I’ve recently put a lot of thought into the product and realized that there is a real gap in the market that I can fill and make this into a real business. This requires a pretty significant amount of work, which I’m slowly chipping away at with 2-3 hours per day. Of course there may be unknown unknowns but the path to something like ~$1M/yr seems very clear to me.
Circumstances at my current day job have been getting progressively worse and I think it’s time to move on. I’m not full-burnout unhappy (yet), but getting more resentful every day. Unfortunately I don’t have enough cash saved up for significant runway. I’m 35 with family and living in the US so eating ramen and sleeping on a friends couch isn’t an option.
I’m trying to figure out my options. Maybe try to find angel funding. Maybe a business loan (is that even a thing?). Or should I just grind it out and stick with my current job.
Appreciate any and all advice. Especially if you’ve been in my position
I do not recommend anything that smells like a "loan." This is speculative stuff you are doing, and a loan means you'll be on the hook to pay it back regardless of how it works out.
> product-focused dev with 10 years experience at a-list startups [...] I don’t have enough cash saved up for significant runway. I’m 35 with family and living in the US.
The earlier you start, the more you accumulate, the more flexibility you have later. I had 12 months runway when I started mine, and it is so valuable not to look for investors and just work on your product/company when you feel pretty confident.
As a guitarist myself there is incredible saturation in the market right now for learning guitar, whether it be apps, courses, or other content out there on YouTube/Ticktoc/etc. My first question is why to you is why you think "the path to something like ~$1M/yr seems very clear to me."? My second question is what does your app do to distinguish it from any other of the readily available guitar learning/fretboard apps (from quick google https://guitar.com/guides/buyers-guide/best-guitar-learning-... and https://americansongwriter.com/best-guitar-learning-app/)?
If you're looking to potentially quit your fulltime employment or potentially take some extended time off, that it feels like you should have some pretty solid answers to those questions before doing so.
At $600/mo, there's about a 10X gap between where you're at and revenues you could actually sustain yourself on, and ideally you'd like to hit 5 figures recurring revenue a month before you start seriously thinking what this would mean becoming a "real business". Assuming you have ideas on how to grow that revenue, I'd suggest focusing on some of those strategies. I'd also start making strides in marketing that can start to grow market share and get some exposure.
While I don't want to discourage you, it's also okay if a side project stays a side project. You can continue to invest the side time you have and grow your passive income to supplement your 9 to 5.
My advice would be: it reads like you're commingling two questions that really should be separate, which are:
1. Do you want to start a business and pursue independent employment?
2. What are the quantitative parameters and conditions under which such an enterprise is sustainable?
If the answer for 1. is yes (and interrogate yourself a bit! how many of the things that you are imagining are less "working on your side project full-time" and more "not working on the day job that you hate?"), get as concrete as possible with 2. What burn rate _is_ acceptable to you? How much savings are you willing to use during build-out, if you were to start now? What growth do you need to hit to feel like you're financially on the right track?
There are lots of funding tools (using the term 'tool' loosely) available to you — SBA, subsidy via full-time job, subsidy via contracting, lifestyle-friendly firms like Tinyseed. But you need to start with the numbers.
(Also always happy to chat more: I'm at justin@buttondown.email.)
Was the market gap realization from conversations with current/prospective customers? Or was it from solo hammock time? It sounds like you have a lot more the build, and because you have dependents, I would try to reduce risk as much as possible by making sure you have a list of customers (emails?) who, in some way, showed strong interest in paying for your product. Ideally a long list.
Unfortunately, this is not good position, because from $600/mo to something considerable for family life in US, may be long path, and not cheap, and not predictable.
I don't think you consider moving away to some cheap place, so answer is simple - keep your day job.
America is country of freedom, so you could continue your side business, and continue grow slowly, but until it will grow much more (I think about 10x at least), it will not become attractive for much investments, and you should not consider it as your main priority - now your main priority family and day job.
BTW, $600/mo is considerable amount for 3rd world countries, and this could be real solution, but it could be not easy, to hire people abroad.
Sorry, life is hard. I believe, if you will see old good cinema, this could make things looking softer and warmer, to accept.
And tell me, if you want to talk more.
Thank you and good luck!
What can you do to increase that $600 to $1200 with your available resources (including vacation time) while holding your nose and continuing the day job?
What is the minimum monthly nut to get your family on the ramen plan? Of course you all ain’t gonna eat ramen but get lean and mean.
How many of the aforementioned doublings of revenue do you need to execute before you’ve hit “ramen family” minimum amount? Don’t forget to pay your taxes too.
How much of that $1M/yr do you want to split with investor(s)? With $600/mo currently, the investor is taking all the risk, so how’d you like to give them $800-$900k per year?
Can you do a friends/family round?
Another comment mentions that this is a guitar learning app and there not being clear competitive differentiation. Assuming this is true, find someone who is an excellent 0-1 mobile app marketer, give them 40% of the company with a 4 year vest, and work on it as a team.
If you can get some written commitments in place, it will be a lot easier to pitch to investors if you decide to go that route, and you'll get a better valuation.
It doesn't sound like you are able to bear a worst case scenario at the moment since you have dependents, so you want to be as sure as possible before you lose your income stream.
I would speak to an attorney to see your next steps both in terms of setting up your business for success as well as making sure there are no issues with your current employment.
The option I am considering is taking 1-2 months of unpaid leave. Obviously this requires some savings and cutting down expenses however you can make it fun for the family with a little thought and creativity.
Maybe a business loan (is that even a thing?).
It is a thing, but basically most intial business loans boil down to signature loans. You sign as an individual and you are on the hook personally.
Sure an established business might get a loan collateralized against business assets such as inventory, real property, recievables, etc. Or a line of credit for cashflow.
Anyway, the simplest thing that might work is charging more for the existing product so you can support existing customers.
In part because $1m/year is not enough to make sense to an established angel investor. But mostly because charging more money is a good way to make more money; a good test of viability; and the simplest thing that might work.
Finally, be clear on the competing ideas. One is getting a new job. The other is owning/building your own business. They are not mutually exclusive. You can get a new job and continue building your side project organically.
Indeed a plan to build your side project organically over a few years is not the only option. Another is to build a new project that is easier to turn into a business (maybe even one that resegments your existing product under a new brand).
Keeping in mind that getting other people's (friends, family & fools) money is a lot of work that doesn't bring in revenue.
Good luck.
Is there a market in the gap though? Often the reason there is a gap is because it isn't a viable market, not because nobody thought of it.
https://successfulsoftware.net/2017/02/03/choosing-a-market-...
People love to dream big and bet all, but nobody wants to make calculated risks and slower progression.
To start with, unless you already know people, raising money can be a full-time job in itself, everyone wants to offer advice and no one wants to cut a cheque.
I took a massively risk-averse approach instead of aiming for $1m ARR I started with building a self-sustaining app that pays the mortgage/rent, then all the bills, then matches your salary.
Smaller more achievable goals will stave off burnout because you won't feel like you're failing everyday you're not making $1m ARR.
Most of the "successful" entrepreneurs I know are self motivated and share a burning desire to succeed beyond the confines of corporate slavery.
Some people find corporate life comfortable. They show up every day and wait for their marching orders --- no need to think or act independently. At the end of the day, they shutdown and go home
If you like the "comfort" of corporate life, you are probably not meant to be an entrepreneur.
There are clear downsides too. You would need to source these contracts yourself and figure out health insurance for your family.
If you're not a single parent, what does your partner think about the circumstances, and what would they be willing to do to help? Having the support of those closest to you will be a motivating factor (emotionally, aspirationally, possibly financially too).
1. Unless you have real traction (2-3x growth every year) or rich connections, your change of getting an investment on a $600/Mo product is almost nil.
2. Your chances of getting a business loan is almost zero as well because most business loans are given against real collateral (e.g. physical/real estate, machines/hardware etc) and most banks in US wont consider a $600/Month software revenue anything real worth a collateral. You are most likely better of getting a personal loan if you have good credit but regardless, you will have to guarantee it personally which means they come after everything you got if you fail to pay it back
3. Your best bet is to keep the job and keep grinding on the side. If you really believe that this can become big, it can become big without you going all in at least in the early days. Get creative. Find a co-founder if possible who is willing to work for sweat equity. If not, do it yourself until the revenue is close enough to your min. expenses. Then quit the job.
I don't mean to say this in a rude way but no one will give you money so that you can quit your job and work on a $600/Month product. You have to take that risk yourself. All the best.
Source: A bootstrapped founder who was privileged to buy an existing side project (doing $2500/Month at the time. used my own personal savings) and grew it to low 7 figures revenue. I have taken small loans (SBA/personal etc much later on) and funded all of it myself for the most part.