So one of the things that's interesting here is the Amazon component. And the anonymity of Amazon vs a smaller provider. Let's assume for a minute the founders actually wanted to keep it alive (I'm guessing they didn't but that's a whole other story) You're generating revenue of say $40,000 and your Amazon costs are $30K. If you went to a small or mid tier sized provider and said "Good news/bad news. We're generating $40,000 a month and growing (oddly revenue isn't which is again another story) You're costing us $30,000 a month. If we can cap you at $20,000 a month for 12 months that frees us up $20,000 and we can keep 3 employees on in the short term and still grow the business. We can get through the rough patch and continue to grow and in a year from now we can adjust this upward and be worth more. If you insist on $30K, which is your right, we shut the whole thing down because we can't keep the lights on.
Now the provider is either looking at generating $240,000 for the next 12 months or losing everything from your account. He/she is probably doing the deal with you because much of their costs are fixed. But I don't know if/how you have that conversation with Amazon.
[Everpix founder here] Interesting idea and no we didn't try negotiating with Amazon. Not sure how much room there is here?
However it's important to keep in mind in a situation like this, and at this scale of burn rate, you're not looking for a solution to shave off a few thousands $ left and right, which is kicking the can down the road (if even), but for a long term solution.
The key problem here is that I don't think you can realistically switch a business built on the VC funding track to the bootstrap track without the collateral damage of killing your company's essence i.e. the product.
For instance: when suggesting to have fewer employees, that is implying you have room for that or that your employees are interchangeable, which is far from the truth. It's not like we had 5 tech support people, and we could have downscaled to 3. We had hired quite slowly and were already as lean as it gets i.e. 1 person per project: iOS, Web, Infrastructure, Science, Design, Imaging / QA. All these folks were working at full capacity managing a multi-platform service managing hundreds of millions of full-res photos with ~100 servers, displaying photo collections of 10,000+ photos in very responsive apps, and running cutting edge computer vision science at a scale no other consumer photo startup was doing (the closest was the semantic search in Google+ Photos). You can certainly cut salaries (which we did and only works up to a certain point in the very competitive SV hiring market), but you can't remove positions which would be akin to extending a bridge to nowhere.
> But I don't know if/how you have that conversation with Amazon.
I do. I've had a conversation like that with Amazon. What I found is the Amazon hosting team is excellent: they moved mountains for my account to get us to success.
The Amazon account exec arranged immediate discounts and bridge services, even working through the holidays, then brought in multiple engineers for phone calls with me to teach me how to optimize our project to cost less to run. Every one of the Amazon people who helped me was 100% on board with finding ways to make the project successful.
That conversation is always worth having with vendors in my experience. They may be able to come up with ideas, or offer rebates, or promotions, or even convertible note financing toward the next fundraising round.
When I first read their story, I wondered exactly what you wrote: how much was their amazon hosting bill and could they have at least kept the lights on if they went with a smaller provider?
I know when I was doing my music start up it would cost is many many times more to be on amazon than the two high power dedicated servers.
I don't know the story in their case but I find it shocking how many high bandwidth start ups have never even explored the option of not using AWS. I mostly blame this problem to the easy availability of funding which encourages you to throw money at problems. The issue though is that the more you build out your infrastructure around AWS exclusively, the harder it will be to explore other options later.
Or simply take those $30k and get some colocation and hardware - get the monthly operational costs down to sub-$10k easily.
It strikes me every time how much money people sink down on Amazon(AWS) when they can do it themselves for a lot less. The usual counter-argument is "but we didn't have money for a sysop", well yeah - your devs/devops needs to manage the AWS system as well, it's not much harder to manage real hardware / servers and network.
Another post that striked me was $300k in consultants, thats more than 3 years of full-time employees - what did they do? Was it worth it?
What a hugely useful thing for you guys to do. Thank you, truly.
The lesson I see from this: AWS hurts bad if you are using it heavily, but salaries... salaries kill. Automate, outsource and self-build as much and as long as you can possibly stand it, and then push on a lot longer than that.
>The lesson I see from this: AWS hurts bad if you are using it heavily, but salaries... salaries kill. Automate, outsource and self-build as much and as long as you can possibly stand it, and then push on a lot longer than that.
Going off on a tangent here, but if (a) "software is eating everything" and (b) "salaries kill", wouldn't that mean a society of mass (30%+) unemployment in the future?
I wonder who would have the money to pay for stuff like Everpix or any other offering at that point...
I did some spreadsheet-ing to look at the "profitability" of their userbase. If the business were sustainable, then Monthly Recurring Revenue [1] would be higher than the cost to service the customers [2]. If not, then growing the userbase just increases total monthly losses (assuming a steady freemium conversion rate).
In Everpix's case, it appears they were growing unsustainably.
Their data shows that all the way up until February 2013, they were spending $3 on AWS for every $1 of MRR. That's scary, because it means that a new customer bringing $1 MRR was actually increasing their monthly losses due to usage costs!
Things got better though. In March and April 2013, a surge in premium users seems to have shifted the balance in the right direction. But still, for May 2013 until the shutdown they were spending $1.20-1.40 on AWS to service every $1 MRR.
So growth in their userbase was actually increasing their total burn rate, which makes growth unsustainable.
Your analysis is certainly logical, but with all due respect relies on the faulty assumption that Everpix's infrastructure, responsible for almost all of variable costs, was somehow "frozen".
The reason we were getting closer and closer to being positive on variable costs (looking at revenues on a sales recognition basis, since from the sales volume perspective, things were already positive in the last few months) is, yes, improved monetization, but more importantly AWS optimizations. We had squeezed a lot out of S3, then EC2 and our last step, the one we were working on before shutting down, was RDS where there was a ton of room. Looking at our trajectory, I'm pretty confident we would have been positive even on AWS (but unlikely much). You can even compound that with AWS discounts which apparently even startups can get looking at other comments in this thread.
To re-iterate, you would not build a freemium business like Everpix, with intense computing and storage requirements, at scale on AWS. Large photo platforms have their own storage and servers. Everpix was never intended to grow out of AWS either and you know you can cut your infrastructure costs to at least half. That was the plan post Series A. Most CTO / CEOs of large established photo companies I talked to said they were doing much better than this 1/2X, so that's conservative (I've been told ranges of 3-8X in savings vs S3 for instance).
Anyway, Everpix was bringing about $6 revenue / user / year IIRC, which is the part that really matters considering the denominator, infrastructure costs, is something you know you can really bring down. One relevant reference point is 500px for instance which is doing about $1 revenue / user / year [1]. I would be surprised if they were growing "sustainably" too ;)
Why would it be unusual for the majority of costs to be salaries for a company that sells services and develops products? This has nothing to do with the "talent war." That's just the way things work. What else would they be spending money on?
> AWS - $394,588.35 - or 14% of total costs
How much higher would that number have been had Everpix built out their own infrastructure?
This is pretty dense stuff. We're working on putting together a more extensive and user-friendly site to make sense of this heap of data. Stay tuned. :-)
6800 subscribers. 2,665,192.34 in expenses.
50000 users.
$395 per subscriber per year. $35/mo.
Convert 10% more of users.... 5000 and it's still $20/mo.
Was this really $5/mo or $40/yr?
There had to be a story about HR plateauing and subscribers increasing an order of magnitude in 12 mo. - and it's still under water for another 2 years.
Who saw the writing on the wall and when did they start raising the warning flags? What happened from then on? What warning signs (talent leaving, investors glaring) showed up? When? How did they take form?
I went through an exercise to recast the numbers as a bootstrapped company here in New Zealand. we don't, for example, have any healthcare costs, and items like legal fees, rent and salaries (including taxes) are substantially lower.
I have 3 Questions for the founders, if possible:
How much did you play with pricing to try to drive revenue per customer up? e.g. Did you consider/test no free customers, higher pricing and gold tiers?
The consultants cost of $272k seems very high - what sort of consultants was this spent on?
If you did it again as a bootstrap (i.e. founders are in control), what are the to 3 things that you would you do differently that would impact on costs and revenue?
The trend towards startup transparency is pretty damn awesome as a startup founder myself. Even with startups that have nothing to do with photo sharing, being able to see the guts of a (failed) startup is extremely insightful.
Thank you for this. Reading the VC letters was just so amazingly refreshing I can't begin to tell you. I love how they said "no" in almost all the same ways.
I'd really like to know the two that were so standup, that they wouldn't fund a competitor or someone who could, eventually, be a competitor. In all honesty, those are the types of funds you want backing you. They've bought your vision and they're not going to do anything to undercut you.
Are you kidding? The "we can't fund a competitor" VCs are just saying "no" like everyone else. There's nothing particularly noble (or ignoble) about it.
It's not uncommon for VCs to have policies of not funding competitive startups, it's in their own interests as well as the startups.
If a VC has funded two competitors it means the startups become reluctant to share information with the VC, the founders of the first startup become unhappy with the VC and follow-on rounds become very messy and cause bad politics.
Certainly it happens (in some cases due to pivots, etc.) but I imagine it's something that most funds would prefer to avoid.
Could Everpix have been run by a very small team at the end, rather than shut down? It looks like it was near adding a net 1,000 subscribers per month.
Also, wouldn't it have been possible - with the understood pain points - to substantially reduce costs by moving off of AWS? Trading the ease of AWS for the critical cash for operations.
Yes they probably could have. I'm purely guessing here but I suspect the founders had a decision just like the VC's. Does anyone want to keep this alive and try and salvage it? It would be doable but a massive grind for 18 months and we're probably never going to build much more than a $5 to $10 million per year business even if we really do make it. Or do we just want to chalk this one up and walk away and use the experience to try and hit a home run next time?
Buried beneath a stack of preferences it makes little sense for founders to make any sacrifices to save the company (i.e. not take a salary for a while) since all money will go to investors first.
You know at some point we are going to have to sit back and ask "Where the F&*^K" does this $100M or $1B business number comes from.
The minute I get the opportunity to put my money my mouth is, I will invest solely in lifestyle businesses: one to two guys/gals wanting to build a profitable business with a yearly dividend, one where if the team makes $500,000/year we are all extremely happy.
You can already do that; invest in existing companies that pay a dividend. They're established and they understand that their investors value their continued profits more than risky behavior.
> "Where the F&^K" does this $100M or $1B business number comes from*
Funding rounds that want to raise millions in VC are for companies that aim to eventually be a $100M business.
A smaller business wouldn’t involve venture capital. And the bank is still a viable option if capital is needed to scale, as long as there is a realistic repayment plan.
This is what separates you from the real movers and shakers: they just want to get in, get theirs, and get out, and they believe they're sufficiently smarter than the rubes to do it.
$30K/month and ~100 servers seems like a huge waste. I'm in the business of managing similar services. I handle, not photos, but video streams. My work is for one of the largest companies in the world (Fortune-5) and I deal with things like superbowl traffic spikes, etc... Everything is handled in house but for spiky loads, we look to things like Akami.
I realize managing at Fortune-5 is different than 100% oursourcing but the cost constraints, I have to imagine, are very similar. For example, I have to imagine Amazon gets similar price breaks from Cisco as my company - I know Amazon has custom built servers and all so there may be some advantages but at $30K/month, I think any hosting company would happily take 1/2 or 1/4 of that.
I'd be curious to know what kind of bandwidth loads you were pushing through AWS and how much of the AWS cloud can be made redundant per client.
Could anyone please clarify for me following things? I have just started to learn about startup capital.
1. Since company is now closed down what happens to Investor's money ? Do they just loose all or do owners have to return it ? ( sorry if this seems pretty noob but I would like to know it )
2. What does 1 year maturity mean in convertible notes ?
3. Shouldn't the Net Operating Income be negative ? Since they had income of $280696 and Expense were $2,665,192.34 ?
Did they count investor's money as income ? or how did they arrive at $2,384,224.67 ?
Thank you for the reply.
The elephant in the room that nobody is talking about here is
they gave away too much. They could have adjusted their freemium model. Why not contact people using a lot of resources ? Let them know the best way to keep the services up at the current clip is for them to start paying.
That's my feeling t0o. I had been using it for a few months before it shut down and was amazed at the amount I could host for free. I recommended the service to a number of people and would have been willing to pay for it if I needed to.
Also I don't get why it disappeared from one day to the next... Couldn't they massively restrict free usage? Or have some form of donation/fund raising à la Reddit Gold? people were attached to the product and it was disappointing to see it just go away /rant
These are very interesting numbers. Obviously the financials are not well suited to the VC-backed startup model, but I wonder if Everpix could have been successful as a small business run by a small handful of people.
In the "About Everpix" part, the text make it seem like the app was doing ok and the reason they had to shut it down was because investors didn't want to invest in it anymore for whatever reason.
Well, the lack of investors was surely a big symptom of their failure but the cause it was not.
When you burn > $2 million in funding ($200k alone in PR and "Promotional Expenses" as their spreadsheet shows) and still can't get through the timid mark of 50 thousand users, then maybe there is something very wrong with your business model that you should think about.
I'm confident that's something that crossed all the investors minds during the series A conversations. They didn't mention that fact directly because it could sound too harsh or rude and they wanted to keep the relationship in good spirits, obviously.
The startup game is tuff, no doubt about it. I hope the Everpix guys learn their lesson and to better next time, they look like cool and competent people.
The PR expenses (109,552.34) seem pretty high and I wonder what that line item entails. Did you guys use a PR firm or run any expensive marketing campaigns?
No marketing campaigns (we spent maybe ~10K on online ads mostly for testing). We did use a national PR firm though for several months and PR contractor for a couple months as well before that.
Why is the main focus on Aws costs when in comparison the HR costs are multiple of the Aws costs? Is it because were too technically minded here? Is it cause the charts in the article only showed the Aws costs whereas including the HR costs would have changed that perception. I don't know but i just keep seeing people focus on the Aws cost which was not the real problem in comparison.
Note my other comment. It hints at this. You make the point clearer.
The technical costs are not damning. Where is the concern about the other costs, which aren't being picked apart? If AWS was 0, it's still unsustainable growth until someone (swisspol?) dispels our concern there.
Another big void is who was pulling the plug and how/what are the founders and direct employees feeling? I'd like to know if there were ship-abandoners, etc.
What is the turning point and what were they decision makers watching that caused the shift?
This doesn't look like a technical learning here. This looks like a business learning. So, while they're being transparent and it's still fresh :) share.
We can A/B test buttons. How do you A/B test business decisions?
It looks like a bunch of people can armchair this thing, technically, to the point where it makes me wonder if someone could NOT take on nearly the funding and make the $100M company on this idea with just some bootstrapping.
Also... how was there not a pricing model that scaled with use?
[+] [-] jusben1369|12 years ago|reply
Now the provider is either looking at generating $240,000 for the next 12 months or losing everything from your account. He/she is probably doing the deal with you because much of their costs are fixed. But I don't know if/how you have that conversation with Amazon.
EDIT: Oh and fantastic that they shared.
[+] [-] swisspol|12 years ago|reply
However it's important to keep in mind in a situation like this, and at this scale of burn rate, you're not looking for a solution to shave off a few thousands $ left and right, which is kicking the can down the road (if even), but for a long term solution.
The key problem here is that I don't think you can realistically switch a business built on the VC funding track to the bootstrap track without the collateral damage of killing your company's essence i.e. the product.
For instance: when suggesting to have fewer employees, that is implying you have room for that or that your employees are interchangeable, which is far from the truth. It's not like we had 5 tech support people, and we could have downscaled to 3. We had hired quite slowly and were already as lean as it gets i.e. 1 person per project: iOS, Web, Infrastructure, Science, Design, Imaging / QA. All these folks were working at full capacity managing a multi-platform service managing hundreds of millions of full-res photos with ~100 servers, displaying photo collections of 10,000+ photos in very responsive apps, and running cutting edge computer vision science at a scale no other consumer photo startup was doing (the closest was the semantic search in Google+ Photos). You can certainly cut salaries (which we did and only works up to a certain point in the very competitive SV hiring market), but you can't remove positions which would be akin to extending a bridge to nowhere.
Regarding the infrastructure expense, I shared some thoughts here: https://news.ycombinator.com/item?id=7041640
[+] [-] jph|12 years ago|reply
I do. I've had a conversation like that with Amazon. What I found is the Amazon hosting team is excellent: they moved mountains for my account to get us to success.
The Amazon account exec arranged immediate discounts and bridge services, even working through the holidays, then brought in multiple engineers for phone calls with me to teach me how to optimize our project to cost less to run. Every one of the Amazon people who helped me was 100% on board with finding ways to make the project successful.
That conversation is always worth having with vendors in my experience. They may be able to come up with ideas, or offer rebates, or promotions, or even convertible note financing toward the next fundraising round.
[+] [-] zaidf|12 years ago|reply
I know when I was doing my music start up it would cost is many many times more to be on amazon than the two high power dedicated servers.
I don't know the story in their case but I find it shocking how many high bandwidth start ups have never even explored the option of not using AWS. I mostly blame this problem to the easy availability of funding which encourages you to throw money at problems. The issue though is that the more you build out your infrastructure around AWS exclusively, the harder it will be to explore other options later.
[+] [-] rnts08|12 years ago|reply
It strikes me every time how much money people sink down on Amazon(AWS) when they can do it themselves for a lot less. The usual counter-argument is "but we didn't have money for a sysop", well yeah - your devs/devops needs to manage the AWS system as well, it's not much harder to manage real hardware / servers and network.
Another post that striked me was $300k in consultants, thats more than 3 years of full-time employees - what did they do? Was it worth it?
[+] [-] unknown|12 years ago|reply
[deleted]
[+] [-] carsongross|12 years ago|reply
The lesson I see from this: AWS hurts bad if you are using it heavily, but salaries... salaries kill. Automate, outsource and self-build as much and as long as you can possibly stand it, and then push on a lot longer than that.
[+] [-] coldtea|12 years ago|reply
Going off on a tangent here, but if (a) "software is eating everything" and (b) "salaries kill", wouldn't that mean a society of mass (30%+) unemployment in the future?
I wonder who would have the money to pay for stuff like Everpix or any other offering at that point...
[+] [-] nashequilibrium|12 years ago|reply
[+] [-] pkrein|12 years ago|reply
In Everpix's case, it appears they were growing unsustainably.
Their data shows that all the way up until February 2013, they were spending $3 on AWS for every $1 of MRR. That's scary, because it means that a new customer bringing $1 MRR was actually increasing their monthly losses due to usage costs!
Things got better though. In March and April 2013, a surge in premium users seems to have shifted the balance in the right direction. But still, for May 2013 until the shutdown they were spending $1.20-1.40 on AWS to service every $1 MRR.
So growth in their userbase was actually increasing their total burn rate, which makes growth unsustainable.
You can see the spreadsheet analysis here: https://docs.google.com/spreadsheet/ccc?key=0Ap7fmpANG_0QdHV...
[1] https://github.com/everpix/Everpix-Intelligence/blob/master/... [2] https://github.com/everpix/Everpix-Intelligence/blob/master/...
[+] [-] swisspol|12 years ago|reply
The reason we were getting closer and closer to being positive on variable costs (looking at revenues on a sales recognition basis, since from the sales volume perspective, things were already positive in the last few months) is, yes, improved monetization, but more importantly AWS optimizations. We had squeezed a lot out of S3, then EC2 and our last step, the one we were working on before shutting down, was RDS where there was a ton of room. Looking at our trajectory, I'm pretty confident we would have been positive even on AWS (but unlikely much). You can even compound that with AWS discounts which apparently even startups can get looking at other comments in this thread.
To re-iterate, you would not build a freemium business like Everpix, with intense computing and storage requirements, at scale on AWS. Large photo platforms have their own storage and servers. Everpix was never intended to grow out of AWS either and you know you can cut your infrastructure costs to at least half. That was the plan post Series A. Most CTO / CEOs of large established photo companies I talked to said they were doing much better than this 1/2X, so that's conservative (I've been told ranges of 3-8X in savings vs S3 for instance).
Anyway, Everpix was bringing about $6 revenue / user / year IIRC, which is the part that really matters considering the denominator, infrastructure costs, is something you know you can really bring down. One relevant reference point is 500px for instance which is doing about $1 revenue / user / year [1]. I would be surprised if they were growing "sustainably" too ;)
[1] http://techcrunch.com/2013/08/07/500px-scores-8-8m-series-a-....
[+] [-] mbesto|12 years ago|reply
https://github.com/everpix/Everpix-Intelligence/blob/master/...
And here it is - the side effects of the talent war in full effect:
HR - $1,374,695.06 - or 52% of total costs
And the real winners of the whole thing (the pick axe industry):
AWS - $394,588.35 - or 14% of total costs
[+] [-] crystaln|12 years ago|reply
Why would it be unusual for the majority of costs to be salaries for a company that sells services and develops products? This has nothing to do with the "talent war." That's just the way things work. What else would they be spending money on?
> AWS - $394,588.35 - or 14% of total costs
How much higher would that number have been had Everpix built out their own infrastructure?
[+] [-] suyash|12 years ago|reply
[+] [-] wwayneee|12 years ago|reply
This is pretty dense stuff. We're working on putting together a more extensive and user-friendly site to make sense of this heap of data. Stay tuned. :-)
[+] [-] rgovind|12 years ago|reply
[+] [-] ameister14|12 years ago|reply
[+] [-] swisspol|12 years ago|reply
[+] [-] RobPfeifer|12 years ago|reply
[+] [-] minimaxir|12 years ago|reply
Just one of the many important costs of a freemium business model.
[1] https://github.com/everpix/Everpix-Intelligence/blob/master/...
[+] [-] pistle|12 years ago|reply
6800 subscribers. 2,665,192.34 in expenses. 50000 users.
$395 per subscriber per year. $35/mo.
Convert 10% more of users.... 5000 and it's still $20/mo.
Was this really $5/mo or $40/yr?
There had to be a story about HR plateauing and subscribers increasing an order of magnitude in 12 mo. - and it's still under water for another 2 years.
Who saw the writing on the wall and when did they start raising the warning flags? What happened from then on? What warning signs (talent leaving, investors glaring) showed up? When? How did they take form?
[+] [-] lancewiggs|12 years ago|reply
I went through an exercise to recast the numbers as a bootstrapped company here in New Zealand. we don't, for example, have any healthcare costs, and items like legal fees, rent and salaries (including taxes) are substantially lower.
I have 3 Questions for the founders, if possible:
How much did you play with pricing to try to drive revenue per customer up? e.g. Did you consider/test no free customers, higher pricing and gold tiers?
The consultants cost of $272k seems very high - what sort of consultants was this spent on?
If you did it again as a bootstrap (i.e. founders are in control), what are the to 3 things that you would you do differently that would impact on costs and revenue?
[+] [-] jmathai|12 years ago|reply
I'm founder @ Trovebox and recently posted this which anyone doing a subscription consumer photo service should read.
"Hello 2014, Goodbye Consumer Photo Service" - https://medium.com/p/b1234eaf75b
[+] [-] dchuk|12 years ago|reply
[+] [-] wheaties|12 years ago|reply
I'd really like to know the two that were so standup, that they wouldn't fund a competitor or someone who could, eventually, be a competitor. In all honesty, those are the types of funds you want backing you. They've bought your vision and they're not going to do anything to undercut you.
[+] [-] MediaSquirrel|12 years ago|reply
[+] [-] ig1|12 years ago|reply
If a VC has funded two competitors it means the startups become reluctant to share information with the VC, the founders of the first startup become unhappy with the VC and follow-on rounds become very messy and cause bad politics.
Certainly it happens (in some cases due to pivots, etc.) but I imagine it's something that most funds would prefer to avoid.
[+] [-] adventured|12 years ago|reply
Also, wouldn't it have been possible - with the understood pain points - to substantially reduce costs by moving off of AWS? Trading the ease of AWS for the critical cash for operations.
[+] [-] jusben1369|12 years ago|reply
[+] [-] accountoftheday|12 years ago|reply
[+] [-] dreamfactory2|12 years ago|reply
[+] [-] loceng|12 years ago|reply
[+] [-] rokhayakebe|12 years ago|reply
The minute I get the opportunity to put my money my mouth is, I will invest solely in lifestyle businesses: one to two guys/gals wanting to build a profitable business with a yearly dividend, one where if the team makes $500,000/year we are all extremely happy.
[+] [-] ameister14|12 years ago|reply
[+] [-] sorbits|12 years ago|reply
Funding rounds that want to raise millions in VC are for companies that aim to eventually be a $100M business.
A smaller business wouldn’t involve venture capital. And the bank is still a viable option if capital is needed to scale, as long as there is a realistic repayment plan.
[+] [-] syntern|12 years ago|reply
We need to give these lifestyle business more spotlight, so that people who are aiming for such won't get embarrassed that they are not aiming for $B.
[+] [-] username223|12 years ago|reply
[+] [-] EricMayo|12 years ago|reply
I realize managing at Fortune-5 is different than 100% oursourcing but the cost constraints, I have to imagine, are very similar. For example, I have to imagine Amazon gets similar price breaks from Cisco as my company - I know Amazon has custom built servers and all so there may be some advantages but at $30K/month, I think any hosting company would happily take 1/2 or 1/4 of that.
I'd be curious to know what kind of bandwidth loads you were pushing through AWS and how much of the AWS cloud can be made redundant per client.
[+] [-] JoachimSchipper|12 years ago|reply
[+] [-] bidev|12 years ago|reply
Could anyone please clarify for me following things? I have just started to learn about startup capital. 1. Since company is now closed down what happens to Investor's money ? Do they just loose all or do owners have to return it ? ( sorry if this seems pretty noob but I would like to know it ) 2. What does 1 year maturity mean in convertible notes ? 3. Shouldn't the Net Operating Income be negative ? Since they had income of $280696 and Expense were $2,665,192.34 ? Did they count investor's money as income ? or how did they arrive at $2,384,224.67 ? Thank you for the reply.
[+] [-] karangoeluw|12 years ago|reply
> 1. Since company is now closed down what happens to Investor's money ? Do they just loose all or do owners have to return it ?
They lose it. http://en.wikipedia.org/wiki/Venture_capital
[+] [-] inkaudio|12 years ago|reply
[+] [-] MasterScrat|12 years ago|reply
Also I don't get why it disappeared from one day to the next... Couldn't they massively restrict free usage? Or have some form of donation/fund raising à la Reddit Gold? people were attached to the product and it was disappointing to see it just go away /rant
[+] [-] stevenwei|12 years ago|reply
[+] [-] rl12345|12 years ago|reply
Well, the lack of investors was surely a big symptom of their failure but the cause it was not.
When you burn > $2 million in funding ($200k alone in PR and "Promotional Expenses" as their spreadsheet shows) and still can't get through the timid mark of 50 thousand users, then maybe there is something very wrong with your business model that you should think about.
I'm confident that's something that crossed all the investors minds during the series A conversations. They didn't mention that fact directly because it could sound too harsh or rude and they wanted to keep the relationship in good spirits, obviously.
The startup game is tuff, no doubt about it. I hope the Everpix guys learn their lesson and to better next time, they look like cool and competent people.
[+] [-] hv23|12 years ago|reply
The PR expenses (109,552.34) seem pretty high and I wonder what that line item entails. Did you guys use a PR firm or run any expensive marketing campaigns?
[+] [-] swisspol|12 years ago|reply
[+] [-] barclay|12 years ago|reply
[+] [-] FollowSteph3|12 years ago|reply
It makes me think of bad pre-optimizations ;)
[+] [-] pistle|12 years ago|reply
The technical costs are not damning. Where is the concern about the other costs, which aren't being picked apart? If AWS was 0, it's still unsustainable growth until someone (swisspol?) dispels our concern there.
Another big void is who was pulling the plug and how/what are the founders and direct employees feeling? I'd like to know if there were ship-abandoners, etc.
What is the turning point and what were they decision makers watching that caused the shift?
This doesn't look like a technical learning here. This looks like a business learning. So, while they're being transparent and it's still fresh :) share.
We can A/B test buttons. How do you A/B test business decisions?
It looks like a bunch of people can armchair this thing, technically, to the point where it makes me wonder if someone could NOT take on nearly the funding and make the $100M company on this idea with just some bootstrapping.
Also... how was there not a pricing model that scaled with use?