Ask HN: idea for a startup, how important should be the path to revenue?

If you don't have an idea yet, why are you refusing job offers to start a yet-to-be-determined company?

Anytime someone asks "What kind of business should I start", the correct answer is none. You should continue learning, working on things and find your passion. That passion will create an undeniable pull that will lead you to starting a business you'll stick with through good times or bad.

hey gilbax, from what i have read/realized, successful startups don't aim at building the world's best business model... u build the model around your product... i think if your product is good (it solves a pain), your customer's will buy it... so.. focus on getting a kick a*s product out... and don't just try to build something just becoz you want to do it... build something that can actually solve the pain of a million people... and it will bring revenues in before you know it :)

There's a short and pat answer, and there's the longer and more thoughtful answer.

But the short version is this: businesses fail when they run out of cash. Period. Keeping that in mind, we can logically conclude that you need either to monetize before the cash runs out (thus becoming organically cash flow positive) OR gather enough outside funding to support operations until such time as you become cash flow positive.

How do you get there? Well, ideally, you have a product that solves a clear need which can be monetized immediately. If not, then you need a product so compelling that you can get to X users in Y months (where X is an impressively large number, and Y is an impressively small one) -- thus attracting partners or investors.

But the bottom line is that you need to generate cash flow or generate funding as quickly as possible.

And yes, generally speaking, it's easier to keep a "fun" product alive in the Valley than it is elsewhere, if only because that's where most of the funding money resides, and because many of the potential funders there have more speculative appetites. Your odds of getting a cool product without clear monetization paths funded outside of SV drop significantly. That's not to say, of course, that getting a cool product funded in SV is easy, because it's not. You still need a good product, and by "good," I mean a product that solves clear needs for its users or else provides its users with functionality or utility that solves problems users didn't even know they had.

Best advice for you is probably to take a job at a startup or larger firm, and build some cool products in your spare time. If and when one of those products becomes extremely cool -- and you'll know it when you see it -- that's when you start looking for users or for funding. No sense in turning down job offers now on the purely hope-driven premise that you'll build or invent something later. Build first, -then- act.

A lot of it depends on your goals.

Are you wanting to build the next reddit, google or Facebook? You'll probably need VC money to do that.

Are you trying to build a lifestyle business that pays 20-30k the first year and could grow after that, skip the VC money and go after a small niche product like Bingo Card Creator. For this you need to monetize earlier than with a VC funded type of startup.

The business you build will reflect your goals, so work backward from them.

As always, advice is situational, and so it will contradict. The idea is to apply the advice to your situation and don't forget to do a gut check to see if something feels right.

Get a job to put your skills into practice and also know better the market.

As somebody who just got our of school a couple years ago, and is trying get a startup of my own rolling, I have a few bits of insight. First and foremost, I'm not sure what your CS education was like but if it was anything like mine it was mostly useless. The vast majority of skills/knowledge I apply to development and design now were self-taught or I have picked up working as a developer for somebody else. It's easy to ready tons of great articles about practices, methods, etc but until you get your hands dirty and code some stuff that gets real world usage you may be at a disadvantage. For example, things like enterprise-level security practices, planning for scale, having redundancy and fall-backs in place are easy to envision and 'think' you planned for but until you are actually faced with a situation where those things happen you aren't fully prepared. My advice: score the best-sounding full time job you can get and see some live internal tools, business practices, backup processes, etc. Nothing says you can't code your dream product in your free time while still getting exposure to a real, working product/business (and making money to throw at your startup as well!)

Depends on your product. A 37signals strategy would be to bootstrap it and charge for your product (works well with b2b). Or do what Facebook initially did which was start with no monetization strategy and scale it. I would say if you have a great idea in mind that you feel can drive millions of users to use your web-app, do not charge for it and raise money.

In general, ideas without early paths to revenue are riskier (but have higher upside). Just because they don't have an obvious path to revenue doesn't mean their isn't one. For example, if you created a fun/viral facebook game, you could probably find a way to make money. But there are famous examples of high adoption startups that failed to monetize (recently: Xmarks).

It sounds like you enjoy products/coding more than you enjoy businesses. Be careful here- Every month that passes in your startup's life, you'll be spending LESS time on user-facing product/code and more time on marketing/sales/support/hiring/etc -- all of the things that fuel and sustain growth.

It's not a business without revenue, it's a hobby. If I were you, I'd look at lucrative niches and find out how you can do it better or cheaper or just as good and just grab some market share.

As a graduate of CS, you have a mind that functions in a unique way. If you set your mind to water delivery, a dry cleaner, or real estate, you would likely approach it in a way that few of your competitors do. Capitalize on that.

If you have to 1. create the market and then 2. create a business on top of it, you are making twice the work for yourself.

Go for the job offers. I guarantee you'll find several areas that you'll find could vastly do with improving and ideas will come flowing in. Learn why they need improving, and build something to improve them.

If you have to think of a problem to solve, you won't know if you're solving it unless you've dealt with that problem directly.

The sole objective of any business is to make profit. How a business gets to profitability depends on a lot of variables, but the end goal is always to make profit.

Ergo, since you can't make a profit without revenue, your path to revenue is of utmost importance and should be one of the very first things you consider.

Definitely focus on revenue. That way you work towards building a profitable business from day one. If you focus on 'money later' you are in effect first building a user base and then trying to monetise it. Just because you succeed at the first stage does not mean the second will be a breeze.

Also, keep in mind that a startup is really an experiment. Every day you should be learning something new and tweaking your business accordingly. By focussing on revenue you start learning how to make money from the beginning. If your initial focus is on a wide userbase, then you learn nothing about the money-making side which is likely to be very different from just getting users.

Do you really have plans for both paths you talked about? Doubt it. Do you have what it takes to execute that plan? If you do have a plan you think can execute to generate revenue from day one, why don't you test that out? It probably won't work out the way you think it would. Meanwhile, be careful rejecting job offers outrightly. If you do have a choice in jobs, look for a place that might allow you to sharpen some important skills you think you need as an entrepreneur (preferably get into a startup). A job might be important especially if you've never shipped anything and a CS degree might not teach you those practical skills.

Since you just graduated, GO FOR IT!

We only live once.

Whining version - there's no kids and family to support now, no house to pay, no car to pay, etc.

You know you can always get a job later on if things dun work out.

My advice:

Start with something that generates revenue. This will give you experience with making money. It will give you experience completing a project. In other words, it will give you a track record.

A track record will help you attract people (co-founders, investors) to your next idea (or to your initial one). Revenue will allow you to pursue other ideas or expand your first business.

However, don't take any of this as advice to start your own company in lieu of taking a job.

Unless you have a personal financial runway that you can / are willing to burn through or investors lined up, you should focus on the revenue-oriented ideas otherwise you'll simply run out of capital.

When you are deciding what your venture should be, I try to think about risk vs. reward ... make sure those "fun" (read: risky) projects have the potential to be home runs, otherwise it is a bad investment of your time and effort.

I would probably think about it terms of how many people would/could use it. If a million people use your product, monetizing it wouldn't be too hard to figure out later.

Haven't spent a lot of time thinking about enterprise stuff, so maybe this doesn't apply to that type of business.

If you have ideas for both path, List them all and assesss their potential for growth and demand. Pick the one which scores better in both metrics and start building it. You will come across many issues to solve, one of them probably be cash.