Ask HN: Struggling startup. What should I do next?
//Background Info
- My co-founder and I started the company 2 years back fresh out of school.
- Both of us are technical, I am handling the frontend where as my co-founder is handling the backend.
- Other than frontend, I also handle the product and business side of stuff and deal with clients.
- We did a localized version of a B2B2C e-commerce web application when we first started.
- It's a very competitive landscape in the US but not so locally at where we are.
- A year later, we realized that the local businesses were just starting to warm up to the idea of e-commerce.
- Unfortunately, our industry is not sexy, hence it's difficult to get funding here locally as there are only limited funds available.
- We do not have any industry experience or networks to leverage on, hence that makes the already difficult fundraising process even harder.
- We kept our company really lean to survive, basically bootstrapping for the past 2 years.
//Present Days
- We have 3 complementary products now, one mobile utility tool and another mobile application.
- Our mobile application is picking up well.
- At the moment we are doing at least $20k per month since we launched our mobile app.
- Still, just the 2 of us after 2 years. We did some hiring but stopped them to keep the company lean.
- We are only paying ourselves to survive as we are trying to conserve our runway.
- Our receivables are pretty bad due to late payment from our clients.
//Our Problems
1. Lack of deep technical skills
We hacked our way through taking advantage of various existing frameworks, plugins etc
Unfortunately this have cost us a lot of money and time wasted because - Our first product is sort of completed but it can not be improved on due to the legacy codes were too messy to be untangled, hence we lost a lot of existing clients because of the lack of improvements. We were thinking of rebuilding it but it wasn't bringing in enough money to make that worthwhile. Of course, this is really a chicken and egg problem as having a better system will help us get more clients or at least have recurring clients.
- Our mobile app is currently built with a js mobile framework that is not exactly stable. My co-founder had been swinging from jquery mobile to sencha to Titanium to iOS and then to the current mobile js framework. These are great tools to get Minimal Viable Product (MVP) version up which had helped us get some initial deals. However, all these switching come with great cost. It has definitely slowed us down in terms of delivering a final/polished/non-crashing version (usable for the client and app store approval).
2. Lack of innovations
A lot of what we are doing right now are just parroting existing solutions in the market. Even if I want to venture into something new or fix what's broken in the industry, it's hard to convince my co-founder to do it. I think you can call it schlep blindness, "unconscious mind shrank from the complications involved"as quoted in PG's essay. My co-founder basically froze at the idea of new initiatives every time I talk about it. Perhaps it's due to the lack of technical skills or perhaps it's due to risk-aversion. I am not sure how to proceed from here anymore. Mobile solutions seem hopeful but nothing we do is revolutionary. It's getting more and more competitive and I do not want us to be left behind. We are only chasing after the tails of others. I find that somewhat tiring and tedious.
3. Competitions
Over the past few months, we have been approached by a few competitors (big public companies who have just setup their regional offices here) and want us to work with them. I take that as a validation that we are doing things right. We are unable to work with them as most of them are looking to get us to stop doing what they are doing or join their team. They are only open to working with us on our latest mobile offerings unless we cease our first product that is competing. We believe that we have a slight edge over their products at the moment (More well-thought and well-designed even just the MVP version). Unfortunately, we do not have the financial muscles to ramp up our dev team or sales team. Our receivables are bad, most of our clients only pay us 6-9 months. With our competitors' big money, very soon they might be improving on their products and will most definitely be ramping up their sales effort locally.
//Questions
1. How should I solve our technical problems?
2. Do you think that there's a need to chase after innovation or being revolutionary?
3. Should we stop doing what our big competitors are doing and work with them on our mobile offerings to leverage on their existing customer base?
4. Is it still worth fighting or should we just call it quits?
5. We have decided against fundraising as it's hard to get good valuation. We might need to give out more than half of the company if we want to go for a seed funding. After all the struggles, it makes it even harder for us to let go of the ownership. Is this stupid?
6. Any other comments/feedbacks?