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Ask HN: Is it really this easy?
I'm browsing startups near my area and what I'm seeing are a lot of startups that are based on previous big ideas, just applied to a very niche market. Ideas that I'm sitting on the subway and thinking to myself, "Hmm that'd be a cool idea", and then I discard it two seconds later. I have hundreds of ideas written down, and I am so quick to discard each and every one of them as silly because who the fuck would use any of these apps I came up with. Then I see the list of startups and what they are all about and I weep.
How do these companies get funding? Why do they get funding? A majority of these startups don't have a very unique ideas and it doesn't look like many are really making a difference or increasing wealth.
How do startups work? Do a lot of these just get initial funding, get an office, work on their stuff, and if it doesn't succeed, it just shuts down?
I'm honestly a bit confused at how the startup scene works as I have a great idea and I'm pouring my blood, sweat, and tears into it. It'd be lovely to have a small team to work with and I'm wondering how do these people get SO MUCH funding? It seems that every second company I'm looking at has been funded through the roof.
I'm genuinely curious how it works as I'm trying to get my own business going. Can somebody shed some light into the process?
- patio11 13y agoIn general, talking to customers, shipping software, and selling things to people for money strictly dominate either thinking beautiful ideas or wondering what alchemy would hypothetically make your startup fundable. If you're really, really interested in that question, I can explain it in detail, but I would bet against you liking the answer, so I'd suggest talking/shipping/selling rather than spending more time thinking about what other people are doing.
- rfnslyr 13y agoIt feels to me that a lot of these ideas are hackish and serve only the purpose of getting funded, an easy money scheme. There are genuinely unoriginal ideas. An image host. Like hundreds of other image hosts don't exist? Why did you get funded? I don't understand. When I think of ideas, the perspective I view the idea from is whether or not it solves a significant problem in daily peoples lives. A lot of these startups, don't solve anything. I'm interested in your extended response regardless of my stance. Is it just guys that have too much money and fund startups hoping that 1 in 100 of the funded ones will eventually make them billionaires? That's currently what it seems like.
- patio11 13y agoThere are far easier ways to get money than raising money for a startup. If two founders raise, say, $500k, under most circumstances they'll work a lot harder and earn a lot less than just working for Amagoobooksoft as engineers. (Remember, it doesn't magically become their money. They'll be expected to spend it on employee salaries, and employees are much, much more expensive than anyone who doesn't have employees thinks they are.) I wouldn't get too jealous of their lot in life, because it will cloud your judgment. Is it just guys that have too much money and fund startups hoping that 1 in 100 of the funded ones will eventually make them billionaires? Again, you're letting sour grapes color your perceptions here. Broadly speaking: "Make lots of bets, lose lots of bets, but have some money invested in [without loss of generality: Google]" is, in broad strokes, the model. Note that there is no reward for being original. Google wasn't. ("Another search engine? Please. And their portal is much worse than Yahoo's.") Facebook wasn't. ("So it's like MySpace but with 1/1,000th the users? Great idea, Harvard dropout.") etc, etc. In terms of what makes a startup fundable: http://venturehacks.com/articles/unfundable-startup http://venturehacks.com/articles/unfundable-startup In general, with exceptions which would be pretty obvious to a hypothetical founder if they applied, a hypothetical founder is fundable if: + They are located in proximity to investors who routinely fund companies like theirs + They are addressing a market with potential to make $10M ~ $100M (seed stage, angels, and early VC funding) to $X00M a year in revenues, at a minimum. + They've got a team who "look like winners", for very subjective versions of that. Graduated from a good school, worked for one of a few firms with known high hiring bars (AmaGooBookSoft, etc), had a high-impact role at a previously successful startup (first hire or first VP engineering at a company which exited or is a shoe-in to do so, etc), etc etc. + They are clearly capable of shipping great product. What makes a great product? Um, investors "know it when they see it", but suffice it to say that high-caliber design is very big right now. + Traction. In brass tacks: $X0,000 of monthly recurring revenue or millions to tens of millions of free users but growing fast. Less at early seed stage, but you should ideally be able to demonstrate it in micro-scale. (e.g. If you can show $1,000 of ad spend got you 4 customers and their LTV is probabalistically above $1,000 then you're in a much better position than if you can't, even if $4,000 doesn't really ring any bells for investors.) Now, let's contrast this to a hypothetical guy. Guy has big dreams. Guy probably has not shipped a product. If Guy has shipped a product, Guy got 20 people to look at it once, but no one still uses it. Guy lives in the Midwest. Guy graduated from a respectable (but not name-brand) school. Guy worked has worked the last few years as a freelancer. Guy has not convinced a second guy to join him on his crazy adventure. Guy has an idea which Guy thinks is awesome but which Guy has not succeeded in actually selling to 10 customers or instantiating on the desktops or home screens of several thousand users. Guy will have a very, very difficult time raising funding.
- makerops 13y agoFirst question I think you should ask yourself: do you really even want to pursue funding?
- rfnslyr 13y agoIt beats coding in my basement covering backend and frontend simultaneously. I'd kill to have a good small team of a designer, backend developer, and front end developer. That would be ideal.
- mapster 13y agoIf you have connections, use them. That's some money. Plus your own and from your family/friends. Office, employee #1-3. Start shipping. You have the appearance of a startup. Now getting a return on the money and time/work is another thing. Good luck!
- dirktheman 13y agoI believe there are two powers for seeing the umpteenth smiling kitten-apps getting funded. One reason is the team behind the app has already proven its worth. So while the angel or VC probably won't be crazy about the idea, he/she will count on the fact that the team will either get acquihired by another, bigger fish, or will pivot into something with better chances of success. The other power is that for every smiling kitten-app you see on TC, there are hundreds that won't make it. You just don't read about them, so you're biased. It's comparable to aspiring actors moving to LA, where they end up serving meals. The truth is getting funded is hard, even harder if you're new to the game, and damn near impossible if you're new and haven't got traction (read: users) yet. I suffer from the same idea-overload as you. But I force myself to write the ideas down, and keep working on something until I finish it. So my advice would be to pick an idea you're passionate about, keep working on it relentlessly, and cut down on reading tech news.
- rfnslyr 13y ago> So my advice would be to pick an idea you're passionate about, keep working on it relentlessly, and cut down on reading tech news. Exactly this. There is no better advice.
- jamesbritt 13y agoSo my advice would be to pick an idea you're passionate about, keep working on it relentlessly, and cut down on reading tech news. OK, great, but what if there is no market for it? This advice sounds just like, "Do what you love and the money will follow." I'm deeply skeptical. It sounds like magical thinking. Somewhere is this are all sorts of assumptions about marketing and sales that just sort of happens.
- rfnslyr 13y agoNot at all. The more projects you have attached to your name, the more you are worth. If you spend two years writing apps that don't go anywhere, but you finish them, and you can preview them, and you throw them on your portofolio and market yourself you can land a really good job. I really don't see a downside, this is the worst case scenario.
- jamesbritt 13y agoI have hundreds of ideas written down, and I am so quick to discard each and every one of them as silly because who the fuck would use any of these apps I came up with. I think the only way to know the answer is to ask people. I've made the mistake of spending time building a product that I and my co-founders really liked, but we never actually asked (in one way or another) if anyone else would pay for it, or even use it. We assumed that because we wanted it that others who were (we thought) like us would want it too. I have some other ideas for products but before I put too much effort into them I want to go talk to potential customers and see what they think. I dread this because I'm not naturally gregarious, but I cannot count on my gut feelings about what people will pay money for.
- rfnslyr 13y agoYou need to put yourself in your target markets shoes. You have to close your eyes, visualize their day, visualize their life, and see how it ties into your application and whether your application truly solves their problem. I have maybe 5 apps I use on a weekly basis on my phone. If another app is to make it onto my phone, it better be a great solution to an existing problem. Asking people if they would use your app is pointless since there is no prototype, and its hard to summarize all the nuances of a complex application in a few sentences, you'll almost always get a shrug and an "Sure, I'd use that" which I really don't think suffices as a basis to build your application on. People will almost always say "Yeah, I'd use that" because it doesn't actually exist yet. Find an idea, see what problem is solves, and fly with it. Better yet, just try to solve your own problems, don't think about whether it will make you a billionaire. Worst case scenario is you have a cool project you were passionate about and can add to your portfolio. "The very best startup ideas tend to have three things in common: they're something the founders themselves want, that they themselves can build, and that few others realize are worth doing." - Paul Graham Great essay by Paul: http://www.paulgraham.com/startupideas.html http://www.paulgraham.com/startupideas.html
- jamesbritt 13y agoYou need to put yourself in your target markets shoes. You have to close your eyes, visualize their day, visualize their life, and see how it ties into your application and whether your application truly solves their problem. Or go talk them and not guess what their day is like or whether your code solves their problems. Asking people if they would use your app is pointless since there is no prototype I first want to know what their actual problems are, not what I naively assume them to be. And I would not discuss a potential program in the abstract, but get feedback on something concrete. Find an idea, see what problem is solves, and fly with it. Better yet, just try to solve your own problems, don't think about whether it will make you a billionaire. Worst case scenario is you have a cool project you were passionate about and can add to your portfolio. Thanks, but I did that. It was fun, I learned a lot. Didn't pay my bills. I have a lot of fun projects to keep me busy. What I want is an income. "Follow your bliss" and the endless variations of that are trite. Passion may be necessary, it's certainly a goal, but it isn't sufficient.
- tptacek 13y agoWorking to obtain external financing for a startup is a miserable experience, even for people who are good at it, and for most of the kinds of ideas software people have for companies, usually results in a situation where (a) you have worked your ass off and beaten extraordinary odds simply to land yourself in a situation where you are working a job for a boss and (b) assuming all the risks and liabilities of working at your own company but with incentives that are now tailored for financiers. External funding for startups has a place, but we'd all be better off if it wasn't glamorized to the extent that it is. The more money you raise, the worse problems (a) and (b) tend to be, with the possible exception of extreme cases where revenue growth and customer adoption are so clear that the glamor of having raised is less than that of having started such an amazing business to begin with. Most companies that raise good-sized A rounds aren't like that, though. It doesn't have to be that way, and if you're wondering how anyone would go about getting a company funded, it shouldn't be that way for you either. Start your company in your spare time. Scale down the ambitions of your product so that you can accomplish it with the resources you have now. Prove your idea on a very small scale, and, as you gain small amounts of traction, gradually expand your ambitions, which will now often track your returns on running the small business. At some point, you'll be making enough money and have enough apparent upside that it'll make sense to quit your day job.
- patio11 13y agoI stabbed the upvote button so hard I may need a new mouse, in particular for the encouragement for the side project to sustainable business trajectory. I did that. It was, no lie, lifechanging. (And I started with a business which many, many people assume must be a joke.)
- soneca 13y agoI am betting a little more. I have a ambitious startup that has no middle term, is 0,00001% of chance to make me a multimillionaire or 99,99999% of no revenue at all. But in the meantime I am starting a less ambitious, more solid SaaS business, with more equal chances between small loss and decent profit. Ok, I had to quit my job because in top of that I had to learn to code. But my savings are in the most conservative investment (treasure bills). But my idea, if this small SaaS doesn't give me enough money until my reserves end, is to come back to a day job, while still pursuing the sustainable business trajectory that patio11 sugests. This is similar to Taleb investment strategy, simultaniously doing a highly agressive investment and a highly conservative one.
- wensing 13y agoThis reminds me that I'm due for the next post in my 'starting Stormpulse' blog series, wherein I cover how and why we raised significant money 6 years after we started.
- kevinchau 13y agoWould love to read this.
- rfnslyr 13y agoStarting Stormpulse turns up nothing for me in Google. Could you link me? I'm super interested.
- wensing 13y agoSure! http://lmgtfy.com/?q=bootstrapping+stormpulse http://lmgtfy.com/?q=bootstrapping+stormpulse
- EvanKelly 13y agoJust as an aside, I usually see LMGTFY as a snarky, condescending way to send people in the right direction with some chiding for not searching for themselves. Your post suggests just the opposite, as you seem genuinely happy to help and point people to the blog. Why didn't you just link to your blog rather than the LMGTFY? Maybe my cynicism detector is tweaked too high today. Congrats on your success with StormPulse.
- sharemywin 13y agoI've read unless you'vew already had a successful exit it hard to get funidng without traction. This artical talks about how much traction you might need. Also, assume your target market needs to be at least $100 million. http://bestengagingcommunities.com/2013/02/09/how-much-traction-is-enough-to-get-seed-funded-or-to-get-into-an-accelerator/ http://bestengagingcommunities.com/2013/02/09/how-much-tract...
- lazyjones 13y ago> Do a lot of these just get initial funding, get an office, work on their stuff, and if it doesn't succeed, it just shuts down? I'd assume that a lot of these do it in a different order: they work on their stuff (a prototype) first, then get funding when they have something to show off. (that's how it worked for me anyway)