Ask HN: Enough profit to replace a day job?
As far as i know, a successful startup is supposed to make you rich or well off, but what about a web app that brings enough profit to replace your day job? I've been programming for about 6 months and i don't have nearly enough experience to venture into the real startup world. Is the failure rate still really high for web apps that make, let's say, $1000-$2000 profit a month or are there tons of these, but we just never hear about it because it's so common? Can web app revenue stay stable or are web apps that make at least $1000 profit/month "doomed" to eventually grow substantially?
38 comments
[ 4.9 ms ] story [ 84.3 ms ] threadThe user base of most web apps is driven largely by epidemic effects: Most new users are "infected" by a previous user, either as a feature of the application (e.g., paypal's create-an-account-to-receive-your-money) or via old-fashioned word of mouth. As such, the growth should look approximately like a logistic curve.
In general it takes at least 5 years to reach the saturation point on the logistic growth curve; google reached that point a few years ago, and facebook is reaching it now. Prior to that point, you're still growing approximately exponentially.
Which is all a long-winded way of saying: If it takes you 5 years to reach $1k/month in profits, you might end up staying there; but if you can reach $1k/month in 2 years, you're probably going to end up a lot bigger than that.
That's the first time I've heard about it, I'd like to know more.
But it seems to be approximately right. It took 5 years (1998 -- 2003) for Google to claim the #1 spot for search engine market share; twitter launched 4 years ago and seems to be just reaching the point now where everybody is aware of it (so its growth now will be from increasing the awareness-to-signup conversion rate, not by making more people aware of it); and facebook launched 6 years ago and their growth (in users per day) seems to be slowing down now.
I'm not saying that companies can't grow after 5 years, of course; but there does seem to be a general tendency that the growth for a single product seems to peak at about that point.
Alexa isn't scientific, but surely some inferences can be drawn from their data: [2]
If you feel you have a superior product, or that you could out-compete someone else, then consider quitting your day job. If you're making money, someone will form a cargo-cult version of your business. Be ready!
[1] http://en.wikipedia.org/wiki/MySpace
[2] http://www.alexa.com/siteinfo/myspace.com
We're very quirky in our usage of computers. I live on the Internet, and Google reports that I've done in excess of 20,000 searches. That works out to about 25 a day. I'm going to guess many of us have roughly similar numbers. The average user, on the other hand, does something like 30 a month if you can believe Comscore et al. Move them a little from where they are to where we are and Google gets to make another round of money hats.
I didn't mean to say that they had. Google awareness however, has saturated the market.
I'm dividing startup growth into two phases: First, an exponential "people become aware of your product" phase, and second a much slower "convince people that your product is useful / better than the competition / etc." phase.
How much growth you get in that second phase will depend on the market and your competitors, but it will never come close to the first phase -- and that first phase generally takes about 5 years.
Of course, none of this applies to you, since bingo cards don't really act like an internet startup -- you're getting traffic from google, not from your users saying "hey, there's this really cool website you should check out".
I don't see why there would have to be a high failure rate for web apps which might bring in 1 - 2K per month. That's a business and as long as it's paying for it's cost and your time then there would be no reason for it to fail other than flagging interest of the owner. That range for two developers with no other income would be a problem, but for someone who spends a few hours a week on the app and has a day job, then it might be a nice income boost.
To build a web business takes a lot of hard work, dedication and persistence, just like anything else in this world that's worthwhile.
So yes - I truly believe that is possible to build small, sustainable web-based businesses selling a digital product or service of sorts. And if you're clever about running your idea as a business, then there's no reason why you shouldn't be able to quit your day job in favour of working for yourself.
It's a bit of a contrast to the VC/silicon valley world where people get investments and try to build a massive business.
It's hard to quantify a failure rate when the cost of starting a web site is so low. I have 200+ domains, but only a few "real" websites. In some ways each of those un-used domains is a failure. :)
So true. Because the barrier of entry for most of these businesses is so low, you're competing against a huge pool for that $1k-$2k a month. You're competing against 3rd worlders to whom $1k-$2k is a TON of money. You've competing against stay at home moms for whom anything close to minimum wage they can do in downtime is perfectly fine, etc. You have to have something that makes your business not worth competing against for these people or they WILL do it for less.
But even with a simple web app you need to know a fair bit about a lot of different aspects of web programming. On the otherhand building one is one of the best forms of practice :)
Generating significant revenue from advertising is tough because it requires a huge audience. But a lot of lifestyle businesses are driven but a more old-fashioned business model: you make something of value and charge a fair price for it. The failure rate of these businesses is lower than that of VC-style startups.
Good luck!
If you are young, on your own, and can manage it - keep both. Theres no reason to go independent soon as one of your apps goes Ramen profitable. Consider the situation where profit plummets quickly before you can figure out how to turn it around and you can't pay your bills. You'll be scrambling for a job and you may end up taking one you don't like.
Consider why you are thinking about doing this, and look at your own situations and emotions on the subject. We can give great advice but in the end you'll know you situation better than anyone else - even if you explain it.
I know some folks with software that fits your description, but most either consider it a failure or have it on autopilot. They typically do not talk too much about it. Absent putting something on autopilot I think that certain dynamics of Internet marketing favor sustained growth over statis but there are plenty of examples of either. For example, an app reliant on Google will tend to grow automatically over time as the site accumulates trust and Google grows the search pie. All bets off on app store.
Do not assume existence of a profit cap. Google does not stop sending traffic after you hit your projections.
If you can find a way to leverage SEO or inherent viralness in your product, you can rely on a reasonable amount of consistency, but it maybe be averaged over months as opposed to month to month.
Some people can work on things on the side of their day job until they reach a good level. For us, we knew we wouldn't get anywhere with such non-committal focus (my co-founder was also in a different city which made it harder). We just made sure we had enough cash runway and quit. Reached profitability about 1.5 years after quitting and have been doing it for 4+ years now. It's amazing how much "business" you learn along the way when you're fighting to stay alive. It's not easy, and definitely more work than a normal job, but it's a fantastic experience.
I'm making about 15k/yr w/ my niche product: http://createyourproglang.com/. Where I live it's not enought to replace my job, but it's a nice complementary income.
There was a nice thread recently on HN about ways to find & test a niche market: http://news.ycombinator.com/item?id=1454221
That's an interesting perception. I have a web-based startup and I'm located in the Midwest. There is a huge entreprenuerial scene here, but web-based startups are as rare here as elevation changes.
Of all the entrepreneurs I know here, the vast majority of them make just enough to get by with a little stability, and you'd be hard-pressed to find someone who doesn't consider that a success.
I think a web-app making $1k-$2k a month with relative stability is a great thing to have, a good source of income, and even potentially a successful business, though by popular definition (as you pointed out), it probably isn't a "startup".
http://www.getinvisiblehand.com/
http://camelcamelcamel.com/
http://picclick.com/
1) Don't rely on advertising to monetize 2) Don't target it to consumers/end-users (if you're selling a web service, obviously this does not apply if you are selling an actual product)
There are many B2B niches right now that have terrible software solutions people are willing to pay for improvements to.
For example: About a year ago, I created a very niche web service for Internet marketers. It was basically a PayPal subscription tacked on to a few custom scripts I wrote to automate certain marketing tasks for myself. I didn't advertise it at all except for posting on a couple of Internet marketing forums I frequented. The site only had a few hundred visitors a month, however about 10% of those converted and became subscribers. Within a couple months, I had about 30 subscribers paying $50 a month to use the service.After I wrote the code for myself, the site required no work to maintain, the subscriptions were coming in on autopilot, it was an easy $1500 a month with no effort.
I was surprised at how easy it was to make a little extra money this way- the key was focusing on a very specific, small B2B niche, and creating a paid subscription service that was far superior to anything else that was available.
At the same time, since my target audience was so well defined, I could quickly build a service that would do exactly what they need compared to broader, non specialized services.
Our app (http://letsfreckle.com) was growing only slightly per month, until we really started promoting it. Now it's growing how we like.
But we could have coasted along at $5k/mo forever.
There are lots and lots of small web apps making a nice tidy living for their owners, but yes, they don't get talked about because it's not sexy enough for the tabloid nature of "startup" news coverage. Only the extreme win, extreme fail, and extreme weird (bingo cards, teaching your parrot to talk) get major traction over time.