"Even if you have 100,000 users and 1,000 pay for your paid account. If you charge $10 per month, you are still making only 10k per month, barely making the salary of one person. No one will invest in a company like that."
If I have a side project pulling in 10K a month, I don't really care if nobody wants to invest. I've already succeeded.
"highly paid" is relative. $10k/month in San Francisco is an average programmer's salary .. Once you deal with the realities of a business (unemployment insurance, health insurance, payroll taxes, franchise taxes, income taxes, cell phones, internet, hosting) it's not really a single FTE's salary in say SF, Seattle, or NYC.
It simply isn't true that $120k/year is the average programmer's salary in SF. That's near the high end of programmer salaries, especially if you're young (programmers in their 20s rarely get >$90k).
There are plenty of programmers right out of college making low six figures. Of course, there are plenty of programmers in SF and SV; these are just the good ones.
If you want to live a programmer's lifestyle in San Francisco, then by all means keep your programming job.
For my part, I decided that not having to enter comments into a spreadsheet marked 'Game Changers' was well worth a 75% pay cut.
The 'realities of business' are not expensive for a sole proprietorship, if you are frugal. At $10/k a month, I could live like a king.
Assuming lead time is less than a year and the profits are already significant both of these options can grow extremely fast. However, just because you can pay someone a reasonable wage to do what you do does not mean it's profitable. It's easy to throw a lot of time and money after a bad idea that only seems to be working.
So if the little website that takes text you type in and gives you a URL that has that text shown REALLY BIG is now defined as a Startup, what should the rest of us with real businesses call ourselves?
what should the rest of us with real businesses call ourselves
If you were using traction, I would find more agreement with you. On feature, you can make a lot of startups look like POS.
- twitter is an inputbox where you write some random crap about you
- facebook is a freakin ugly looking profile page
1. If you couldn't tell, those are what facebook and twitter launched as.
2. May be you should be figuring out how to make your "real business" as big as twitter and facebook? Of course, you'd hate that and you'll claim you are happy to be running what you already have. So are the tiny startup dudes you seem to be railing against.
You have a very narrow sense of what constitutes a "real business" or a startup...which is totally okay because it's just semantics. It's just not worth getting bogged down on.
The scale of a software business can be anything from "Hello World" to Microsoft. The little one-day "startups" that we see here every day exist in a tiny sliver all the way to the left of that spectrum, near zero. The "Real Business" part is everything to the right, on out to infinity.
The tone of your post smells of too much hate. You sound like someone who could write a cool-headed post explaining when you think startups should try to raise money and when they should just enjoy the passive income from a weekend project.
Also, don't forget the biggest hit of this decade(facebook) was a college kid's side project just some years ago. As was twitter. And many others.
"Also, don't forget the biggest hit of this decade(facebook) was a college kid's side project just some years ago. As was twitter. And many others."
Facebook was a weekend project long before it went to raise money. It wasn't merely a weekend project trying to raise money.
Twitter wasn't a college kid's side project. It was developed by Odeo.
Indeed, the "biggest hits of this decade" seem more to be weekend projects that evolve from that, and then seek funding, rather than weekend projects that remain that, and seek funding.
And while his tone does come off somewhat harsh, I think the message is still a good one.
If he is arguing that many or most weekend projects are seeking funding, he is setting up a strawman. I don't think most or many weekend projects seek funding, especially ones posted here.
Facebook was a dorm room project, which you could argue originally fell into the 'non-startup' category. There are many, many examples of how your vision at start may be entirely different than where you end up, and its often difficult to see how that path looks when you are standing at the starting line. "Stuff happens" when you execute.
Also, the quality of a start-up should not be measured against scale potential. How a VC sees the world is deeply influenced by their own goals of 10x returns. A cynic might say that VC's promoting this view do so to produce more fuel for their business model.
This raises an interesting question actually.
What works better, scratching your own itch (hobby project) and then putting a business idea around it (e.g. http://www.couch.io/) or putting business first? I think some VCs might prefer putting business first.
I suspect the prior works better but may need some patience. I have a bunch of projects in various stages of completion and now I am working on (enjoying!) something new and hoping to make it useful.
IMO make-something-useful and then bother about business should work better, but then I haven't made much using this approach yet.
*A company to make money based on advertising has to be able to reach a very large audience. Do you think that your application that your geek friends like is going to be like that? If not, forget the “ads” model.8
Is this actually true? It would seem to me that ads could work for a small, but focused web site, because the ads could be targeted really well.
The weekend project is a good way to find out what it takes
to work a project from start to finish. Then when you get a
group together you have already been-there-done-that once before, just on a smaller scale.
If I have a side project pulling in 10K a month, I don't really care if nobody wants to invest. I've already succeeded.