance, a fair deal of freedom in how I arrange my affairs, not being bossable, etc. If you raise money, all that goes out the window. Not only do you now have new cofounders to answer to, but they're expecting you to spend their money, which means hiring a team and growing quickly, working crazy hours, etc. Doesn't seem to fit you, does it?

patio11 15y ago
Dharmesh Shah actually has covered this topic in much more depth than I could. Basically, for a SaaS business, cost of customer acquisition is going to put you into the red for each customer for the first X amount of time of their customer life. My CoCA for "a small number of self service accounts per time period" is very, very low. My CoCA for "a scalable number of enterprise accounts" would be very, very high. The Take Over The World From Hollowed-Out Volcano Lair plan would likely involve hiring a team of sales reps to get accounts with LTVs in the 6 figure region. I don't have their salaries in my back pocket. The math for getting to a modest, profitable business with $N0k of monthly revenue, on the other hand, is fairly similar to BCC with radically higher per-customer values. Work on SEO and paid traffic acquisition strategies, convert people in a scalable fashion, business supports approximately 1 employee at full wages per 125 paying accounts, gradually hire out things that don't increase number of accounts added per time period so I can focus on things that do, optionally go after a few low-hanging-fruit enterprise sales. (n.b. There exist enterprise deals in this space where I could literally just be "The company that provides reminder services for $ONE_PARTICULAR_CUSTOMER" and that would support a very profitable company with a modest number of employees.)
- ryanwaggoner 15y ago
  But surely if you've demonstrated the ability to print money by covering your CoCA in 6-12 months with a LTV of 24-36 months or whatever, you have additional options beyond selling off a big chunk of your business. Isn't this the ideal scenario for debt financing? What about doing creative deals with your first few enterprise customers, where you give them a 50% discount in exchange for a larger upfront payment, which you can then plow back into sales and marketing for the next group of customers. You cut your profits down for those customers, maybe even to zero, but you get the cashflow immediately. What about doing sales distribution deals with companies in a similar space, so you can piggyback on their sales and marketing efforts, thus reducing your need for upfront CoCA? Come on, you're so creative at finding ways around these kinds of things that I have a hard time believing all that's left is to take a pile of VC like everyone else does.
- danielharan 15y ago
  You have a product people want. The main thing that will get investors aboard aren't numbers so much as proof that you have a scalable acquisition channel. Once you get that, the money will be on great terms. I don't understand why you're putting any attention on BCC or consulting. What is stopping you from rocking this?

patio11 15y ago

Dharmesh Shah actually has covered this topic in much more depth than I could. Basically, for a SaaS business, cost of customer acquisition is going to put you into the red for each customer for the first X amount of time of their customer life. My CoCA for "a small number of self service accounts per time period" is very, very low. My CoCA for "a scalable number of enterprise accounts" would be very, very high. The Take Over The World From Hollowed-Out Volcano Lair plan would likely involve hiring a team of sales reps to get accounts with LTVs in the 6 figure region. I don't have their salaries in my back pocket. The math for getting to a modest, profitable business with $N0k of monthly revenue, on the other hand, is fairly similar to BCC with radically higher per-customer values. Work on SEO and paid traffic acquisition strategies, convert people in a scalable fashion, business supports approximately 1 employee at full wages per 125 paying accounts, gradually hire out things that don't increase number of accounts added per time period so I can focus on things that do, optionally go after a few low-hanging-fruit enterprise sales. (n.b. There exist enterprise deals in this space where I could literally just be "The company that provides reminder services for $ONE_PARTICULAR_CUSTOMER" and that would support a very profitable company with a modest number of employees.)

ryanwaggoner 15y ago
But surely if you've demonstrated the ability to print money by covering your CoCA in 6-12 months with a LTV of 24-36 months or whatever, you have additional options beyond selling off a big chunk of your business. Isn't this the ideal scenario for debt financing? What about doing creative deals with your first few enterprise customers, where you give them a 50% discount in exchange for a larger upfront payment, which you can then plow back into sales and marketing for the next group of customers. You cut your profits down for those customers, maybe even to zero, but you get the cashflow immediately. What about doing sales distribution deals with companies in a similar space, so you can piggyback on their sales and marketing efforts, thus reducing your need for upfront CoCA? Come on, you're so creative at finding ways around these kinds of things that I have a hard time believing all that's left is to take a pile of VC like everyone else does.
danielharan 15y ago
You have a product people want. The main thing that will get investors aboard aren't numbers so much as proof that you have a scalable acquisition channel. Once you get that, the money will be on great terms. I don't understand why you're putting any attention on BCC or consulting. What is stopping you from rocking this?