Tips and tricks for building a startup that makes no money

My first social app grew too fast. Didn’t focus enough on the business model, just lost a ton of money, and had to shut it down. That was probably the lowest point in my life.

Things I learned:

• Do not rely on ads (Google AdMob, Facebook Audience Network) to sustain you. It doesn’t work. I’m serious. “Hey let’s just keep this free so we can grow our user base and we’ll figure it out from there!” Don’t think like that. Charge money. If you’re selling your own ads and build your own ad network, that’s different and what the most powerful companies and best engineers in the world do. If your app is a game, where there are incentives and rewards for watching video ads, that could also work. But on a social network, nobody is going to click your annoying banner or interstitial ad for no reason.

• Try to charge a subscription that sells your best features, while still allowing you to grow. I repeat, charge money. Freemium with subs.

• Don’t overengineer with a bunch of different databases and too many microservices, etc. because this will drive up costs. Instead of paying for an AWS elastic load balancer per service, try just one in combination with something like NGINX and Ingress or just start off small to save hundreds of $ a month. CDN/cache will also help save requests.

• Try not to get lazy and use third-party software when you, as developers, could just spend a little more time to build the functionality for free. What if instead of Algolia, you just did text search in PostgreSQL, the database you were already using? What if you just built your own chat with just a few more tables and websocket instead of relying on Firebase? Save dependencies and hundreds of $ a month.

• Charge money.

Co-founder here. Thanks for the great responses thus far! Very helpful.

Just to clarify on the tech costs aspect, we both have technical backgrounds, and me personally on the backend/infrastructure/devops side of things. When people hear the founders are technical, they assume things will be over-engineered. :-) We have definitely not over-engineered any aspect of the service, and in fact, I'd say we've been very, very careful about UNDER engineering almost all of it. We build things ourselves and/or use open source solutions as opposed to using a SaaS that may provide a feature, but will cost us $. Our time is "free" after all. Our hosting costs are not a concern right now: under $100/mo for the production infrastructure on AWS. Pretty standard fare stuff.

You've built the product and enjoyed the ride on the Coding Train.

Now it's time to pull over, and get going with the non-tech stuff:

1. The Value 🥤

• Write the name and slogan for your app down. The slogan should be catchy and define your app in a nutshell (or intrigue people to find out more)

• define what the VALUE is that your app provides

• write a paragraph or two on why your app is better or different from the others. Perhaps for whom it is intended. Don't talk features, talk value here too. ie:

⛔️ We have a different and cooler GUI

✅ Our Interface is designed to help you share your images faster

2. Landing page 🛬

Put on a landing page which shows the app and (here it is again): its value. Don't go off and code the landing for weeks or even days. Better to have that page done yesterday. Use carrd.co or something similar to whip it up in a heartbeat.

Don't go all crazy on design. Make it look nice enough for now. Don't go crazy on your logo. Make the first version and be done.

Sidetrack: Getting your product out there is the most important thing. Mostly nowadays getting your word out way before even writing a line of code is more effective. It helps you to validate your product by iterating ideas/designs/mockups/prooff of concepts and steer in the right direction. You're past that so i'll stop preaching 😅.

3. Get those first x users 🎣

Get the word out to

• HN

• IH

• Product Hunt

• Relevant Reddit channels

• Relevant Facebook groups

• Relevant LinkedIn groups

Find out where the users of similar apps reside and reach them. Whip out your 📲 and 💻 and call and email :

• local newspapers

• possible users (friends, family, people you know, colleagues,ex-colleagues) and get them to use it.

4. Put out $50 on Facebook adverts.

5. Write content to get noticed ⌨️

To get people to your landing more often than not, people accompany it with a blog and write content for it. If you use Carrd.co you can use a Medium publication and just put on a "blog" link to that. Medium is nice to get some traction.

Post relevant stuff like:

• how your app journey is going

• technical challenges you've been/are​ facing

6. Be patient but consistent

Unless things get picked up and hyped you probably will be facing the road of a slightly increasing traffic amount and user base​. Being consistent​ and finding out where your market is and how you can reach them and show them the value of your app will be the fairy dust that makes your app fly. 🧚‍♀️

PARALLEL stuff 🔀

While doing the things above, make a pitch deck for your app. Not so much for raising money, but it helps you to think about your apps core value, competition (and how yours is better), the market and - more interesting for your question - the monetizing part.

Essentially, it is your pocket-sized​ business plan.

Nice info on pitch deck slides: https://articles.bplans.com/what-to-include-in-your-pitch-deck/

Hope this helps?

TBH: I'm​ not an SEO expert and don't have any hit solutions. This advice is based on everything I've been reading, learning and trying the past 3 years or so from sources like Podcasts, talking to founders and SEO's, communities like WIP.chat, IH, ...

It is a solid route. Its effectiveness lies in your ability to find the best matching market for your product, the effort you put in to align your product with the users' needs and how good you are in showcasing the added value of using your product.

Coffee time ☕️. Wishing you all the best ✌🏻

My advice is to figure how to become B2B. selling ads? premium services? up to you!!

Pretty deep pockets:

article on series a round based on user counts.

https://www.businessinsider.com/10-million-users-is-not-the-new-1-million-2012-8

Here's an interesting article on cost of streaming gangnam style:

https://www.forbes.com/sites/quora/2012/10/29/how-much-did-it-cost-youtube-to-stream-gangnam-style/#73a154be3229

From this you can calculate runway to finance to a Series A or seed round.

or can you make advertising work?

ARPU:

https://www.marketingcharts.com/digital/mobile-phone-104837

A couple of friends I know faced the exact same problem two years back. The idea was that they'll incur some burn in the first couple of months and in the mean time build the ad engine which will eventually become the primary revenue generator.

The problem was that they didn't calculate it well enough. The site blew up and the server costs went sky high. There were several bugs that needed fixing to support retention and building the ad engine got postponed until the burn was too high to sustain.

They tried AdMob for a while, but that ruined the experience. They quickly hacked a freemium subscription model (because that was the easiest to build) but it didn't help much and DAU kept falling. Turns out nobody likes paying for a messaging app.

These are my learnings:

1. Make the complete service premium with a 14 day trial period. Most people won't pay, but at the service won't have to be shut down.

2. 14 day trial period may become 7 or 30. That depends upon your business. You gotta tweak it to know the optimum value. But the general idea is to keep it small. If somebody doesn't like you product on the 14th day, chances are nothing much will change on the 30th day.

3. The pricing should be such that, with X amount of users, the you can breakeven.

4. The number X would be tricky. It'll depend upon the product. As a rule of thumb, I'd go with 100 users. If a social network doesn't have 100 active users, it most likely won't work. It's Stage I until now.

5. Stage III: When number of paying customers become more than 100 and your burn is under control (or you've achieved ramen profit), you can give an extended trial period for your app. Say 30 day, or even 365 days. Since, you've achieved Product/Market fit and you know that users love/like/want what you are selling, it won't be a problem to ask them to use it, and pay later. WhatsApp did something like that in the beginning.

6. Stage III: To scale up, your business will have to generate steady flow of money. The easiest way is to find a business need. Instagram has a Business version, so does WhatsApp. If you can find a business use case for your app, then bingo. You can start charging money and it behaves like a SaaS business. But this can happen only once you've successfully onboarded a lot of users, i.e. passed Stage I and Stage II. Most startups succumb at Stage I itself.

Good luck out there!

I'd like to see the next Instagram, or Facebook, or WhatsApp or Snapchat that becomes huge without any outside finding. All the best!

I would definitely recommend what others here are saying and introduce a freemium revenue model, and as soon as possible. Introducing a monetisation model later always looks like an afterthought, even i you planned it out in advance. And users feel cheated by that.

If users are uploading images, they will be investing time and effort in your app. A trial period puts a limit on that investment.

A free tier would allow them to experiment and see if it's really for them, without rushing. It also means they could later pay for more storage as they fill up their free account, for example.

Your users then become fans and market your app for you.

Some serious questions, @mikefogg

Why are you calling this a social network kind of app? Is it only about the social sharing aspects?

You've alluded to a core value proposition being different - are you willing to at least express the main points of the proposition here?

Can you do a matrix putting it against flickr, pinterest, snapchat, instagram, cluster.co etc. and say what it has that's different?

If the difference is because of a core user group, consider:

1. Is this group big enough to sustain this as a lifestyle business if we got a significant percentage of them paying a small subscription? Can it be a product that lives through a core group of devotees?

2. If you have to scale beyond a core group, do you have a defensible way to do that or is that when you suddenly are competing head-on with flickterestchatgram?

3. Are you vulnerable to just being one added feature on a mainstream app?

I've been through that kind of thinking as I get closer to releasing my own product (and my lengthy comments here reflect personal angst as well as refining my own to-do list!).

good luck!

I agree with your first answer, CHARGE MONEY for something.

I previously helped a developer launch a horoscope app with both content and social functions. He wanted it to be sticky enough on the social side to have strong engagement and good ad revenue. However we also put some content behind very low paywalls, either a one-time fee or a subscription for all of it. A shocking percentage of people paid. We honestly didn't expect anyone to and we just had put prices on some random features and content. Once we saw how many people wanted to pay we got more strategic about what to charge for and make sure it was worth the money.

Ad revenue was supplemental and I don't think you should leave it out either. But it was under 15% of the revenue if I remember correctly.

Most of the early users came from search so work hard on ASO. For search, you can use SensorTower or similar to find good keywords and get them into your title and description. To optimize conversions, AB test with your icon and screenshots even when your audience is small. That can make an enormous difference.

Are the infrastructure/server costs your primary expenditure?

(do you need to pay anyone? pay yourselves? rent office space?)

Infrastructure costs shouldn't be too bad. Start small and scale up (and out) gradually, as needed. Don't jump at the cheapest options, consider a PaaS provider if neither of you have ops or infrastructure expertise.

I'd say you need to raise money, eventually.

In my experience the investors of consumer tech startups don't really care about whatever revenue you might or might not be making initially. In fact, it's usually just a bad thing for them if you successfully bootstrap as it renders them unnecessary. Don't make the mistake of scaring off your potential prospects (users) by putting anything behind a silly payment barrier. And for God's sake don't put ads on it!

For now, I'd focus purely on the release & getting a good growing user base. Your case doesn't sound very resource intensive so I don't think you'll hit any significant size cloud infra bills before you already have a lot of users. And at that point raising money is substantially easier and you have more leverage in negotiations for it.