Ryan will talk about how to build a web app on a budget.
You don’t have to be big anymore. Remember boo.com? You don’t need that kind of silly money.
Why now? Why hasn’t it happened before? Broadband is one factor. People are also more comfortable with web apps: they aren’t freaked out. Hardware is dirt cheap. Open source software is even cheaper.
What is Enterprise? Let’s say mass market or 1000+ users.
What is Dropsend? It’s a service providing a way of storing and sending large files online. It has 9,500 users in less than 2 months. There are desktop apps that use the Dropsend API.
The most important thing, he says, is making sure the idea is financially viable. Would you pay for it? Be cautious about your projections. It’s a guessing game. Can you get by on 60% of your realistic projections.
Acquisition, my ass! Don’t bet on it. It’s a dumb business model. It’s not a sure thing.
As for all this “is this another bubble?” talk: bollocks.
Onto the budget. Every project is different. Here are the stats for Dropsend:
- £5,000 for branding and UI design by Ryan Shelton.
- £8,500 for development from Plum Digital Media.
- £2,750 for desktop apps.
- £1,600 for XHTML/CSS.
- £500 for hardware.
- £800 a month for hosting and maintenance from BitPusher.
- £2,630 for legal stuff.
- £500 for accounting.
- £1,950 for miscellaneous stuff (travel, etc.).
- £250 for a trademark.
- £200 for a merchant account.
- £500 for a payment processor.
Total: £25,680 (hmm… did £500 go missing somewhere?).
When you’re building a team, don’t go for the rockstars. Go for the quiet guys; they’re cheaper. Ask friends for recommendations. You could try outsourcing but it didn’t work out for Ryan when he tried outsourcing to India.
Now, what about scalability?
Ryan recommends buying just enough hardware to launch. Basecamp launched with just one server, for instance. Wait to see if your app is successful before you throw a lot of money at it.
Build scalability into the architecture of your application. Think about it ahead of time so you don’t have to take everything offline for a week. Plan, but don’t obsess.
How do you keep it cheap?
Don’t spend money unless you have to. Don’t buy stationary. Ryan got Dropsend stationary for £1,000. That was dumb.
Don’t get new shiny machines: just say no to Macs, says Ryan.
And no luxuries! You don’t need that company car. Before you spend £25, ask yourself if you have to. No froo-froo features in your app either. Bah! Humbug!
Pay people with percentages of your company (or pizza), advertise on your blog, use IM instead of phone calls, sell your body… he didn’t really say that last one.
Shop around. The first quote he got for hosting was huge.
Pessimism has its place. You will go 10% over budget: plan for it. You will go 3 months over schedule: plan for it. Put it into your cashflow and see if you’re still in business.
Holy crap! Lawyers are expensive.
- £1,00 for terms of service.
- £800 for freelancer contracts.
Cheap software is your friend. Get a £200 linux box for your dev server.
Don’t spend any money on marketing initially. Use blogs and word of month. Build viral shit into your application so it tells people about the service. Writing is a great way to raise profile. So is selling your body.
What about venture capital? You might need it if you need to scale or expand very quickly. But, these days, you need a really, really good reason to go to a Venture Capitalist.
- Don’t spend money unless you absolutely have to.
- Barter for services (sexual favours, for instance).
- Cut features so you can build quickly.
- Be realistic, even pessimistic about cash flow.
- Plan for scalablity, but don’t obsess.