HN Explorer

New Startup Now Pulling In Over $100k in Monthly Revenues

282 points by kumph ↗ HN
I write this not to boast, but for two simple reasons:

1) To inspire other YC-rejects, especially single founders.

2) To recruit hackers to help me bring this company to the next level. By which I mean, of course: total world domination.

I came up with a simple idea for a iPhone app to recommend iPhone apps at the end of the summer, began working on it the fall, and applied to YC shortly thereafter. As a single founder, I expected to be rejected, but thought it couldn't hurt to apply. The rejection email came on November 2nd, and I got the app into the store a week later.

At that point, it was pretty clear the app wasn't ready for prime time, so I worked on it and racked my brain for a viable near-term business model and marketing strategy.

This was sorted out and tested in microcosm by the end of the year. I actually pinged pg on New Years' Eve with my modest but promising stats, requesting late acceptance to YC. Unfortunately he replied that it was just too late, and so I soldiered on. I began marketing internationally, in English speaking countries, rolling the eventual profits from one successful country-targeted campaign to go after the next larger country in my list. Ireland. Success. Australia. Success... Canada.. The U.K...

Finally, on the night of February 15, I went after the U.S. That was a pretty intense night. But all worked as predicted. And one month later, it continues to work.

Over 800,000 downloads to date, 4.5 star rating in the store and a nice constant revenue stream of over $100k per month. Check it out: http://itunes.apple.com/us/app/id399128529?mt=8

That's as a single-founder, with no investors, and only the advice I could squeeze out of my friends.

But this is just the beginning.

Of course there will be: An iPad app. Android. Internationalization. Vast improvement of the recommendation algorithm. An in-house advertising system. Marketing pushes to get the app to at least 10x users by the end of the year.

We're also going to expand this from just apps to books, movies, music, and so on. Cars? Fashion? Let's see what works.

So there's our basic business plan for all the world to see. And we're not afraid. Go ahead, try and steal it. You know it's all about execution and position at this point. And we've got an excellent position and fantastic execution.

But who's this "we"? Right now it's just me---the founder---and the business assistant I just hired. An excellent developer friend will be hopping on board soon.

But really: I want YOU! Quit your Google! Quit your Facebook! Quit your Apple! Let's forget about getting acquired and build something with which to acquire! Come with me, fellow hackers, and let's conquer the world!

Sound like fun? Send your resume, along with a brief cover letter explaining why you're interested, to:

jobs@kumph.com

88 comments

[ 3.5 ms ] story [ 157 ms ] thread
JCB_K
"Let's forget about getting acquired and build something with which to acquire!"

Love that.

detst
Reading that quote gave me a strong sense of déjà vu. Seems like there was a similar posting here maybe a couple years ago. Anyone remember this or am I crazy?
salemh
There have been many thread discussions on "why not just keep building it? Why is an exit always on the mind?" etc. Unsure if their was a specific post focusing on that aspect..Actually, to help other memories, I think it may have been AVC (or similar, quick google I believe its NOT avc / Fred Wilson) "Build an empire..not a ___" which discussed why you should build companies long-term.
us
I assume current monetization is by in-app ads? I came to this assumption base on the fact that the app is free and I have yet to download it. Either that or you charge people to be in your app.
minalecs
Awesome work man. I'm with you. I've been seeing this in the top 10 free apps. Can you share any insight into your marketing strategy, and how you got some traction ?
taphangum
Awesome-ness. I love these kind of stories.

I'm actually working on an iPhone game, Link:http://beathub.net. Was rejected by YC before (not on this idea though).

Would love to talk more via email about possible partnerships, advice you may have.

Just started an Ask HN thread also for those who are interested in offering their advice on this: http://news.ycombinator.com/item?id=2318920

Edit: Just got downvoted, i know how this comment can be seen as self promotional but it isnt. My intention is to be brief and to the point.

rms
Best startup hiring post I have seen on HN in years.
taphangum
Don't know why this got downvoted. It is.

Edit: It has obviously been upvoted now. Now i'm getting down voted? lol. HN, i don't get you sometimes.

zyfo
No, you're getting your upvotes too. Don't worry.
zone411
Congrats. Are you sure that any possible additional competition because of this post won't matter to you, though? I am involved with some successful and already well-established websites and the last thing I would do is share how much they make on here.
glenngillen
If the only thing keeping you in the game is the fact that your potential competition doesn't know you're profitable I think you've got bigger problems to address.
zone411
I said no such thing. The reason I said these websites are well-established was exactly to highlight that I'd be much less afraid of any new entrants than he likely should be with his app. Even if new competitors took one percent of the market as a result of such a post, then unless you gained enough in publicity, it was a bad post to make.
xuki
Dude, get a designer on board.
kumph
Yes. Send them over.
Estragon
Not exactly a YC-reject in the usual sense, if you just missed the application deadline...
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zyfo
"The rejection email came on November 2nd" He was rejected. The email to pg was sent after he released his app, hoping for a second chance.
lubos
congrats man, I'm so happy for you. your attitude is great, finally someone who dreams real big! go ahead and thumbs up
vlad99
This is not a solid business that might get acquired in the end so they are not interested in 1 hit wonders.
davidw
100K for even a few months would give most people a lot of room to find another hit.
jonknee
The $100K is revenue, not profits. There are a lot of payouts that come out of the $100K.
ericlavigne
Revenue of $100K is a lot less interesting if most of it is going towards iTunes gift certificates to convince people to continue using the application. Is this business at least profitable?
kumph
I found that user retention only went up marginally when the rewards were added. The main advantages are that is provides a good hook and a near-term business model.

And to answer your question: Yes, very much so. And growing.

newchimedes
Just curious to see, just how profitable are you? Are you saying you launched the app without rewards at first and were making money from day 1? If so that's impressive.
StavrosK
Unfortunately, "solid business" and "getting acquired" are probably inversely correlated these days. Is Twitter a solid business?
drp
Has Twitter been acquired?

edit: This must be misunderstood. My intent was to illustrate that Twitter is not a good example of a company that has been acquired without a solid business model. Obviously the news says they've had offers, but just as obviously no offers have turned into acquisitions. The many intelligent people who work there and have invested in the company think Twitter has at least the promise of a solid business.

StavrosK
Regarding your edit, you said it yourself. Here's a company that has had multiple acquisition offers, a company which people would consider a bargain at a billion, and the best it can do towards a business model is "at least have the promise of a solid business".

If I had a business that generated even 30k/yr in revenue (albeit a sustainable 30k), I would think really hard before selling it. It pays my living expenses, after all, and ostensibly leaves me free enough to pursue other ideas.

This "acquisition fever" we have these days isn't really about good business models, there are the businesses which try to grow as fast as possible by burning investor money and disregarding business models (the ones that are good acquisition targets), and the businesses that start out with a good business model and aim to be sustainable as fast as possible.

jrockway
Hey now, dickbars are a solid business model!
kingsidharth
C'mon! There are far better things than getting acquired! Like positive cash flow and happy customers. (Making a general statement here, if you can't tell)
hnfwerr
Are you applying to YC again? (for the 2011 summer batch)?
StavrosK
Why would he apply? He has 1.2m revenue per year, his valuation must be much higher than that, the 30k YC will give him in return for 10%-30% (or whatever it is) is a pittance.
gus_massa
From: http://ycombinator.com/apply.html

"We usually invest $11,000 + $3000n, [...] in return for between 2% and 10% of the company. The average is 7%."

rst
You're forgetting the likely Yuri Milner $150k convertible note, which changes the math somewhat. (If not, we have a "typical case" $14k investment --- n is the number of founders --- for at best 2% post, giving a post valuation of 50*$14k = $700k, which is a very raw deal under the circumstances.)

As to whether this is worth it --- depends on the expenses (which presumably include at least salaries, promotion, and rent). If they aren't spending as much money as they're taking in (no names, but I do know of iPhone devs in this position), it's hard to see the point of giving up equity to get more.

philipDS
Then again, I think you could consider applying to YC. Even though your revenue > expenses. Don't think of YC as an incubator or a funding machine (or whatever you'd like to call it). They offer a lot more. I think it's more like a ticket to a community of entrepeneurs and investors, based in Silicon Valley.

And yes, the $150k is a nice addition, but would you pick this convertible debt over the weekly dinners, office hours, alumni help you might get and most of all connections with possible investors? I wouldn't :)

Now I think about it: the YC FAQ also mentions this money-related question.

abraham
For the experience and connections. There is more to YC than money.
rokhayakebe
True, but do you know of many (or any) companies that applied to YC while making a cool $100k/month?
abraham
I recall seeing some posts about YC startups trending more in the direction of established companies. But what is more important is whether or not going through YC will help them achieve their goal. If YC helps move from $100k/month to $1m/month it is very much worth it.
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khangtoh
Why YC? YC is not the only avenue, I would suggest submitting to AngelList instead.
joebo
100k per month with a free app? Can you elaborate on the revenue model?
mscarborough
The Description says:

>>Get $100, €50, and £50 iTunes Gift Certificates with this app! Not just "another reward app"--take a look at our reviews! Devs pay us to promote their apps, and we pass it on to you. Check out the rewards section on the flipside.

Not sure how this translates to 100K/month but would be interested to find out.

[dead] jw84
It's very simple, it's affiliate marketing 101.

Take a App creators, b Advertising partners, x End-users sign up, y Users complete reward levels

Get as much x to provide value for a which convinces b to pay you to cover y.

b > y = PROFIT

The trick is x, only a network effect creates the rare times b is ever over y.

gyardley
Are you making money from iTunes affiliate fees and simply passing a cut of it on to your users, or are you charging application developers for placement?

Right now the biggest cost-per-install networks are doing 50x to 100x your revenue and growing quickly, and they're hiring every experienced salesperson they can possibly find. That's your true competition for app developers' advertising dollars, not the little stuff like 'Daily App Dream'. You probably need sales more than developers.

spaghetti
What are the largest cost-per-install networks right now? I'm just curious.
kumph
Those CPI networks are actually our biggest partners. We're AB testing a couple right now. And it's a good thing there's more than one. Then, to win your business, they do nice things like give you access to their API or call you in for a meeting with the CEO.

I see you used to be at Flurry. It was your former CEO, Simon, who asked me to come in.

gyardley
Excellent - I didn't think of partnering with the CPI networks, which makes a lot of sense.

Simon is terrific - given that there wasn't an obvious acquirer for Pinch Media, merging with Flurry was a great decision.

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nhangen
Love the bravado. And further proof that building something on the iOS platform is a great way to make some money.
chocoheadfred
I wonder if you make make more adding functionality from another app that I use that looks at your installed apps and suggests new ones based on that. Seems like you take age into account. Why not other factors like gender, interests, hobbies...in addition to popularity. All of these would be able to deliver better recommended apps. I would hesitate on just featuring the apps that pay you the most. Maybe hold out on those really good ones until you are able to prove success, which you might be able to do now. Too bad I can't see the app on my droid.
OoTheNigerian
Is this the same app someone asked for a review of a while ago?
jswinghammer
This is a pretty good idea. It connects devs who want to sell apps with people looking to buy more apps. I am always looking for a cool game or app. Congrats!
bvi
Something really refreshing about this post. Congratulations on your success, and best of luck!
kingsidharth
This is so much better than those YC-rejects bragging about raising a fund as if that's a prerequisite for success. A positive cash flow is something to brag about for sure. Congratulations!
jonknee
To be fair he never said anything about positive cash flow. $100,000 in revenue when your business model is paying your users can easily not be profitable.
nischalshetty
Ok, I am going to do step 1. Apply to YC and get rejected.
sinaiman
This is so awesome and inspiring, congrats!
[dead] savoy11
Excellent move. It worked very well for you mostly because you were not approved by YC. If you were, you'd spent several months with paperwork and empty conversations and could miss the moment.
weaponizedgames
Kumph, congrats, but what's your plan for when Apple clones your features and look-n-feel to be included inside their own App Store app?
emmett
"In titles, please don't describe things by their relation to YC unless they're actually associated with YC."

http://ycombinator.com/newsguidelines.html

rokhayakebe
I did not downvote you, but if you read the post you would know it is related to YC.
emmett
I did read the post. The guideline is specifically about situations like this one. You should not describe your company in relation to YC unless you are actually affiliated with YC. Being rejected is not an affiliation. Neither is being an applicant.

That said, I think there's nothing wrong with this post, but that guideline is there for a reason.

zacharycohn
It doesn't say you can't mention YC. It seems like this post only goes so far as to say "I applied but was rejected."