Re:Applications open for winter 2009 YC funding
by SwellJoe on Saturday July 05, 2008 @04:07AM
(#236807)
I'd like to add an agreement as well as a counter-point.
It's possible to sell software and chase the dream of a big exit. But, it's a different mindset and a different model, and you cut off some of your possibilities when you choose one or the other. If you build software with the intention of making it profitable within, say, six months, you will make decisions that work counter to making a sale to Google or MS or Yahoo. First thing you'll do that makes a sale to a mass-market consumer Internet company less likely is you'll charge money for your software and thus cut your userbase by an order of magnitude, if not more. Free stuff has tens or hundreds or thousands of times the number of users. I know this to be true because our commercial offering has a little over 1000 paying customers. I know, that's awesome, right? Until you learn that our Open Source software has X million users . I have no clue exactly how many users 12 million verifiable downloads, plus countless downloads from mirrors and other sources, means in real living, breathing, users...but it's certainly more than one million and probably less than 12 million. Makes our 1000 paying customers look like a bad joke. But, when it comes to being acquired by the big guys, 1000 paying customers is nothing...X million users is more interesting to them, by far. And, of course, I should point out that not everyone with a startup has the option of following both paths--we were "lucky" enough to have been working on our Open Source products for the past 10 years or so before deciding to make a business and a commercial product out of it.
But there's more yet to the story. When you have revenue...at least, revenue of a certain level, say, $1 million annually, you are no longer at the mercy of investors or acquirers, and you're more likely to find that you can call the shots in raising money and in being acquired. You may not be acquired by the coolest company in the world, but there are an awful lot of companies out there that would like to acquire a software product that makes $1 million a year, even if it's only serving 1000 paying customers.
I don't think maxklein or I can tell you (the figurative "you" that is applying, or thinking of applying, to YC) what kind of business you ought to build. But being aware of the extremely wide range of possibilities for funding, growing, and making money from your business is absolutely mandatory if you want to come out the other end of the process happy and feeling like you got your time's worth.
It's possible to sell software and chase the dream of a big exit. But, it's a different mindset and a different model, and you cut off some of your possibilities when you choose one or the other. If you build software with the intention of making it profitable within, say, six months, you will make decisions that work counter to making a sale to Google or MS or Yahoo. First thing you'll do that makes a sale to a mass-market consumer Internet company less likely is you'll charge money for your software and thus cut your userbase by an order of magnitude, if not more. Free stuff has tens or hundreds or thousands of times the number of users. I know this to be true because our commercial offering has a little over 1000 paying customers. I know, that's awesome, right? Until you learn that our Open Source software has X million users . I have no clue exactly how many users 12 million verifiable downloads, plus countless downloads from mirrors and other sources, means in real living, breathing, users...but it's certainly more than one million and probably less than 12 million. Makes our 1000 paying customers look like a bad joke. But, when it comes to being acquired by the big guys, 1000 paying customers is nothing...X million users is more interesting to them, by far. And, of course, I should point out that not everyone with a startup has the option of following both paths--we were "lucky" enough to have been working on our Open Source products for the past 10 years or so before deciding to make a business and a commercial product out of it.
But there's more yet to the story. When you have revenue...at least, revenue of a certain level, say, $1 million annually, you are no longer at the mercy of investors or acquirers, and you're more likely to find that you can call the shots in raising money and in being acquired. You may not be acquired by the coolest company in the world, but there are an awful lot of companies out there that would like to acquire a software product that makes $1 million a year, even if it's only serving 1000 paying customers.
I don't think maxklein or I can tell you (the figurative "you" that is applying, or thinking of applying, to YC) what kind of business you ought to build. But being aware of the extremely wide range of possibilities for funding, growing, and making money from your business is absolutely mandatory if you want to come out the other end of the process happy and feeling like you got your time's worth.