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My co-founder and I have invested $50k together and launched phase 1 of our social network website. We have started marketing in NY metro and have grown to 300 users in 4 weeks. We are in the process of delegating adwords, fb campaigns and twitter campaigns (this means $5k monthly cost). We are finalizing phase II requirements and that means additional $50k investment over the next 3 months. We need a 'check' at this point. Below are my questions:

  1. Is it wise to invest 50k, launch a phase 1, then regardless of the market response, invest ur remaining savings to phase 2? What is the maximum amount 2 co-founders should risk before seeking funding?
  2. We understand we cant get VC's to listen to us unless we have up to 1 million users. But what do we do if we want guidance and assurance from a tech expert that we are on the right track?
  3. Our product is unique and is solving a problem (everyone says that I know!). Should we just invest 100k and then reach out to people and find out our potential? What methods should we apply to get attention of Tech Gurus to look at our phase 1 and provide recommendations before we plunge into spending another $50k?
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At the second stage, consider security and integration, as the first stage was development and initial launch. During security you will solidify and policy the product. Consider making authentication server as separate server, for example. During second stage you can also invest in documentation and release the first API. And make sure it's rock solid obviously. In the following stage, you would need to consider scaling, high availability and monitoring as well support.

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Thanks Andrew. This helps. – Rajiv Jun 25 '12 at 14:13
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Rajiv,

All good questions - and almost impossible for us to answer without being in your shoes. ;)

That said - some things to ponder.

  1. What is the product? Is it paid vs. free? What is the revenue model?
  2. what does your customer interviews say? Do you have a documented list of interviews + hypothesis / educated guesses to perform?
  3. Test assumptions. If everyone needed 1 million users to get funding there likely wouldn't be any commercial internet (beyond big corporations) - and definitely nothing like a Ycombinator.
  4. Everything is social. Think of a good elevator pitch and refine. Then test and refine again. See http://www.emergentone.com/blog/the-evolution-of-an-elevator-pitch/ for an example.

Tech gurus can't tell you what your product should be - your customers will. They buy your product. You need to understand why they do, whether they represent a large enough community to make the venture sustainable, and if - after numerous pivots / feedback / trials - chasing such an effort is still interesting to you. Only you (+partner) can uncover that.

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Thank you Jim. The product is free. it is a social network. we are not able to get customers to tell us the feedback as most people just signed up and are not replying to emails. Although the friends who saw it for the first time really liked the concept and agreed that the site 'solves a problem'. – Rajiv Jun 25 '12 at 14:15

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