Why we stopped raising until we no longer need the money

Note: This now has a follow up post about how we successfully raised our seed round.

There's a well known mantra in the startup world that I used to believe in - "Launch early". The concept is to launch a minimal product (MVP in lean startup terms), get real world feedback and iterate quickly.

Feedback and iterations are great and will improve your product to no ends. However, this is bad advice if you intend to raise outside funding (VC in particular). Let me explain by relating to my personal experience:

Me and my co-founder Adam launched Binpress in the beginning of 2011. We are experienced product guys, so we had no problems launching a polished product without funding. Building web products is what we've been doing for a long time. Our thinking was that building and launching a product, getting some users and some revenue will put us in a better position when we would like to raise capital.

(For a quick summary, you can skip to the TL;DR at the end)
Continue reading Why we stopped raising until we no longer need the money

Building an app does not make you a startup

I just read Andrew Chen's Mobile app startups are failing like it’s 1999. He raises a good point about the closed nature of mobile app development, which for the most part is a reflection of the Apple way of doing things and especially the appstore review process.

Most software products are not a billion dollar business

Before I touch on how that process can be improved, I want to talk about what I see as the core problem here - many of those VC backed apps, are not in fact, startups. They are startups in the old-school sense, in that they are a new business starting up, however they are not what VCs are claiming they want to back - in short, they are not appropriate for VC funding.

Once you take VC money, the game and expectations change completely, and the vast majority of those failed mobile "startups" never had any chance of living up to those expectations in the first place. Some of those actually have decent launches in relative terms, if they were considered as normal software products and not as startups that were hailed as the "next big thing". If they had just raised regular funding, via friends and family, loans and personal funds, they could have been a nice small business that generates a decent revenue stream for their founders.

As it stands though, with VC money, those apps will be considered a failure, which is too bad. The mobile trend, just like any other funding trend (social, local, offers etc), makes VCs take a leap of faith and buy into the dreamy future the creators of those apps are painting, while in fact they are just building regular software that is derivative of existing products with a small, fairly insignificant twist. There are exceptions, but most of the apps I see founded leave me wondering how someone can consider them a possible billion dollar business.

In fact, I'd go further and say that the fact those founders have no initial product actually helps them raise - as it's easier to sell dreams than reality. I have a post coming up on that exact topic, which I call the funding paradox.

Reducing costs and time to market

What can do we do to combine the agility we learned in the past decade with the requirements of the App Store?

Back to the original point of Andrew's article - lack of agility and relatively high time to market in the mobile space. This problem is not unique to mobile and many software products have this process - despite the introduction of more agile development models in the last couple of decades.

I co-founded my current startup, Binpress, to counter that exact problem. While each app has its own concept and core features that are unique to it, the fact of the matter is that many features are shared across apps. Things like in-app notifications, sharing options, review reminders, UI elements and so forth - are developed from scratch at each company. Those are solved problems that do not need to be developed over and over again.

At Binpress we build a curated inventory of code components for any development vertical, including mobile apps (our fastest growing category right now). We are a marketplace and a discovery tool for free and commercial mature code solutions that solve common needs in software development.

Our main goal in building such a service is to promote code sharing as a business that improves the software industry as a whole. There's no need for every app dev team to build their own solutions for everything, when much of it has already been done to death before. You waste time and money building it, and you waste time and money debugging and QA'ing it, when mature solutions are already available.

I like to make the analogy to car manufacturing which is a mature market compared to software development. Consider that no car company makes their own wheels, or their own screws, and some don't even make their own engines. They focus on designing cars that best integrate those various components which are built by companies that are experts at it.

I am convinced that this kind of component-based development is the future of the software industry. Cherry pick mature solutions to fill out necessary but not unique core features, shorten your development cycle and concentrate on the unique value your product delivers to your target audience. It's really a no brainer.

Check out Binpress and let me know what you think is the solution to the app development life-cycle.

 

Breaking down the PayPal API

PayPal is the most popular platform for receiving online payments. The relative ease of opening a PayPal account and receiving payments compared to opening a merchant account for a traditional payment gateway is the number one reason, and another is the comprehensive API they provide for their payment services.

Foreclosure: The PayPal API is amongst the worst I've ever had to deal with - inconsistencies, sometimes poor and conflicting documentation, unpredictable failures and account changes and major differences between the live and sandbox versions all conspire to make working with the PayPal API quite a pain in the ass.

Unfortunately, there doesn't seem to be any better alternatives currently, so hopefully this guide will help ease the pain for some of you out there taking your lumps working the API into your applications.
Continue reading Breaking down the PayPal API

Last call for the Binpress programming contest

The Binpress programming contest is entering the last stretch - 10 days left until the end. Over $40,000 in prize value is still up for grabs - request an invitation and get your submission entered.

A short recap - my startup, Binpress - a marketplace for source-code, is running a programming contest for best submission of a source-code package in one of the 6 top web languages - PHP, Python, Ruby, Java, ASP.NET (C#, VB.NET) and Javascript. One grand winner and two runner ups will be chosen, as well as the top pick for each language. We have over $40,000 value in cash and prizes that is sponsored by companies such as Google, Amazon, PayPal and Zend.

So far we've had over 70 submissions in the various languages. Some of the submissions are really top notch and there's no clear winner right now. Submissions will start go out to our judges next week for review and the judging will take up to two weeks after the deadline for the contest.

Hope to see what you have to offer there!