Ask HN: What would we need to pay for?

https://news.ycombinator.com/item?id=8975693

by ely-s • 11 years ago

4 7 11 years ago

news.ycombinator.com

A friend who wants to make an app asked me why anyone would need investors to help bring an app to market. She asked "what would we need to pay for?"

How should I answer her?

greenyoda• 11 years ago

Unless the app is completely self-contained, you're going to need to pay a hosting company to provide you with server hardware and communication bandwidth.

If you want to market your app to people, you'll need to pay for ads.

However, most investors aren't really going to be interested in funding something unless they're convinced that there's a good chance it can make a lot of money. If all you want to do is create a small-scale project that doesn't need to support a lot of users, you could fund it out of your own savings.

byoung2• 11 years ago

It depends on the app. If it's something like Flappy Bird, you won't have much in the way of expenses. If it's something more substantial, you might need to hire designers and developers to build the app and make it usable. You may need ops people to keep it running. If it's not inherently viral, you may need marketers and a budget for ads and PR. If you're doing something novel you might need to file patents and hire lawyers. You might need to pay for servers, storage, and bandwidth.

All that costs money. It might be more than you have in your checking account. That's where investors come in handy.

Throwaway902832• 11 years ago

Well, the money can be used to grow. If you launch a hit app, like Flappy Bird, you might think money is rolling in, you have few expenses, so investors are a waste of time. However, your Flappy Bird game is going to come and go within the year, and you'll watch that daily income fade to zero and end up back to square one.

So, you want to strike when the iron's hot, and take advantage of that brand. You want to get Flappy Bird sequels coming out, you want Flappy Bird stuffed animals for children, Flappy Bird backpacks, etc. You want these things happening when the game is in its peak, and if you try to do everything on your own, you won't make that deadline, and Flappy Bird will be quickly forgotten. So, you get investors, bring in millions, hire staff, and start pumping out Flappy Bird everything to keep it in the spotlight and to grow the business. Or you start doing spinoffs, Wiggle Frog, etc. Either way, you need money to get things moving... fast.

Secondly, you need to fight off competition. This isn't a huge concern with Flappy Bird, but let's say you make a simple app that let's you post a few photos of yourself, and others vote on your best picture. You launch, it's a huge success, and you have practically zero expenses. Now, you're going to have a dozen competitors fire up overnight, and some of them will have more talented developers, some of them will have more free time, and some of them will have huge budgets. They want to take your crown, so you need to stay one step ahead of them. This is where investors come in. The money goes into polishing the app further, turning out new features, or related apps.

skylark• 11 years ago

Funny that you mention the photo voting app, I was thinking of banging that out as a side project. Do you know of one that's already reasonably popular?

jordsmi• 11 years ago

Servers and marketing are the two big money hogs.

Also you need to think about the time spent and income being made. Getting investments mean you can treat it as your full time job and not worry about dipping into your own savings after your 3rd month of advertising without getting much return.

j45• 11 years ago

Money can help you do the right thing faster if you know the right things to do. Otherwise raising and then spending money a little better each round can end up in focussing on the investors as being the customers of your business. If you consult at a medium-high enough level, you can probably raise a fair amount of money yourself and self-fund.

It really depends on the app and if there's market demand ($) for it beyond just users.

If it's the first app, learning how to make money is more valuable on a smaller project than building something big and having less of an idea.

Ask HN: What would we need to pay for?

Related Stories