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For me, a startup is a business first, technology second. So my first question are always: 1) What does it cost to aquire a customer (CAC)? 2) How much does

For me, a startup is a business first, technology second. So my first question are always: 1) What does it cost to aquire a customer (CAC)? 2) How much does a customer pay (REVENUE)? 3) How many customers are there (TAM)? 4) How much does it cost to service a customer (GROSS MARGIN)? Let's answer these: 1) No information provided, but it's probably not cheap given there is plenty of competition. You can try to rely on word of mouth/focus on the FSBO niche... but this is a critical question to answer. (High CAC?) 2) This is easy, you charge $995/listing. Is this less or more than 1? No idea. (Low REVENUE!) 3) We can estimate this - you mention 500k FSBO happen each year. Let's say you're really successful, and capture 50k sales a year. (Low TAM!) That's a $50M/year revenue stream. As an induvidual that sounds large... but as a business that sounds pretty small - for context redfin spent $158M in marketing alone in 2022. 4) Cost to service customer... I imagine overtime and scale this could be reduced, but to what level? (Possibly okay GROSS MARGIN). As presented, and filling in the blanks, I think this is a currently a weak business model - high CAC, low Revenue and small TAM... this is going to make everything you do harder than it should be. ---- Notes on the website: The website doesn't really sell the value of using your service. The headline says 'Zero commissions'. This doesn't actually add any value to the seller. Your bullet points for 'sellers' are questionable: Set your home apart? Really? Who will see these listings? How will they know it's easy? Deal directly with buyers? This sounds like work. Why do I as a seller want more work? Close and Save? How does this help me close? What am I saving? ---- A different approach. Keep in mind I don't know your target customers, but here are some idea's: 1) Charge 10x as much - $9,995. Maybe on a success only model. This instantly 10x's your possible revenue and TAM... and focusses your time on early adopters who see value in your service, not cheapskates who are not going to do the work and leave bad feedback. Use the extra funds to market and hire! Alt: Keep cheap, but go deep into viral + addons. More complex, so not my preferred route. 2) Work on understanding the customer and figuring out thier pain points. Adjust marketing to fit: E.g. Save $X0,000 and be in control with PropBox! E.g. All the control of FSBO, but none of the paperwork! E.g. Sell your home faster, on your own terms, with PropBox. 3) Serve customers via concierge model until marketing/CAC is dialled in. Then focus on automation.

moneywoes 3y ago
Phenomenal analysis and suggestions. I’d love to learn what other metrics and decision frameworks you follow to build this type of intuition
- unusualmonkey 3y ago
  Nothing crazy - though I have studied 'startup' methodology and worked in some which has helped shape my opinions. For example, learning to pitch a startup is valuable IMO. At the start it doesn't seem to make much sense - why these details, but not others... but by the end you start to understand the questions investors want answered: 1) What is the problem? 2) What is your solution? 3) How do you make money? 4) How much money could you make? 5) Are you the right people to actually build this? 6) What is this going to cost to invest in? https://www.ycombinator.com/library/2u-how-to-build-your-seed-round-pitch-deck https://www.ycombinator.com/library/2u-how-to-build-your-see... The rest of it is from running a business, and understanding that businesses need a way to attract customers (typically paid) and idealy make, or have a plan to make, more money than it costs to aquire and service a customer.

moneywoes 3y ago

Phenomenal analysis and suggestions. I’d love to learn what other metrics and decision frameworks you follow to build this type of intuition

unusualmonkey 3y ago
Nothing crazy - though I have studied 'startup' methodology and worked in some which has helped shape my opinions. For example, learning to pitch a startup is valuable IMO. At the start it doesn't seem to make much sense - why these details, but not others... but by the end you start to understand the questions investors want answered: 1) What is the problem? 2) What is your solution? 3) How do you make money? 4) How much money could you make? 5) Are you the right people to actually build this? 6) What is this going to cost to invest in? https://www.ycombinator.com/library/2u-how-to-build-your-seed-round-pitch-deck https://www.ycombinator.com/library/2u-how-to-build-your-see... The rest of it is from running a business, and understanding that businesses need a way to attract customers (typically paid) and idealy make, or have a plan to make, more money than it costs to aquire and service a customer.