+19

too focus on money making in early stage

lu chen pin 3 years ago • updated by Muz 3 years ago 22
Many mentors and investors like to tell entrepreneur to identify the money making element, that kill a lot of innvotive ideas, and make Malaysian's startup to only focus on the same business models, or copy from another workable idea.
+3
Personally, I think startup are not only about making money, it is about growing fast, constantly disrupting the big boys while making money to stay alive.

I think most of the mentors & investors are looking at a traditional money-making business rather than a tech startup.

Can you imagine Facebook or Instagram start accepting monthly fee, display ads and sponsored post from day one? Will you (as a consumer) even try the service/ product? 

+5
I don't see how identifying how to make money or making money early will kill any innovative ideas, in fact making money is the clearest indicator that your startup is making something people want. You have to know on Day 1 how you can make money. Down the line you might change how you monetize but like it or not you need to make money ASAP.

Why? Because 99% of the early stage startups out there are self funded. Don't be fooled by those well-funded startups out there that say things like "We want to focus growing our userbase first". They, the 1% are backed by millions of dollars of funding. You? Probably your own bank account.

Pinterest, Instagram and a few others are the few exceptional cases. But even they are not making any money, they from day one know how to make money.

It's never too early to make money but it might be too late to save your startup when you starting to run out of money. That IMHO is going to kill many innovative ideas.
-2
Forget about making money. You don't know what it is, you don't know what it will be, you just know where it should be.

Wait till people knock your door.
+2
Couldn't agree more on Matthew's sharing. No investor will invest to a startup which doesn't have a very clear business model. IMHO, they are not our father/mother, investors are looking at how much return they can get if they invest.

http://digiday.com/platforms/how-eduardo-saverin-sold-facebook-ads-in-2004/
This is Facebook's first pitch deck in 2004, inside the pitch deck you can see that just two months after launching, they already have 70,000 users at 20 major colleges and going to expand to 200 colleges in six months. They also mention that they are going to make money by showing banner ads.
-1
Focus on creating value that will change the world, not how much money you can make for your investor.

i always believe this - Do good, have fun, and money will come, Richard Branson said this.

Agree we should creating value that will change the world. But let become a little bit more realistic.

"It's never too early to make money but it might be too late to save your startup when you starting to run out of money." - Matthew Phiong.
+2
It's positive to think that way, get inspired by those successful entrepreneurs but keep in mind that we are not one of them, at least not yet.

I'm talking about the 99% of us here. Lets say you and Richard Branson have the exact same idea, same pitch. Who will get investors invested in them?

Money (including investors) will not come without a clear business plan. Put it this way, how are people going to pay you when you don't even know how to charge them?
-2
Put it that way: How you, your people and your investors are going to know what you are charging while your user don't know you? 

If we are expected to sell faster horse, instead of doing cars, i think it is OK. What's not ok here is that you people expect others to sell horse but in reality want a car. And this same kind of mentality just repeat again and again. As a Founder, it is my duty to tell people to face the honest problem that we don't yet and we are keen to figure out. 

Unfortunately, there isn't much people here who want this reality. But surely there is like-minded people out there. Find them become the Founders' responsibilty. Get out and find one.
+2
I want to create a car to replace horse. (Just a idea, and car didn't exist yet)

I want to create a car to replace horse.
This is how the car look like, got wheels under the car body, and with this design mechanism, it can burn the oil to energy to move the car. (How it work)
There are x number people are riding horse, and increase y percent yearly. They may replace horse with our car because faster and can travel anytime as long as the car has fuel. The house need to rest after few hours. (Potential market size and competitive advantage )
This is our cost to build a car and target selling price. (Business plan with clear business model)
Now, I need z amount of money to achieve this.

Do you understand the different between "i want to change the world" and "i want to change the world, this is my business plan" now?
-2
Here is your "i want to change the world, this is my business plan". 

This is how the car look like, got wheels under the car body, and with this design mechanism, it can burn the oil to energy to move the car. (How it work)
There are x number people are riding horse, and increase y percent yearly. They may replace horse with our car because faster and can travel anytime as long as the car has fuel. The house need to rest after few hours. (Potential market size and competitive advantage )
This is our cost to build a car and target selling price. (Business plan with clear business model)
Now, I need z amount of money to achieve this.

Here is how Benz (the first automobile) did it. He improved the engine first, making it reliable for his wife to ride the 106km to her's mother home. And Bertha didn't inform his husband before taking the ride.

And exactly what General Motors did with your plan. They launched EV1, planned to replace or at least to partially replace oil powered car. There are X number of oil powered car, and sales increasing Y percent yearly. The response from public is good. It has Z more traveling distance. Compared to cars, it has potential market size (California starting to ban oil powered car), competitive advantage (longer distance), and GM is targeting to lease it out (business plan with clear business model).

Now, They lost $1 billion.

When we say about business plan, we really have a working one. It merely describe, not planning. Schools would have taught students to plan, organise, lead, control. One successful entrepreneur  disagree and told me: Act, Strategy, Target. We need to act first to get feedback, then formulate our strategy, and finally our target. 

Go to change the world first. Forget your business plan.

Again and again, I am feeling I am the only one who told story after story. Now, it's your time to tell me stories.
+1
What I've said is based on my own experience.

Since you want stories, here is one: http://www.fastcompany.com/3032341/most-creative-people/this-startup-had-over-5-million-users-and-a-great-product-then-it-folde

"We built a heck of a product, but we didn't build the business."

You can have a great, world changing product, millions of users but at the end of the day what matters is the money to keep your startup going. Springpad has $7.3M in funding but still ended up in deadpool. This shows the importance of making your own money to keep your business going. They made money but not enough to sustain their business.
-4
Since this is not the first person source, and there is no cost figure provided, it is a lot of guess work. I can have my own guess. Maybe they enter into Mobile too late? Or they seems to be confuse about their money? Maybe they thought of acquire hire in first place? Or maybe all of them. It's just guess.

There are a lot of post mortem, some with figures: http://www.theverge.com/2013/11/5/5039216/everpix-...

There are different things in business.

But frankly, I am just not interested in posting anymore. Man, I am just too damn tired for all this shits.
As an entrepreneur, I remind myself to learn something new everyday, no matter it is sales negotiation skill, business partnership development, marketing or new programming language. One thing I learned and I feel this is most important thing entrepreneur should know which is listen to other people suggestion. You should appreciate to those people who gave you advice, because they don't want you repeat the mistakes they did before.
-5
I will just reply this with a laugh :D

You are welcome and good luck :)
+2
How you, your people and your investors are going to know what you are charging while your user don't know you?
If you don't even know what you are charging (for) or roughly how much, then you probably don't even know what you are doing, your target users and markets.

Also, users pay because of what you offered, your product, and not you... maybe few of them do like your friends and family members as a token of support. But if really they pay because of who you are then you must be as popular as Justin Bieber.

My whole point of argument is that you don't have to have a perfect business plan from Day 1 but you have to know your plan/model, how to charge for your product and how much roughly especially for SaaS products. Then start charging as soon as you ship a "chargeable" version and change the pricing/model base on user feedbacks/markets/competitors.

If what you are doing already existed in the market (99%), look at your competitors and if you are doing something revolutionary that has yet to exist (1%), then set a reasonable price based on the cost, etc... then go to your users and ask them.
I agreed with you on your point. 

However, we need the communities, government, and investors' support to allow entrepreneur to be extremely crazy about making a difference, see and think beyond the future, be truly innovative,... than just copy a money-making products from US, Japan, Korea, China, etc, such as another group-buying portal, online shop, taxi booking system, etc.

Malaysian need to be crazy enough to innovate.


-3
Oh, yup. We want innovative, we want originality. Yes, we want startup that can making a difference, see and think beyond the future. Oh yes, and we expect them to make money too.

Startup need time to tell and to see what is going to happen. In the meantime we want people to make money, demand the same standard as everyone else and let others impose the same demand to everyone else. We want contradictory things.

If we are expected to sell faster horse, instead of doing cars, i think it is OK. What's not ok here is that you people expect others to sell horse but in reality want a car.

I seems like Tom Cruise's Edge of Tomorrow. :D Repeating, repeating, repeating.
-6
Knowing what is making money and acting on make money is totally two different thing. We might know how the money making by watching our peers how they did it. What we might not know is whether it is suitable for us or it is the way to the future. Precisely Facebook didn't follow their "Ads" model and wait till they figure out how to really make money, which is utilising user's data to show information "targeting" instead of purely showing banner, Facebook triumph over MySpace which is told by News Corp to utilise their webpage to put in as many ads as possible.

Without a base and vision, there will be no way to see where the money coming from. From the on start, Mark has an vague idea of creating the digital phonebook for every single man and woman in this world, connecting them. He merely work his way and clarify things by testing them out. "Ads" is not important, but data is. This is where the money comes and now everyone see it. By targeting Ads, information become useful. The real selling point is user's data, not Ads anymore. In contrast, MySpace sold out pretty early, and the business comes in. Instead of testing things out, they just merely putting Ads everywhere, crashing browser and droving users to FB.

Being told by so many people to have a business model that makes money, you are 1) Committed to your promise; 2) Directing your focus to something else; The 1) consequence is that you now need to be accountable for your promises which will be self reinforcing while you are still in your growing stage. This also makes 2) your need to focus on business side which might is not the right time to do it. By taking away your focus from the people and the product, right now you got two burning headache problem that requires your attention. And when you don't deliver, 1) will come back to haunt you, making 2) an almost impossible mission. Even if you do deliver, there will be self-reinforcing cycle that divert you to a path that is not right in your stage. This is why as founders, it is more important for us to sense the wrong thing. Once there is a smelly rat in the corner, we just need to avoid it. But if we are into it, make sure we get ourselves out of trouble fast. 

And indeed, I have repeated my stance again and again. I smelled rats in this corner. The primary dying cause of startup is not running of out money, it is running out of passion. And together with the wrong enviroment, even passion will get dimmed by people who repeatedly told us that we are not going to succeed. "It's never too early to make money but it might be too late to save your startup when you starting to run out of money.“, this is precisely get us all into the trouble in the first place. People, if asked, will they invest in a business that will not get their return in 5 years, they will say NO. Me too. And BUSINESS IS NOT STARTUP. My internal return for any business I invest is 20%~30% per year securely, my friends is even higher, 60% per year. If we got a scarcity of resource, startup that provide 0% and might require continuously pumping money is a CRAZY choice compared to my others business investment. Precisely WE ARE CRAZY and we actively seeking out those who are as crazy as our. This is why we are doing startup.

People need to be crazy about the idea. You don't ever compare things in ways that doesn't work for you. This is stupidity, not crazy.
+3
Thanks for your input, but personal attack with "stupidity" will make people won't share their thought to you anymore, thanks.
+2
A business is only as sustainable as the propensity for its users to pay. No revenue = no business.  I agree fully with Benson Chang. 
The focus shouldn't be on making money, but making revenue. Investors love companies that are burning money but making big revenue. Revenue means that the market is there.