Did you ever have to shut down your early-stage startup despite strong traction?
In the meantime, kill off your cloud. Purchase or rent bare metal servers and stop paying per minute for shit. You can get 100+ of cpu cores, terabytes of ram, and disk space for less than a few hundred USD a month. Self-host the things you need (garage for s3, longhorn for persistent storage, harbor for Docker images, Loft for k8s management, etc).
> In the meantime, kill off your cloud.
This will massively reduce the price you charge your customers. Do it first.
Source: I am doing it right now.
Most of the time (in life, business, and marriage), you succeed/fail in “death by 1000 cuts”, not in huge gains or losses.
Trying to market on a short runway is suicide.
Ive burned high $xx million/year at only 10k monthly users because the answers to those forecast questions were good. And got to XXX million users and line of sight to X billion in revenue. However I’ve seen plenty of others who had better initial traction but no real path to a multi billion dollar company so they fizzled.
Just food for thought.
Is there no room for small, stable, profitable companies in startupland?
There is room for them but outside of startupland - a small, stable, profitable company is the exact opposite of a startup, and has entirely different funding and ownership models than startups do.
If it's stable and profitable, then it doesn't need investors, and if it's stable and not expected to become huge, investors don't need it.
If it's small, stable and "needs investors" because it's not profitable, well, then it has fizzled already.
And, crucially, a stable and a profitable company doesn't need investment even if it would benefit from it, it wouldn't fizzle out without investment or (obviously) it actually isn't stable or profitable.
Its up to you. Its not like VC's owe you investment to make a small business.
They aren't commited to a high risk strategy. They may have planned it that way but that may because /everyone/ does it that way. What's wrong with putting other options on the table.
There's nothing wrong with having a small business, I'm actually somewhat convinced they generate more user value, and can treat their employees better these days.
[0] many people, myself included, define startup as a company seeking rapid growth, using investor capital to do so and will most likely rapidly die if it can't. Versus any new company under the sun that can be sustainable.
At least I would switch regularly between "oh, let's give it up" and "no, there is still hope" :)
Perhaps the "sunken cost fallacy"...
I'm a serial founder, business angel, and LP of two larger funds... But man, where's your pitch? I've tried to find it by looking into your submissions, and all I found is "New Molecule Discovered That Strongly Stimulates Hair Growth ...
Are you seriously looking for investment or just messing around and wasting your and other people's time? If it's the former, then please (with a cheery on top), tell us what you do and at what terms you are raising.
We were successful in that we hit all of the numbers we set ourselves and had 50k monthly active users at the end of 2y.
We were unsuccessful in that we hadn't pulled in enough revenue to survive early enough, and were reliant on raising a next funding round. That did not materialise in part because we hadn't understood what angels and investors were looking for given their interests, where they were in their fund, their portfolio. We were too late into our runway to learn that lesson.
The story is over here: https://medium.com/tech-london/the-journey-of-a-london-start...
But my tip for you would be to go harder on getting a "No" from investors... it prevents wasting your time on false promises.
Also... can you get revenue from those users? I could, but not enough to achieve growth which is what we needed to get the product to a place where it could financially sustain itself in a viable way. I could only get it to a modest lifestyle company that would be in decline instantly without the investment to take it further.
I set a hard deadline... we were all in and 100% committed... but when we hit the deadline, it wasn't sustainable, there was no more runway. We'd built something, it was successful by many criteria... but not financially self-reliant and so by the only success criteria that ensures the viability of the company it definitely failed.
I don't regret shutting it down, and I took a lot from the experience. The forums we launched still exist and are now up to 250k monthly active users, it runs on a shoestring entirely from donations.
The costs are below this, in the region of $600 most months except when TLS certs and domain names roll around. I donate extras throughout the year to causes related to the one website that delivers the donations.
I do receive a few other donations from a few other sites based on "pay what you feel it is worth", and those amount to another couple of hundred dollars.
This just sounds like bad sales. If you aggressively asked for donations, some users will get mildly annoyed, but then the service can still operate - ie not shut down and users can get utility out of it.
But I'm fine just offering a non-profit social service.
An alternative to VC money is monetize your users and live cheaply while you grow revenue.
I shut down a company with really great product-market fit, but a small TAM. I don’t regret it, but I wish I didn’t have to. Real traction is gold.
Don’t expect a crazy valuation, but anything is better than shutting down?
In my experience, that's the question that causes people to ditch a startup despite whatever headline metrics it has.
If it's not monetised yet then start doing that instead of chasing investors.
The startup I'm at did both of these to good effect.
You'll also notice VCs perk up once you've told them you managed to pull that off.
Is this really a good idea? Not judging, just stirring the thought-pot.
If you aren't really certain of success, then causing friends&family to invest and lose money is much worse than shutting down, that's outright evil. There's nothing inherently good or valuable in the survival of a business - your business surviving is good if and only if it is a valuable, profitable business, and if it is not, then it's wasteful to throw good money (especially good money of people who trust you) after bad. And burning all your personal relationships by acting in this untrustworthy manner to your friends&family has worse long-term consequences than burning a startup.
A lot of friends/family could get you a lot of smaller investments which could add up.
Also, just because privilege exists doesn’t mean you shouldn’t use it if it does, for you; if the option is between the death of your startup or calling in some favors, the latter is the one you should take (assuming your bet in the startup is correct, but every founder tends to think it is, heh).
You’d be surprised how many in your circle have waaaaay less money than they let on, like orders of magnitude less.
I just mean that even then, I knew some people who knew some people that had some money.
If you get to know the person more, you can actually know/guess. Usually, it's a redflag that deviates from what their standard is. (ie: A big purchase, having significant instruments that are only accessible to privileged people, or struggling to pay a small a bill when they have an expensive car)
It wasn't my startup, but I was the third employee of a small startup which we had to shut down despite having a few hundred paying customers after failing to raise money. In our case though it was clear the business wasn't financially viable. We would have needed something closer to ten thousand customers to have broke even.
In your case 100k monthly users seems like quite a lot. You'd only need to be making a few dollars per user to have a decent amount of turnover. I'm guessing this is free service or something?
100.000 users are impressive, but we don't know what the plan for monetization is. Is it ads, data mining or just a straight up you give us money, we deliver a service? What's the cost per user, both in terms of operating costs and acquiring?
If the plan is to run ads, then maybe forget founding for now and run it as a fun little side project. Then add an option to people donate whatever they feel the service is worth to them. Donations could be a way to keep the thing going until the economic situation changes or until you find a subscription model that will work. Most people won't donate, but then again, so will donate much more than you'd have been able to charge them.
It was a lot easier to sell a profitable company than raise funding.
You have an asset, even if it's not profitable. For us, we were able to attract the target market of our acquirers cheaply. We'd get a paying customer for cents, while they'd need about $5 of advertising costs for the same customer. So you could probably sell yours as a marketing channel.
2. Primary goal was runway, or rather paying our salaries. Loans make it... complex. We'd have accelerated growth, but it would still be in that spot of not feeling right about paying our own salaries. If we had to take a job and do it on the side, it would basically be game over as we couldn't have the focus to grow the startup.
3. Loans put a lot of pressure on profitability. For context, we were a recipe app that sold ingredients. First stage has us take about 3-7% margin, but it was all handled by a partner. Second stage had a 7-30% margin, ops handled internally. We were going for manufacturing of ingredients at a 50%-90% margin.
However, that would have locked us far away from being software based. We'd have to start selling to pharmacies and such to make up for the minimum order. That kind of messes up the company DNA.
The ideal end goal for a startup isn't really to become FAANG. That has its prestige, you call yourself a billionaire, and yet all your money is tied up in stocks and you can't really spend it. The ideal end goal is to make something valued at a few billions and sell it to some company that makes like $10B/quarter. Most of those large companies don't have the DNA to hire people and get high growth.
So the irony was that taking loans would make us less attractive to VCs. We'd be a small-medium business group, which is less ideal than just taking a job at a Fortune 500 or something.
how many monetized?