Ask HN: Killer idea, no cash to build an MVP, what to do?

https://news.ycombinator.com/item?id=5727255

by joshmn • 13 years ago

8 26 13 years ago

news.ycombinator.com

Besides the obvious "ask friends, ask family" what would you do?

I'm asking in part because I have a killer idea for a subscription-based model in a multi-billion dollar industry. It would be the only player in this industry, and the model has proven itself over and over across dozens of different industries.

I've had my share of success from an early age as an entrepreneur, but they have all been software or web plays. This is different, and my network of people aren't interested in this sort of thing.

I'm out of ideas.

kimura• 13 years ago

crowd-founding is your friend.

ignostic• 13 years ago

Is this software? Can you build it yourself? What kind of investment would be needed? Is your credit good enough that you can get a personal loan? Would it require more money than that?

Your other option, of course, is to seek angel investors and VCs. You may have some success there if you have some knowledge of the industry or product that they can't immediately duplicate. If you choose this route, be careful how you word this:

"It would be the only player in this industry"

That's usually a big red flag that the start-up doesn't know who their competition is. Adding "subscription-based" to the front doesn't instantly mean you are the only one in your industry.

persona• 13 years ago

Being the only one can also mean there is no market... like being the only company to offer flood insurance on the Sahara...

joshmn4• 13 years ago

It's not software, no. If it was then it wouldn't require some significant bills. It sits on Netflix's model. The industry that this caters to specifically has no player doing anything even close. I mean, how long did it take before we had DVDs by mail?

dylanhassinger• 13 years ago

downsize the idea

upsize your skills

start blogging and beta signups

try and find a way to presell it

chuhnk• 13 years ago

Why do you need cash for the MVP? Is it a physical product? Do you have to hire someone to build it?

joshmn4• 13 years ago

Gotta stock the warehouse shelves somehow.

bmelton• 13 years ago

Not necessarily. If, by "Netflix model", you mean rental, then you're probably right. If instead you actually mean purchase, then you might be able to get away with presales and drop-shipping.

exnav292• 13 years ago

I would agree with the other comments so far.

If your idea is in fact without competition then include who are possible competitors no matter how slight. To not have any competition is a HUGE red flag. By including even the slightest of competition then you are showing that you have done your research. Also, make sure you have a rock solid way of explaining how long it will take for investors to get their money back.

Contact your group of contacts and ask them why they do not want to back you. You may be surprised at their responses. But take their advice and alleviate their concerns. Because their concerns will be the same as potential investors.

Find a way of doing it on a smaller scale that you can afford to finance yourself. You will need a proof of concept anyway so start working on that. People are more likely to invest in things they can actually see not ideas alone.

joshmn4• 13 years ago

I should have mentioned that this plays on the Netflix model. And, with that, well, how long did it take before we had DVDs by mail? A longggggggg time. So yeah, there's the typical retail outlet for this stuff, you're right. And this market specifically is ginormous and will always be there. But there's currently no member of this market that's decided to go along with the Netflix model. And, at least to me, I see that as a huge opportunity.

exnav292• 13 years ago

Sounds exciting. I would advise you to look into why the retail outlets are not using the model then. See if you can glean some points as to what they saw that keeps them out of it and see if you can come up with an idea around it. For example, if you look at the Netflix model it requires them to have several warehouses with several dvd's in stock constantly in order to meet demand. How could you alleviate this cost? Perhaps by offering it in a limited area initially.

newbie12• 13 years ago

Of course Netflix already abandoned the mail delivery model as their focus, they even tried to spin off that business, and it is only a small portion of their revenue today. There were a lot of factors that went into Netflix's success, including working closely with the USPS on rapid delivery, a terrific web presence, and catching the DVD market at a point when they were dropping in price but still a popular format for consumers. The window for Netflix was actually quite small (I suspect you are young and don't remember the time before DVDs) as DVDs were the most rapidly adopted media format in consumer electronic history, and are imploding at an impressive rate as well.

jpeg_hero• 13 years ago

Netflix for power tools?

manicbovine• 13 years ago

You've mentioned the Netflix DVD model a few times, so ostensibly you seek to offer some type of physical good via subscription?

Netflix's DVD model worked because everybody was used to renting movies from Blockbuster. The business model already existed: Netflix just did a better job of it and at exactly the right time. Will you have to change hearts and minds, or will you be simply "doing a better job than Blockbuster"?

It seems like you're considering some business that requires a lot of inventory, low margins, and high-operational costs. I guess I'm making a lot of assumptions.

EDIT: I guess I sound fairly negative. I'd like to add that I have a dear friend who manages to earn a decent living with a small internet-based video game rental service. It's a husband/wife team. They somehow managed to bootstrap the business, earn a loyal customer base, and maintain inventory in their apartment. They spend a few hours per day manually fulfilling orders, adding custom notes/suggestions to their customers, etc. It works quite well for them.

petermelias• 13 years ago

Even if it's not software, you should learn about the relevant tech (assuming there is some). You'll have an easier time hiring talent later, you'll need less upfront costs, and investors like co-founders who have a good understanding of the technical aspects of the business.

If it's tech, but rather material cost, then crowdfunding is a good bet AFTER you have locked down a good marketing plan and secured some early traction in the form signups / commitments.

You can do tests and "fake door" type experiments to get user signups, or even commitments from potential customers to further validate your understanding of the model and relevant addressable market.

Once you've gone through that testing and validation process, try building out a small MVP yourself, or use what traction you mustered to try and recruit an equity partner with the relevant experience / network / talent necessary (and/or go get some angel money).

good luck

joshmn4• 13 years ago

There is some relevant tech that I'll have to look through. A lot of logistics has to happen for everything to go smoothly. And, like always, it's better to do it right the first time rather than playing catchup when money's knocking at the door.

I like this fake door idea. Good words, thanks.

Felix21• 13 years ago

Your question is really vague as you didn't give enough details about what you're building or what you'll like o achieve. Still, i'll try to answer.

You need:

0. Can you do it manually? Without any code can you provide this service? If yes, start here.*

1. Feedback - this is not easy without a product but draw something, sketch something or create a model in autocad. Show people and talk to them about how you plan on making their lives easier with it... Are they excited?

2. Product - if its a physical product, go and find money an then post again.

If its software, build a website, create a mockup of your app and start selling pre orders.

3. Reduce your product - Kill everything else except the core feature that makes you awesome. That's your MVP. I'm serious, just ONE feature.

4. Hire a developer - or start looking for a tech-cofounder. you should learn to code, but you should also build your business while you do it. Your pre-orders will make developers more welcome to your approach.

ibudiallo• 13 years ago

If you have no competitors, are you sure there is a market for it ?

Do your research and since you haven't said much about you will be doing I can only tell you to find out if your are going to need the amazon model or the Ben & jerry model:

http://www.joelonsoftware.com/articles/fog0000000056.html

mtext• 13 years ago

sell your body.

orangethirty• 13 years ago

How much do you need?

alanchavez• 13 years ago

Run a validation test.

shail• 13 years ago

Is it related to medical field?

OnyeaboAduba• 13 years ago

Im guessing you should look locally first. In my town just had a tech week where alot of local investment firms where eager to fund some fresh ideas as long as there was some meat behind it e.g other funding , site developed , or in your case a tested entrepreneur. Start there S.C.O.R.E is also a good source as well to look at

sahil_videology• 13 years ago

Why are you so vague about this killer idea?

robodale• 13 years ago

So, you have an idea for a killer app. No way to pay a developer. If the idea is all you are bringing to the table, then you have nothing to offer.

Ask HN: Killer idea, no cash to build an MVP, what to do?

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