March 22, 2019

Need advice for next steps.

I need some advice on next steps for the startup I've been building over the last 6 months.

I'm going to expose some internals and try to be as open as possible here so hopefully at least someone else learns something positive here.

I'm not a new entrepreneur. This will be my 5th company. 3 have been moderately successful. The 4th is still in business but it's more of a lifestyle company.

The 5th though is the 'big idea' that I'm most passionate about now and think it has legs.

However, it has some significant challenges ahead which I'm unsure about.

I wanted to keep this anonymous as I don't want our user base to read this and become disheartened.

First, some brief history.

I've been building it for about six months and we've launched an MVP and a couple main iterations.

It's a document collaboration platform with some unique and compelling features which aren't found in other products.

We have some VERY passionate users. Many of our users say that it's changed their life and that they would pay for it and that it's very very important to their work flow.

We've been polling our users using the Sean Ellis method and we're scoring about 35% (40% is MVP fit and something like slack loyalty). It's been slowly going up and was about 32 just a few months ago.

Here are the challenges we face though:

  1. The model lends itself to freemium. In this space there are a ton of free products and consumers are accustomed to free. Think Evernote or OneNote. This puts us in a tough position as we have to have a VERY robust product and it must be used by the users for a long time before they're willing to pay. This process is going to take another six months.

  2. Customer acquisition is going to have to be done via SEO or app store optimization. This doesn't happen over night though. This process is going to take another six months.

  3. We could do paid acquisition but since the app is freemium and not all users are converting yet it's going to just be a waste of money now.

  4. I made a huge mistake by focusing on a desktop app and not building a webapp instead. This really hindered our growth and in retrospect is the biggest thing I've screwed up. It prevents users from easily using the app and also means viral growth via SEO isn't really possible. I've now resolved this issue and ported it to the web but it seems that we're starting from scratch.

our user stats aren't horrible but aren't amazing either.

We have about 500 active users and about 5000 MAUs (monthly active users).

I think at this point we're essentially out of money.

I've been basically funding this by my self and working on it as my side project.

I don't think our numbers are amazing enough to encourage VC to invest and if they did we would take it on the chin in terms of valuation.

... so here's my plan for the next stage.

We have a new version of the app which is a webapp + chrome extension which I think will solve #4...

The plan is to launch it on Monday and try to focus on SEO + getting reviews from app review sites and news sites.

This isn't a ton of work and might end up with say 10-100k users checking out the app - which might be amazing since it's now a webapp.

I'm going to capture their emails and maintain the ability to stay in touch with them.

Then, in about 2 weeks, I'm going to approach our users about raising money in more of a 'kickstarter' fashion and encourage them to buy the vision and use our current progress as metric to how effective we could be with the right funding.

I think the user base could be able to fund us to $50-150k which would get us a solid 3-9 months.

I've been polling our user base and it seems that the average user would donate about $25... With our current user base I think we could conservatively get $20-35k but if I can get the fundraising to go viral I might be able to raise more. I have some ideas for a video which I think I could make go viral.

This would at least keep us alive while we:

  • keep working on PMF
  • hopefully prove out our revenue model so we can get to Ramen profitability
  • can focus on growth including SEO, app store optimization, and adding more viral components to the product

It would also give us time to maybe raise money as a non-profit and go after grants from orgs like the Sloan Foundation which take from 3-6 months to complete.

... Thoughts here?

  1. 1

    Hey :)

    There's a lot to unpack here.

    Do you have any concrete questions/challenges you want advice on?

    What's your biggest worry/challenge right now?