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    Startups Lesson learnt: Don't build your business on top of a *single* entity (e.g. data provider)

    February 28, 2018

    Startups Lesson learnt: Don't build your business on top of a *single* entity (e.g. data provider)

    Lesson learnt: Don't build your business on top of a *single* entity (e.g. data provider)

    Posted: 27 Feb 2018 07:33 PM PST

    Last week I posted this: https://www.reddit.com/r/startups/comments/7xfb0t/finally_launched_my_startup_after_working_on_it/

    A few hours later, our Twitter accounts were mysteriously suspended.

    Perhaps it was pure chance, or maybe it was something more sinister - I guess I'll never know.

    Anyway, my lesson learnt for the day: don't business your business on top of a single (potentially unreliable) entity - or you could end up in our situation. Kind of obvious, but I guess I didn't appreciate this enough.

    Mitigate, mitigate, mitigate...

    Or, if you must rely on it, read their terms and conditions in incredible detail, ten times.

    submitted by /u/philmcp
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    Building a team

    Posted: 27 Feb 2018 06:43 PM PST

    So I have a start up idea and business plan that will take $500k to launch. While I feel great about the funding, the competitive landscape, and my ability to become profitable very quickly, the one area I am a bit shaky on is bringing in the right people to help me build it.

    The core of the business I feel super confident in being able to run and grow (likely 75% of my revenue) but the other aspect not as much. This secondary part of the business isn't a lost leader from a financial perspective because can still make some money but it is in that its role is to keep people moving to the core of the business.

    My trouble is in finding someone that I can trust to help me build and run that side of the business because it is critical to get right. So this big question is this:

    Aside from just reaching out through referrals of personal connections, are there any resources out there that would be a more graduated version of a job site where you're not just looking for employees, but looking for people with certain industry expertise and are willing to venture into a start up? I'm not afraid of it being a true partnership if it was the right person.

    Thanks in advance. This sub is great.

    submitted by /u/Clash_Tofar
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    Has anyone had success negotiating with Stripe or another payment provider?

    Posted: 27 Feb 2018 03:27 PM PST

    I have a solo SaaS business that's doing fairly well -- grossing around 85K/month. However, because of Stripe's fees, I'm only seeing about 75K/month of that.

    The reason is that the typical 30 cents + 2.9% fee is killing me, and it's the 30 cents that's killing me. My typical customer pays between $7 and $20/month, and for the ones closer to $7, that 30 cent fee makes it so that the overall percentage taken out is around 7-8%.

    I'd love to hear of others' stories when negotiating with payment providers, before I initiate a negotiation discussion myself.

    submitted by /u/bbhSmash
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    How do you answer the common investor question: "But what if Google comes to compete with you?"

    Posted: 27 Feb 2018 09:29 AM PST

    I see this question come up quite a lot and I found it sort of confounding because there appears to be no way to give an airtight answer. Partial defensibility cases can be built around network effects or technology, but this question seems impossibly fatalistic for an early-stage startup.

    It basically poses the question, "If someone with unlimited resources entered the market with the express mission of killing your startup, could you beat them?" The question is tough because 1) this doesn't appear to happen that often, 2) markets worth chasing are large enough to sustain competition, and 3) if this is a legitimate fear, we may as well quit launching startups because Google is going to build everything anyways.

    How do you all approach this tricky question?

    submitted by /u/YoungAdultFriction
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    Hiring a Graphic Design Intern vs. Freelancer (vs. some other less appealing options)

    Posted: 27 Feb 2018 10:25 PM PST

    I have an AR app startup that is approaching MVP on my first app. I'm using mostly cheap/free assets I can find, but branding, logos, and assets leave much to be desired. I have a fairly immediate need of a company logo and app icons, with a longer term need for art to fill my apps. My startup is self funded, so money is tight.

    Since you couldn't tell my art skills from a six year old, I figure I have a few options:

    1) Scroll through my list of friends and find someone with design experience to help me. Pay them, or potentially bring them in as a partner. I'm not sure I want a partner right now, and it gets pretty awkward if you end up not using their stuff.

    2) Shop around for design companies and build a relationship with one I like who can do everything I need. I don't think I'm rich enough for this option.

    3) Hit up Fiverr/Upwork/Freelance/Guru for each of these needs when they arise and cross my fingers. I've had mixed success with these in the past. Obviously there are some horror stories and it's kind of a pain to have to go back for every new asset needed.

    4) Reach out to some of the local universities and try to establish an internship with a design student. I've spoken with some other startups in the area and they've had good success with this. I figure I can pay a design student about $12 an hour for a semester and basically have a designer on call at all times. Drawbacks being lack of experience and there's still some cost there. Also paperwork headaches.

    So I'm interested to see what your experiences have been with these options. Has anyone tried #4?

    submitted by /u/vikings_70
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    Some questions about joining a startup

    Posted: 28 Feb 2018 02:05 AM PST

    SO I have just been lucky enough to get involved with a start up as their marketer and doing content creation. I have previously worked for a start up and know exactly the type of environment it is, and absolutely love the enthusiastic and learning environment. However at my start up I was getting an actual paycheck, whereas this start up is in such the early stages that they don't have the resources yet to start payroll.

    I want to make sure that I am looking out for myself, both economically and logistically, in terms of my employment with them. Instead of being paid I am being offered equity. We had a quick chat about it today in a meeting, and they said that their lawyers are putting together an agreement so we can sign.

    Due to the volatility nature of start ups, and my lack of knowledge in anything financial, My question for you guys is, what should I be asking in order to be looking out for myself?

    I've read some things about preferred equity and employee equity, but just do not understand the lingo of finance. What equity is safer and "better" (if that word can even be used to describe equity)?

    On top of these, what should I be asking the founders of the start up that are important for an employee to know?

    submitted by /u/Emergancy
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    Wrapping up my first SaaS and would love to hear from other seasoned one-person startups!

    Posted: 27 Feb 2018 11:32 AM PST

    Introduction

    Today actually happens to be my birthday, so I figured that would give you a little more incentive to share your deepest, darkest "here's how I grew at the beginning" secrets. ;)

    I'm your typically newly 26-year-old guy. Out of high school I was still boxing and thinking about doing something with that, then I went into youth ministry for a bit, before turning to a brief life of crime and intrigue, and subsequently telecom marketing (that could probably go under the crime category as well). All of that was great fun, but my true love has always been building something of my own... Or at least the idea of doing so.

    You see, when I was younger I always looked at life a bit differently than most. While other kids wanted to be professional athletes, cops, and the like when they grew up, I wanted to own a tech company. Then one day when dad and I were in CompUSA killing time, and potentially our pocket books, while mom got her hair done, I saw this book "C++ For Dummies." I had some Christmas money with me at the time, and asked dad if I could get it. He looked at me like I was crazy, but he wasn't going to deny me the opportunity to learn something.

    Clearly, that book was well over my head, but it ignited something important in me: A love for programming.

    Fast forward to now... And I still haven't done anything meaningful with it. I've either thought my ideas were too dumb, or that I wasn't at a place mentally or emotionally mature enough to handle the responsibility and everything it entails.

    It's funny how having someone in your life that you might need to provide for eventually can totally throw those worries out the window though!

    Where I'm Headed

    So that takes us to my first subscription-based SaaS that I'm wrapping up.

    I don't think I can name drop here, and there's really no reason too, as I'm still working on the front-end. All that matters is the backend is wrapped up, the marketing plan has all the "t's" crossed and "i's" dotted, and in a week or two (whenever I get the free time), the front-end will be done and I can launch.

    My goal is to be to $20,000MRR by 2019. I'll probably release the entire marketing plan after the launch.

    Information About My Startup

    A little information about the startup: It's very generic and is focuses primarily on small businesses. There's also a landing page for online shops, other SaaS', non-profits, and restaurants. So while the service itself is generic, I already am aware of the need to have tailored messages.

    The price points are $49/month, $99/month, and $249/month, with a 25% discount for nonprofits. These price points have been validated as reasonable by several small business owners I've questioned and the demand seems reasonable enough to eventually be sustainable.

    What I Need

    I figured this would be a great time to pick a lot of you one-man show startups' minds!

    What I'm worried about is trying to do too much too early and burning out. So here are my questions for you:

    • What are some things that paid off early for you with your SaaS?
    • How did you effectively handle doing customer support, marketing, PR, and bug fixes without going crazy?
    • Are there any time management tips you would recommend?
    • What are some good customer milestones that you allowed yourself to celebrate on?
    • Is there any other advice you would like to give?

    Thank you!

    submitted by /u/imjacobw
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    When did you incorporate? When do you reccommend?

    Posted: 27 Feb 2018 09:09 AM PST

    Hi there! I'm long time lurker on this sub but first time poster. I've really benefitted from many of the conversations here, so I'll start by prefacing this post with a thank you! This is a wonderful, encouraging, and mutually supportive community.

    Now, to my question: my start up is getting to the point where money is going to start changing hands (from my hands to other people's hands for the moment), so I'm thinking we should incorporate for tax purposes. Is that correct? When did you incorporate? When would you recommend? How do you go about it?

    For more context: I'm DC based; the start-up's first users will be in DC but hopefully all over the world relatively soon thereafter. The first payments will be to individuals in the UK and Poland. I am a British citizen, in the U.S. on an H1b visa (which doesn't have anything to do with the start up).

    submitted by /u/kittengr
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    Can you join a startup as a large investor and become part of the team?

    Posted: 27 Feb 2018 08:29 PM PST

    Let's say I were to earn 100k through something like crypto investments. Is it possible to join the startup im investing in and become like a partner/co-founder/team member. I've heard about only people who are accredited investors can invest in startups so i was wondering if it was possible to bypass this by investing in a startup and joining the company. Sorry for the beginner question, I am just starting to learn about stuff like this. The bot is forcing me to add more words so I am currently doing that. Apparently I need at least 500 which is downright preposterous.

    submitted by /u/ArchLatitudinarian
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    Resigning & Noncompete (Long post)

    Posted: 27 Feb 2018 05:37 AM PST

    Hi all, throwaway account & long post. Things are happening quickly and I'm overwhelmed from the last few months. Any advice / POVs to consider is greatly appreciated

    Background

    am currently working for a startup & was picked to lead the company by the founders. I have worked with them for many years in the past & they felt I would be a fit for their plans. One is/was an old friend who I previously lent a fairly large amount of money on a personal basis, who would go on to become a major pain for me.

    Terms:

    • The current employment would be under a holding company that did IT work, but they also wanted to project it as an incubator. This would continue till enough funding or revenues would come in and was promised that I could move everything to the startup then.

    • I was offered a monthly salary & 10% of the startup, no vesting (since the founder owes me money, he claimed this was a goodwill gesture).

    • As an unwritten goodwill agreement, the holding company/ incubator asked me to help in other projects (I have past subject matter expertise for a client they were trying to win) and marketing activities for a quarter, before I move onto my actual role. Due to complicated hiring laws, it was easier to hire me under this firm as a consultant, then move onto the actual startup after the work was done.

    Previous (Key) Issues

    • I was the largest reason for the incubator to win a big client, to the point that the client would request me to be at all their meetings, in front of the other founders which apparently started to irk the founder/friend, as he wanted to claim them as his win. I never wanted any extra money for the work, just my salary & move on to my work as CEO. They have withheld my salary for that period and don't give me clear answers when I'll get it back.

    • Once I began, this incubator/they provided minimal help. But, all expenses had to be paid through them to show that the "incubator" does all the heavy lifting, which they used to market on their website. All actual development was done through me (by my hired developer, paid from my salary) hoping to reimburse as we get profitable. I bit my tongue and went along with, as I truly believe in the potential of my idea of what the business should be

    • They also raised seed capital under the startup's name but distributed (an undisclosed amount) through the incubator. I received most of my due salary for the remaining part of the year through this arrangement. But, despite repeated requests, I have not received any financial information e.g. the cash flows and cap structure etc

    • They had an outdated 2-part concept that I knew would hit a wall in a short time. I suggested a viable innovative path where they could leverage bleeding edge tech to bring a few more parts to the overall solution and make it a huge money maker. I was met with incredible hostility by the same founder/friend who felt I was trying to undo his idea (I wasn't, was only adding more sources of revenue, but ensuring compatibilty and synergy) and this started a road of continued hostility & resistance over the smallest details to the point we simply stopped talking by my choice, since the unrest prevented actual work

    • Their previous attempts to develop overran in costs & had a suboptimal result

    • I have been carrying out practically 90% of the work from product design, roadmap creation, overseeing development (far under budget & decent results), branding, marketing, sales calls, investor calls, with minimal involvement from the rest.

    Present

    Turning point

    • now that we are ready to go to market with a "minimum sellable product", they recently offered a revised term sheet at the start of the year, that retroactively replaces my 10% with smaller increments & vesting but solely contingent on sales performance (a ridiculously high number). They claim now I can get more but they have designed it so it's very hard to reach. Additionally, there is no longer a base salary, but paid out pro-rated based on sales target (i.e. 100% commission based). My Spidey sense is tingling overtime & I've asked for changes - after a long period, they come back with no changes to salary but only reduce vesting by 1 year. I'm being urged to sign this document in the next few days.

    • I also asked about my other outstanding amounts and they are vague about repayment

    So, what now

    • Presently, the minimum sellable product has only been developed for a portion of the initial 2-part idea; I had set aside my ideas for another phase, to balance cash requirements, as we need to pay well to hire the kinds of people we need

    • Roadmap was broadly shared with them, including a high level workflow. All actual details of tech stack & how those various parts work together, are known to me alone

    • I want out & start my own thing, along the lines of this startup. I came up with the real innovation and it hurts that they are obviously setting me up to fail so they can take over and stiff me in the process.

    my current terms have this clause

    You shall undertake and agree that you shall not disclose to any unauthorized person, or misuse any information including financial information, including, without limitation, processes, data, concepts, ideas, plans, strategies, analysis, surveys, and/or proprietary or Client information relating to the past, present or anticipated business of the company, disclosed to you by the company or which becomes known to you in the course of your employment.

    Questions

    • Since this is for the incubator & mentions nothing directly about the startups being nurtured - do I have some wiggle room?

    • There is a possibility that if I put my papers, they may ask me to sign more locked down text, but they owe me a lot of money, so I could say I'm not signing anything till my money is paid, which would take them a few months OR alternatively I have to forfeit the money; a large sum that I'm ashamed I let pile up, but friendship & goodwill got the better of me. Im almost ok to forfeit if i can somehow make a clean exit and continue doing what i know is possible.

    I'm really sad about burning bridges, but I'm increasingly certain they are trying to screw me over hard, & I'm looking for any thoughts on what possible options I could think about

    Thank you so much in advance. As I'm on a different timezone, my replies to your thoughts may be delayed, but I promise to read & respond as needed

    submitted by /u/EveningClub
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    Recommendation for SAAS Billing Solution for MVP

    Posted: 27 Feb 2018 07:16 AM PST

    I've got a B2B saas platform launching soon and am curious what is the quickest, easiest, cheapest way to handle billings to my clients. We will bill on a unit basis ($/x/mo) and right now our plan is to handle manually via quickbooks invoicing. We know this is a short term solution, but are there any billing platforms that I could use instead without having to put any time into direct app integration in the short term with the thought that I could do so post MVP when my client base grows.

    Thanks in advance.

    submitted by /u/ArchitectGeek
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    Professional fundraisers

    Posted: 27 Feb 2018 03:17 AM PST

    Let's say I would like to find an angel investor for my startup, but I am a developer who has no connections to angel networks and whose time is better spent on the actual development. Would it make sense to outsource fundraising to a professional? Is this even a thing?

    Anybody cares to share their experience? Where to find such a fundraiser?

    It seems reasonable to have somebody who knows what they are doing in charge of that area. I assume such a fundraiser takes a cut from the actual funding or equity?

    submitted by /u/dawcza
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    Any tips for somebody who might have an exit on the horizon?

    Posted: 27 Feb 2018 02:37 PM PST

    Background: Once upon a time I got in on the ground floor at a start-up. I worked my ass off for a few years and built out the working prototype that got the whole business rolling and clinched us venture funding. You know how it is 70 hour weeks eating ramen. More and more it became apparent that my talents and sacrifices weren't being appreciated (especially post-funding), so I moved on with little to show for it except some stock I'd purchased after my options vested. (It felt so stupid at the time -- after all that work I'd put in that they'd barely paid me for, and now I handing many months of paychecks back to them!) Now what seems like a lifetime after leaving the start-up game and not looking back it's suddenly and unexpectedly looking like I might have an exit opportunity on the horizon. Not clear on the details yet. Definitely less than $1m.

    So I was wondering if anybody here who has had an exit that could speak from experience had any advice for me. Anything from tax advice (I'm thinking about preemptively moving to a income tax-free state) to lifestyle (I'm pretty frugal, so I'm not going to blow it on fast cars or anything. I know I'm still far away from retiring...) or anything I should know...

    Thanks.

    submitted by /u/Viridian_Hawk
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