Comment by ezl | Hacker News Reader

Comment by ezl | Hacker News Reader

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1. If you're contracted out your dev work, do you mostly work as a manager, ensuring day-to-day operations?

I spend my time doing marketing and bizdevy stuff. However, I'm still really involved in any major development efforts, we regularly at least 3 times a week discuss code, I still contribute code, and we often pair program.

My contracted developer, Henrique, is really not just a "contracted developer". He's a CTO caliber amazing architect and I consider him a partner in the project.

The current codebase is the 3rd-ish iteration on the same theme. The first and second iterations were built primarily by me, so I had a pretty good sense of how I wanted everything built for the future (incidentally, my "pretty good sense" was totally garbage, and if i started over again, it'd be totally different... again...)

Even the early versions of the current iteration were largely a collaborative code effort between me and Henrique, either hitting milestones by "divide and conquer" or by pair programming.

As the product began maturing, I have been slowly shifting away from code to marketing and CEO/CMO-y stuff. Basically, I am not good at being a heavily involved CTO and marketing. My perspective here is that development CAN be outsourced, though it may not be easy, but good marketing and bizdev can NOT. However, we try to be analytics driven, so Henrique is also deeply involved in the marketing and analytics, but we just have a focus on our own individual domains.

2. Looks like you're now making a profit but a really small one... for May 2013: $5660 - $2377.23 - $1808 = ~$1500, is that right?

Correct.

3. Sounds like your revenue vs costs/expenses scale linearly as well, but more business = more margins, is that right?

In principle, I can squeeze out a little more edge once I get to bigger scale, but there's a floor on the cost of reports, so I'm more interested in growing the audience size than optimizing the costs here. I'm also below the threshold where reporting companies really want to cut me breaks, so I'll have to wait a little further before that.

The "cost of reports" component scales linearly, but I expect the fixed costs to be pretty static for very large ranges of total users/applications. It'll be stepwise-ish, but I'll probably flat until at least 10x more sales from here.

Shoot, I got excited yesterday when I saw that ~1500 number. I remember thinking "wow thats more than I think I'm making...

for May 2013: $5660 - $2377.23 - $1808 = ~$1500, is that right?

I was wrong. This is incorrect. the 2377.23 is the sales - the cost of reports, so its

    +$5660   Total Sales
    -3282.77 Cost of reports and stripe transaction fees
    -1808.08 Trailing average monthly fixed costs
    ---------------
    ~570     Leftover to the business

Which makes the "breakeven" calculation in another comment even more dismal, at something like 180 months assuming no growth. Yay!

However, the real growth trajectory is probably between 0 and the trailing history that seems to be adding about 600/mo.

If I linearly add 600/mo to my gross profits, the breakeven will happen between about 17 months from now.

I have no delusions that i have any ability to predict the growth trajectory though, so for now my plan is "keep doing anything I can to grow it as fast as I can".

  > Looks like you're now making a profit but a really 
  > small one...

Eric, at what point will you as the sole investor start making a profit, assuming steady growth, etc?

oh man, i don't have a good answer for that, but i'll give you the next best thing -- a bad answer. :)

I don't think its fair for me to assume steady growth at my previous 4 months trajectory. I would love that, of course, because, uh, i like money, but it seems improbable.

So the next best thing: last month, RL made ~$1500.

I try to track every dollar I spend, so I just grepped my expenses sheet for every dollar ever spent that is tagged with RL.

$95,225.20

So, at 1500/mo, I'll break even in 63 months, assuming a cost of capital of 0%. :)

However, that number is really tagged based on what my accountant tells me is valid for the purposes of IRS reporting -- meaning, whenever I have drinks or dinner with other founders and we talk business, marketing, strategy, when I park in a parking lot and have to pay a fee, purchases that can be attributed to the business, etc. so the total invested number is probably non-trivially lower than 95k.

From the looks of it, he is making a profit... just that he's paying himself from that profit so he includes that in the expenses.

Did you go the route of compiling credit/criminal reports yourself, or are you whiteboxing something from a company like Core-Logic?!

RL uses third party reporting companies that have APIs -- so its not quite "whiteboxing", but I'm not warehousing criminal records and creating FICO scores from peoples financial data independently, if that's what you mean.

This is awesome - both the blog post and your product. Thanks for the detailed posting, explanation ... and cool product! B-)

Thank you for taking the time to read it!

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