5 ms·

Sad. The thing about "ramen" profitability is there's another level to be achieved after that, which I refer to as "opportunity cost" profitability. It's often

by ojbyrne 17y ago

Sad. The thing about "ramen" profitability is there's another level to be achieved after that, which I refer to as "opportunity cost" profitability. It's often much more challenging, and I sense it being an issue in this article.

ivankirigin 17y ago
We weren't ramen profitable. We ran out of money and didn't have a good environment or case for raising more.
- auston 17y ago
  I've been following you guys for a bit and wonder did you guys really spend over $1m since inception? (http://www.techcrunch.com/2008/09/24/tipjoy-raises-1-million-for-its-simple-micropayment-platform/ http://www.techcrunch.com/2008/09/24/tipjoy-raises-1-million...)
  - ivankirigin 17y ago
    We were advised (in retrospect incorrectly) to be ambiguous and say "raised under $1M" when the amount we raised was actually much less. Our burn rate was slightly higher than most poor grad students, but not _that_ high.
    - nreece 17y ago
      We were advised (in retrospect incorrectly) to be ambiguous and say "raised under $1M" when the amount we raised was actually much less. Advised?! By whom.
      - medianama 17y ago
        YC?
        drusenko 17y ago
        I could be wrong, but that doesn't sound like the type of thing YC would advise...
        ivankirigin 17y ago
        No, not YC. This issue isn't that important. If investors don't like the way we spent their money, that matters. Confusion on a blog doesn't matter.
      - petercooper 17y ago
        You sound surprised but this is extremely common in smaller deals IME.
    - vaksel 17y ago
      The company hasn’t disclosed the exact amount of the funding, but says that it is just shy of $1 million. that doesn't exactly say under $1 million, its written more like 800-900K
      - zach 17y ago
        Only by the word "just" which could easily have been inserted by mistake. "How much did you raise?" "It's, um, shy of one million dollars." Reporter writes "Am't raised: just shy of $1M" in notes.
    - jacquesm 17y ago
      What a strange advice! You should never play for 'perception', after all, everybody that it matters to will have full disclosure anyway and you set yourself up for being called out at some point in the future. Just say it like it is. I notice that you're still not coming clean about how much you in fact did raise. You're under no obligation to say it but the way it stands right now it could be $100K or it could be $999,999. If somebody misquotes you that is not your problem, if the press embellishes your story, well, that's what the press does more often than not. But if you purposefully engage in the spreading of false (or suggestive) information then that does not really help.
      - pbhjpbhj 17y ago
        "if you purposefully engage in the spreading of false [...] information then [...]" you must be marketing something
- zhyder 17y ago
  Sorry to hear about the shutdown. FWIW, I'm impressed how open you're being, about profitability as well as money-raised (http://news.ycombinator.com/item?id=777010 http://news.ycombinator.com/item?id=777010). Btw, apparently you have a decent amount of traffic (http://siteanalytics.compete.com/tipjoy.com/ http://siteanalytics.compete.com/tipjoy.com/). Is the problem that very few of your visitors convert to tippers?
  - ivankirigin 17y ago
    Compete measures iframe includes or javascript widgets - meaning our widgets on 3rd party sites. That traffic is roughly correct in direction, but totally wrong for the volume to tipjoy.com itself. But that doesn't really matter, because it is a service - one usable almost entirely without visiting tipjoy.com. The twitter integration, for example, is completely unmeasured by compete. Finally, traffic is a poor metric for a payments site. Transaction volume is what matters. Ohh, and I'm not being that open. If we were profitable, we wouldn't be shutting down.
    - patio11 17y ago
      Transaction volume is what matters Feel free to smack me if I'm prying, but I'd be fascinated to know a rough ballpark for what transaction volume was.
    - eterno 17y ago
      Thanks for being so open and honest about the whole thing. You said, if you were profitable, you wouldn't be shutting down. But if you think there should be a way to make social payments work then don't you think its just a matter of time when you would be profitable. I mean minimum profitability also doesn't really justify what is called in other posts the 'opportunity cost', but if you are working on something big and still believe there is customer value then profitability will come eventually. And if that belief is still there then maybe just buckle down for sometime in a paying gig and then go back again. It might take your mind of it for sometime which might actually give you some good insights on how to take it ahead. I though, still understand that there could be other personal reasons for you to do this, in which case please feel free to not respond. Thanks again for the post and best of luck for the future.
- bk 17y ago
  Just out of curiosity: Are you dissolving the corporation (and YC involvement) or are you continuing with YC involvement for a future venture?
  - ivankirigin 17y ago
    I'd love to give YC advisory shares in a future startup. We're eventually dissolving the corporation, but need to handle cash out properly.
    - johnyzee 17y ago
      Give, or sell, shares? I am just wondering if you consider YC involvement so valuable that you would actually hand over shares just to have them on board in a venture.
      - daleharvey 17y ago
        thats quite common for advisary board positions (usually < 1%)
        aditya 17y ago
        It's surprising isn't it? that's the same amount you'd give an early engineer. Makes it sound like advisory board positions add an equal amount of value.
        ivankirigin 17y ago
        That entirely depends on how early, right? Advisers can definitely be worth more than a single engineer.
        aditya 17y ago
        Yep, I think my big trouble is 'can' and 'will'. An engineer, being a full-time employee will come in and kick all sorts of ass, while an advisor may or may not help you make the right decision, make the right connections, etc. Not saying that it isn't good to give your advisors equity but just wondering if you might be better of hiring great engineers and giving them more equity. Probably need personal experience to figure out the right answer (if there is one).
deleted 17y ago
[deleted]
sho 17y ago
Actually that's an excellent point that I don't see mentioned enough. Profitability enough to offset opportunity cost - ie, how much you'd be making if you were working in a "real job" - is indeed very hard to reach. Anyone can be "ramen profitable", defining that as say, under $1k a month. In fact, in actual good countries, you don't need to do anything at all to be able to eat. Australia will pay you $1k/month just to not be a criminal; in other countries it's higher. People can and do live off that their whole lives! Your average HN reader/startup founder is generally highly capable, multi-skilled, and, probably, a very valuable employee. To start a business capable of matching or exceeding their likely "normal" salary is indeed a far harder proposition than just making enough to eat.
- angusgr 17y ago
  >Australia will pay you $1k/month just to not be a criminal FWIW, this isn't strictly true, at least not in the last 10 years. Provided you are not disabled or retired, Australia will only really pay you ~$1k/month while you demonstrably look for work, or while you are an undergraduate student doing your first degree.
  - dejb 17y ago
    There's a program called NEIS which would pay you that amount for a year while you try to start up a business. You had to submit a pretty serious application and attend a fair few weeks of some business course. They do have a few BS rules but you really just have to structure things the way they want. Did it about 13 years ago and helped me and a friend get a successful startup going. Come to think it of it it was a bit like a govt version of YC.
  - sho 17y ago
    Well .. in theory yes. But in practise, people stay on it for years and years, just putting up with the hoops they make you jump through. Apparently they stop even pretending to care after a couple of years. I know this because a couple of friends of my brother have been on the dole for literally 10 years. There is nothing wrong with them, they just don't want to work and are apparently happy to live within the constraints of their $450/fortnight. Places like Broome and Byron Bay are full of such people. I used to resent people living off the system like this but now having lived in countries without it, I don't mind it anymore. In fact I now support a Norway-style basic income program. They're never going to work, that is completely obvious, just give them the damn money...

by ojbyrne 17y ago

ivankirigin 17y ago

We weren't ramen profitable. We ran out of money and didn't have a good environment or case for raising more.

auston 17y ago
I've been following you guys for a bit and wonder did you guys really spend over $1m since inception? (http://www.techcrunch.com/2008/09/24/tipjoy-raises-1-million-for-its-simple-micropayment-platform/ http://www.techcrunch.com/2008/09/24/tipjoy-raises-1-million...)
- ivankirigin 17y ago
  We were advised (in retrospect incorrectly) to be ambiguous and say "raised under $1M" when the amount we raised was actually much less. Our burn rate was slightly higher than most poor grad students, but not _that_ high.
  - nreece 17y ago
    We were advised (in retrospect incorrectly) to be ambiguous and say "raised under $1M" when the amount we raised was actually much less. Advised?! By whom.
    - medianama 17y ago
      YC?
      - drusenko 17y ago
        I could be wrong, but that doesn't sound like the type of thing YC would advise...
      - ivankirigin 17y ago
        No, not YC. This issue isn't that important. If investors don't like the way we spent their money, that matters. Confusion on a blog doesn't matter.
    - petercooper 17y ago
      You sound surprised but this is extremely common in smaller deals IME.
  - vaksel 17y ago
    The company hasn’t disclosed the exact amount of the funding, but says that it is just shy of $1 million. that doesn't exactly say under $1 million, its written more like 800-900K
    - zach 17y ago
      Only by the word "just" which could easily have been inserted by mistake. "How much did you raise?" "It's, um, shy of one million dollars." Reporter writes "Am't raised: just shy of $1M" in notes.
  - jacquesm 17y ago
    What a strange advice! You should never play for 'perception', after all, everybody that it matters to will have full disclosure anyway and you set yourself up for being called out at some point in the future. Just say it like it is. I notice that you're still not coming clean about how much you in fact did raise. You're under no obligation to say it but the way it stands right now it could be $100K or it could be $999,999. If somebody misquotes you that is not your problem, if the press embellishes your story, well, that's what the press does more often than not. But if you purposefully engage in the spreading of false (or suggestive) information then that does not really help.
    - pbhjpbhj 17y ago
      "if you purposefully engage in the spreading of false [...] information then [...]" you must be marketing something
zhyder 17y ago
Sorry to hear about the shutdown. FWIW, I'm impressed how open you're being, about profitability as well as money-raised (http://news.ycombinator.com/item?id=777010 http://news.ycombinator.com/item?id=777010). Btw, apparently you have a decent amount of traffic (http://siteanalytics.compete.com/tipjoy.com/ http://siteanalytics.compete.com/tipjoy.com/). Is the problem that very few of your visitors convert to tippers?
- ivankirigin 17y ago
  Compete measures iframe includes or javascript widgets - meaning our widgets on 3rd party sites. That traffic is roughly correct in direction, but totally wrong for the volume to tipjoy.com itself. But that doesn't really matter, because it is a service - one usable almost entirely without visiting tipjoy.com. The twitter integration, for example, is completely unmeasured by compete. Finally, traffic is a poor metric for a payments site. Transaction volume is what matters. Ohh, and I'm not being that open. If we were profitable, we wouldn't be shutting down.
  - patio11 17y ago
    Transaction volume is what matters Feel free to smack me if I'm prying, but I'd be fascinated to know a rough ballpark for what transaction volume was.
  - eterno 17y ago
    Thanks for being so open and honest about the whole thing. You said, if you were profitable, you wouldn't be shutting down. But if you think there should be a way to make social payments work then don't you think its just a matter of time when you would be profitable. I mean minimum profitability also doesn't really justify what is called in other posts the 'opportunity cost', but if you are working on something big and still believe there is customer value then profitability will come eventually. And if that belief is still there then maybe just buckle down for sometime in a paying gig and then go back again. It might take your mind of it for sometime which might actually give you some good insights on how to take it ahead. I though, still understand that there could be other personal reasons for you to do this, in which case please feel free to not respond. Thanks again for the post and best of luck for the future.
bk 17y ago
Just out of curiosity: Are you dissolving the corporation (and YC involvement) or are you continuing with YC involvement for a future venture?
- ivankirigin 17y ago
  I'd love to give YC advisory shares in a future startup. We're eventually dissolving the corporation, but need to handle cash out properly.
  - johnyzee 17y ago
    Give, or sell, shares? I am just wondering if you consider YC involvement so valuable that you would actually hand over shares just to have them on board in a venture.
    - daleharvey 17y ago
      thats quite common for advisary board positions (usually < 1%)
      - aditya 17y ago
        It's surprising isn't it? that's the same amount you'd give an early engineer. Makes it sound like advisory board positions add an equal amount of value.
        ivankirigin 17y ago
        That entirely depends on how early, right? Advisers can definitely be worth more than a single engineer.
        aditya 17y ago
        Yep, I think my big trouble is 'can' and 'will'. An engineer, being a full-time employee will come in and kick all sorts of ass, while an advisor may or may not help you make the right decision, make the right connections, etc. Not saying that it isn't good to give your advisors equity but just wondering if you might be better of hiring great engineers and giving them more equity. Probably need personal experience to figure out the right answer (if there is one).

deleted 17y ago

[deleted]

sho 17y ago

Actually that's an excellent point that I don't see mentioned enough. Profitability enough to offset opportunity cost - ie, how much you'd be making if you were working in a "real job" - is indeed very hard to reach. Anyone can be "ramen profitable", defining that as say, under $1k a month. In fact, in actual good countries, you don't need to do anything at all to be able to eat. Australia will pay you $1k/month just to not be a criminal; in other countries it's higher. People can and do live off that their whole lives! Your average HN reader/startup founder is generally highly capable, multi-skilled, and, probably, a very valuable employee. To start a business capable of matching or exceeding their likely "normal" salary is indeed a far harder proposition than just making enough to eat.

angusgr 17y ago
>Australia will pay you $1k/month just to not be a criminal FWIW, this isn't strictly true, at least not in the last 10 years. Provided you are not disabled or retired, Australia will only really pay you ~$1k/month while you demonstrably look for work, or while you are an undergraduate student doing your first degree.
- dejb 17y ago
  There's a program called NEIS which would pay you that amount for a year while you try to start up a business. You had to submit a pretty serious application and attend a fair few weeks of some business course. They do have a few BS rules but you really just have to structure things the way they want. Did it about 13 years ago and helped me and a friend get a successful startup going. Come to think it of it it was a bit like a govt version of YC.
- sho 17y ago
  Well .. in theory yes. But in practise, people stay on it for years and years, just putting up with the hoops they make you jump through. Apparently they stop even pretending to care after a couple of years. I know this because a couple of friends of my brother have been on the dole for literally 10 years. There is nothing wrong with them, they just don't want to work and are apparently happy to live within the constraints of their $450/fortnight. Places like Broome and Byron Bay are full of such people. I used to resent people living off the system like this but now having lived in countries without it, I don't mind it anymore. In fact I now support a Norway-style basic income program. They're never going to work, that is completely obvious, just give them the damn money...