Crowdfunding · Mobile

Are there examples of businesses that rely solely on customer revenues to scale?

Priya Prakash Designer-Founder, D4SC-Changify

September 29th, 2013

What precautions should one take if one is relying on customer revenues to scale?

Context: 

We (Changify- alpha) A hyper-local mobile platform that uses social media, mobile loyalty and crowd power to create better neighbourhoods - currently in pilot stage, working with community networks, council and 2 large brands. to crowd source, solve and fund better neighbourhoods using your phone. 

We have a new version coming up in Oct. 
Our current alpha doesn't represent fully what we are trialling with partners. So apologies that its got elements switched off - e.g.: crowd-funding etc, we were experimenting with different models to quickly test something.

What tips/advice/experiences can you share that helps us in maintain existing revenues, attract new customers without the need to go for funding. Is it partnership with licensing a platform or press? Any pointers would be most useful.

Candice Hughes, PhD, MBA

September 30th, 2013

It sounds to me like an issue of how fast do you want to scale. If you already have customer revenue then you can continue to grow that base organically and grow the business as revenues grow. On the other hand, if you are trying to scale faster than you can organically grow revenues, then that is the time companies look for outside funding.

Brahm Singh Eng Head - Deep Search at Quixey

September 29th, 2013

We are trying to scale through customer revenues too and are just starting up - would love to hear what others have to say

Paul Travis Multifaceted Online Executor: Product Marketing to Program Mgmt. to Business Development

September 29th, 2013

This is the definition of "bootstrapping", which we hope to do after a Kickstarter round.

Paul Travis, Night Janitor

Priya Prakash Designer-Founder, D4SC-Changify

September 29th, 2013

Thanks Paul. Yes it indeed is bootstrapping - I was curious about how to maintain or scale revenues during the bootstrapped phase with live customers. Cheers Priya Priya Prakash Founder - D4SC Design for Social Change Data + Action = Change https://twitter.com/D4SC +447956573183 ---- www.changify.org http://blog.changify.org https://twitter.com/changify Company Number: 08485710

Anonymous

September 29th, 2013

Didn't Craigslist do that?

Paul Travis Multifaceted Online Executor: Product Marketing to Program Mgmt. to Business Development

September 29th, 2013

I didn't think so -- the first time Craigslist charged for listings was a nominal fee for employment posts.  However, I did some searching and learned that others agree with you:  reportedly they drove advertising revenue to over 100 mil.

Anonymous

September 29th, 2013

Ebay did buy a 25% stake a while back but apparently that was sold by one of the co-founders? So, that wasn't necessarily investment per se.

Luis Avila Owner/Fullstack Architect at IdeaNerd LLC

September 30th, 2013

Ditto Candice,

Our plan is to grow organically. We're pretty lean so we will be profitable from customer one. And as we grow we can speed up expansion. Being a SaaS I don't see much of a challenge scaling from that perspective until we get into the 10k's of users.

You'll obviously want to stay lean and keep costs down. More growth does not need to mean more employees. Only hire when you can no longer do with the team you have.

We'll offer premium features that will hopefully push users up the subscription ladder and sign up for upper tier levels. That's one way to grow revenues.

I also plan on offering an extra free month of use when a user signs up a new user... ie referrals.

To me those are some ways to grow the user base that don't cost you any money.

At some point we intend to go to enterprise customers too. so that's another avenue. We're also considering white labeling the product. But these things are in the distant future once we've gotten enough traction with our original plan. (You dont want to lose focus)

Just some thoughts.

Ray Dollete Tech Lead at PHENOMENON

October 4th, 2013

Nasty Gal

Rob G

October 4th, 2013

Priya, that is precisely the plan for my current startup. not launched yet, but several enterprise customers committed and waiting for us to get a rev 1.0 out the door.  will let you know how it goes.  key is building a sales/distribution and pricing model that generates $$ on a short runway to profit.  Not all businesses can launch this way, especially those that rely on scale and/or advertising for revenue or are consumer focused.  Ours is actually a B2B2C model so will be interesting to see how this works.  It still takes resources to bootstrap, but we think we can sustain reasonable growth for year 1 until we've proven product/market a fit and generated profit and retained earnings at which point we plan to raise money for growth (with a better valuation and better terms).