Pere HospitalCSO @ Cloudways. IT Security & Cloud.
Bio

Co-Founder & CSO @ Cloudways. Geek with awesome knowledge of Cloud environments combined with a thorough Security background (CISSP&OSCP certified). Bootstrapping believer and adept to Lean everything. Co-Founder at TUVPN (Acquired 12'). Mentor at Generalitat de Catalunya.



Recent Answers


I agree with Mike that getting their feedback is important. Other characteristics that your plan must have:

* Simple - Don't over-complicate. Make something that is mostly straightforward and easy to understand: $X per conversion, %Y of all revenue during first 3 month ...

* Aligned - Make sure the plan is aligned for the current objectives of your business. Is your target to increase customers as fast as possible ? Then pay per conversion. Is your target increase MRR and reduce churn ? Then pay an increasing % of revenue over a number of months ...

* Immediate - Any plan your devise, make sure that sales people get the pain or gain as soon as possible (ideally monthly). Plans where pains or gains are further into the future don't incentivize as much as near real time ones.

Pere


That will be absolutely subjective.

You are going to be dealing with angel investors at this stage, so valuation will be highly dependent on how personally interested is the potential investor on what you are doing and how crazy are your expectations about what you are doing.

I say crazy, not in a pejorative way, but realistically most entrepreneurs tend to underestimate the challenges ahead of them and overestimate the potential for growth of what they are building (at least in the short/mid term).

If you are able to find an angel investor who is extremely excited for the field in which your startup will operate, and you have a more or less sound product and go to market strategy, then you will get a better valuation. This is the type of seed investor that you need to look for.

Also, don't get more money than what you absolutely need for the next 6 month. You will be in an infinitely better position to negotiate once you have traction. Traction trumps everything.

Cheers,

Pere


Guess you have considered asking them to prepay. Depending on number of customer you have and monthly amounts, offering an enticing yearly prepaid option can help you raise some cash.

Have you thought about providers better than clients for direct funding?. If you work closely with a provider who understands your business and has a stake in your success, then they can be better positioned than customers to help you out.

Best,

Pere


If you will primarily contact leads via email, then customer.io definitely. Besides A/B testing, it offers plenty of other options. We have been using it for nearly two years, and it has helped tremendously in conversions.

outbound.io adds mobile push and SMS if you need more than email.

Hope this helps.

Pere


Trying to raise money with no customers/revenue will always put you at a disadvantage when trying to bargain for any deal, and you will always end up giving more than you should.

What I would suggest is to carefully analyze which is the minimum runway capital that you need for the launch of the first market and to demonstrate that a need exists.

* Decide which is the market with the best chances to get customers on.
* Outline the bare minimum that you need to build and launch a MVP in that market (dev, PPC campaign ...).
* CLEARLY build a timeline of events and milestones linked to above.
* Add 25% to both money and time for some extra runway that you will surely need.
* Go and pitch to angels JUST for this initial / clearly defined stretch. If you have stomach for it, consider FFFs (Family, Friends and Fools) for launch (best possible deal).
* In any case, difficult to get something for anything short of 10%.

Another option, if you idea is really great, is to apply for an accelerator (there many, many) that will get you some cash, speed up your success/failure and give you some contacts for approx the same %).

Cheers,

Pere


Definitely DON'T go for funding at this stage. It would be just TOO COSTLY for you in terms of the stake you will have to give away for a limited amount.

Most likely at this stage, you don't even have a clear picture if you really need the investment. Have you mobilized all the cash you can on your own? All I mean absolutely all. You don't want to ask for money when you are saving some bucks just in case your idea doesn't work. Have you raised some from FFF (Family, Friends and Fools)?. Again, don't go to angels until you have covered your very basics with those.

All in all, most probably what is best for you is to grow this a bit more, get some proper biz metrics in place (churn, growth, revenue per user ...), experiment a bit with which marketing tools will work best for you and start a fire. When you have this fire started (i.e. you know, backed by data, what works and what doesn't), then YOU MAY buy some gasoline (i.e. ask for cash). Don't do it before.

Always keep this in mind that I read in some book:
"A FOOL AND HIS/HER EQUITY ARE SOON DEPARTED"

Pere


There is not much background information when it comes to what your company is doing, but will try to provide some tips.

Assume you are working with customers and have some kind of ticketing system in place, so for:

1) I would be sending a very short survey with every single ticket just asking customers to rate the service they have received. Extremely well, Very well, Moderately well, Slightly well, Not at all well. This over time will give you very good indications on how the team is doing and how changes you apply impact customer satisfaction. There are many other important metrics when it comes to support but this one is key.

2) Again, no idea on what your product is about but i.e. in our case we monitor plenty of backend metrics. Successful/failed servers, successful/failed applications launched and so on for most important operations on the network.

3) Don't think that there is really a metric for that. You want to measure impact of new stuff you do in already present metrics and correlate success. Letting people innovate is more a culture related thing and how your organization embraces success/failure (as innovating implies failing many times and people will not innovate if they think they job is at stake)

In any case, for any metric to have any impact, it must be OBVIOUS to every one working for you. Make it AS EASY AS POSSIBLE for everyone to check metrics, try to make this a habit for key people in your organization if not everyone. We send a daily heart-bit to everyone with most important metrics and we have a grafana dashboard for each team, accessible to everyone with all historical metrics where people can thoroughly examine trends and see impact of everything we do.

Building a metric based culture, even if difficult is worth every drop of sweat it takes.

Pere


Running a PaaS and have tested all tools and more.

It all depends on the level of control that you want.

I would DEFINITELY recommend you using one of the new breed configuration tools out there. Specifically if you don't have much experience and want to get things done quickly, ansible would be the way to go.

Ansible is easy to learn, based on standard SSH and easy to scale (currently we configure/orchestrate over 5000 servers with it), and it will give you a high degree of control.

Besides you have tons of ready made playbooks to use:
https://galaxy.ansible.com/

Ping me if you want to dig deeper.

Pere


It really depends on a lot of factors (i.e. type of business you are in, how much cash intensive it is ...).

As a general rule though, I would advice you to BOOTSTRAP AS LONG AS IT IS POSSIBLE.

Bootstrapping has a lot of advantages, nonetheless that you get in lean mode and make the best of each possible opportunity (or else you are out). Bootstrapping, while building a set of CORE METRICS around your business, will help you realize the real value and potential of what you are building.

As CORE METRICS (revenue, users, ARPU, LT, LTV, churn...) improve, the cost of financing will decrease. So you will be able to get funding on better terms.

Also following a path similar to this, will give you a much better understanding on WHAT YOU NEED FUNDING FOR (besides getting a nicer office). Metrics will tell you and investors will know.

Can you be bootstrapping for ever?. Probably yes (if this is what you want and how do you want your business to evolve), although most probably not advisable. When the metrics are right and you have a fire burning (as clearly seen in the METRICS), I would say it is time to get some petrol and make it much bigger.

Happy to chat about my experience.

Pere


By far, it is managing cash flow. You need to be VERY good at it. There is an extremely fine balance between the speed you can invest and the speed at which you get new customers (i.e. revenue). And it is very easy to tip it of one way or another.

If you are too risk averse, you will not invest enough and grow too slowly and be overtaken by market, if you take too many risks, you can be broken and have to shut down ... as said, very fine balance!.

But mastering this balance will equip you with extremely useful skills that will prove invaluable for later stages of your startup and that, from my point of view, people that try to get funding as soon as possible don't fully develop.

So face the challenge with a brave face! :)


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