Ask HN: Build a product with no revenue? | Hacker News Reader

Ask HN: Build a product with no revenue?

8 pointsbvallelunga15 comments

Hey guys, currently I am prototyping an education app and have signed up every high school in our city with full support from the principal and select teachers. Interest seems amazing for something yet to be built, we are using proto.io to showcase how the app will work.

The only problem is that I can't figure out a way to monetize it. Schools don't have money, neither do teachers and students will never pay.

Should I continue to work on it when I have no clear way to make money? Granted the costs are minimal but it just doesn't seem like a great way to pitch investors later down the line with no monetization plan.

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Are you doing this to get maximally rich? Or because you want to make something useful? If the latter, there are ways to make enough money to have a sustainable business.

Monetization gets easier when you're big. If you have most of the schools in a state, you can find something they'll pay for.

Both YC and Imagine K-12 have a lot of experience helping startups with a popular product monetize it. But solve the hard problem first.

Selling to schools is possible, but takes a long time and is full of politics. It looks more like an "enterprise" sales ultimately.

Many teachers are very excited to try anything that is free, since allocating budget is an arduous process. Do not take that to mean that they will pay for your product.

This does not mean there's not value, but it may not have a paid monetization path in the short term.

If you're interested in a business, rather than a non-profit concept, then finance it for them.

What do I mean by that? Do not give it away for free.

The app comes with a one or two year introductory period (whatever you can stomach), in which the schools can use it at no cost. After that, it's $x per month per student (or $$$ flat for the whole school per year). Hook them, get them dependent on it, and then charge them for your useful product. Keep it inexpensive, so that if it is in fact useful, they will find the money for it when the time comes rather than have to abandon their solution.

Constantly stay in touch with the schools and the board of education. You have to sell your way into their budget planning and you have to do it far ahead of time. The no cost introductory period exists solely to provide you time to sell your way into their budget plans, because that can take a lot of time and effort. That is as much a political navigation process as it is business. Constantly solicit feedback, they have to feel like you're part of their education system to justify expenditures.

So it goes like this.

1) Free for a year or two. Get your product adopted and embedded into the system.

2) Solicit constant feedback. Get to know everyone involved in determining the budgets.

3) With enough lead time, sell your way into their budgeting plans. Keep your product inexpensive.

4) Scale it.

I was in a similar boat, I developed something for PTA/educators, it was unexpectedly very popular, people were telling me I should make a product out of it.

After a lot of thinking, I realized that there was demand, but there just wasn't a market there. PTAs and schools just don't have the money to support it. However, I identified some other similar markets (corporate trainings, private classes and workshops, etc) where I could adapt the product to and it think make a viable startup if I wanted to.

I don't know if I'm right, like any startup it would be a ton of work, and I have other things I want to spend my time on, but my advice is to use the education audience as a testing ground to see what works and define features, and then find a similar market to make a product.

Also, be aware the the response to a prototype can be pretty misleading. People are often super excited by a prototype but then strangely disinterested once you've built the actual thing. Use the high school markets to actually prove the concept and make sure that it works.

Schools have and spend money, in the US several thousand dollars per pupil per year. It's the way they have and spend is just not in the way that people and small businesses do. Their money comes out of budgets allocations and their spending via procurement processes.

This means that schools tend to live "paycheck to paycheck" and thus their culture is of necessity based on trying to get stuff for free when their aren't bespoke funds. And the people giving the money, be it the Central District Office or the PTA will tend to earmark funds for what they [the school board or PTA] have been sold over what the teachers and principals have been sold.

That said, if costs are minimal then showing growth and high levels of engagement will count for something with investors...and limit or eliminate the need for investors substantially [keeping in mind that investors are a means to an end, not a goal in and of itself].

Good luck.

I'm doing the same thing in the post-secondary market. In fact, feel free to drop me a line (email in profile); I'd love to hear about what you're working on.

The answer to your question depends upon a few things. I think the most important are: how sticky is your product, what are your opportunity costs, and are you motivated to see this through over the next 2 years.

Schools won't want to let your product go if it's sticky. For example, you could offer the product free for a year or two with the expectation that you'll charge for it later. This helps you avoid the red tape, iterate upon feedback quicker, and grow faster.

If you can spare the time and this product excites you, go for it! What's the worst that can happen? Even if you fail, you have an amazing story and portfolio piece about a product that you built and brought to market. It shouldn't be hard for you to land a great job after that.

Schools probably have at least some money, but it is hard to get at (probably easier if you have success-stories you can show at your first few schools). Schools potentially can make students pay, but that is understandably a sure way to get attacked and scrutinized.

General ad-based models probably don't go over very well in education, local "sponsorships" (which also are ads, but packaged differently) might work if there is enough visibility and it fits the product.

In all cases: expect a lot of politics.

Should I continue to work on it when I have no clear way to make money?

Is it just me or shouldn't the answer to this be self-evident? In what other industry would you ask this question?

I'm with you, but depending on how cynical I am on a given day:

- maybe the monetization path isn't obvious yet, but you've got a project that is getting traction. Figure out the monetization later! (positive)

- Software is special, and eyeballs have value (neutral)

- Snapchat is worth billions, despite losing hundreds of millions/year and having almost no revenue let alone profit. Maybe my personal money plan can be to get outside investment. (negative)

I'm from Germany and in our country education is ultimately free. But in the US the people are used to paying for education. So is it maybe possible to create a model where the parents pay a monthly fee for their children so that they can use your software in order get an advantage? Or is it differently percepted for schools and colleges to pay for education?

Most people do not pay for K-12 education in the US (it's paid for via taxation as in Germany), they go to public schools. The OP is talking about typical public high schools from what I can tell. Definitely a different context from college.

But do you think it is in any way possible to collect money from parents in order to be able to provide an improvement in education? ... I have to say I as a parent wouldn't like it, but if the schools are simply not able to do it who else is left?

You should continue. In any startup, user engagement is important. If you have schools and students on your app then why are you worried about monetizing? You can put some advertisements who sell products to students or you can sell directly like stationary, books, and games. Initially you may be requiring some investment to build user base but keep continue.

Is this your first side project?

If it is I believe it is ok to do something that do not have a huge potential, because then it is easier to fuck up and fail without it having a great mental cost.

Then you can take all you have learned and use it on a new problem that can be monetized later on.

Maybe try to "sell" it to a donor, that is, apply for a grant to do it as a public good.

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