I've got an idea for a logistics software service company that is valid. I know what it needs to do, I know what it's specifications need to be, and I know where to acquire customers for close to 0 cost.

I've been in the industry since 2014 and last year generated about 1.9M in sales performing the role this software services. I'd like to think I'll seem credible. My credit is good. My 1099 is sort of pretty.

What do I do next? Do I hack together a ****ty prototype teaching myself to code as I go along? Do I build out a non-working prototype to include in a deck? Where do I find VC's? What kind of deal is standard for something like this?

I have a lot of questions obviously. What do you guys think I should know?

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I normally **** on these ideas, but if a successful startup business person has an idea for automating what they already successfully do, and clients to sell it to, I think it's probably gold.

This is one spot where networking comes in very handy. The ideal situation is finding a coding partner and funding the prototype yourself. Your business know how + his coding ability gets a prototype done. He's also the guy who handles coder hiring as well. You could probably go 30% each with the rest for VCs if you bring them on - he does the coding work, you bring all the business knowhow. Once you have a working prototype you can decide whether to make it live or bring in funding.

Some questions first:
- Is there no one in the space who does what you're thinking of building? Nothing close?
- What's the likely market size in terms of revenue?

You're in luck at the moment if you want to go the VC route, as VC is desperately in search of opportunities right now. Others will be able to help you more than me. But given that it's your business know how that will build this, I'd be hard pressed to take less than 30%.

You could learn to code and hack together something, but it seem like an enormous waste of your time. You can hire or partner with a coder. Your business knowhow means they need you, which will keep them honest.

Since you don't make it sound like you are a technical person, here is my advice:

If you know a technical person you respect and are sure you would like to work with get them on board and share equity 50/50. Likely it would be good to commit 120% of your and their time to this, and If you think you can create a working product together, don't go for VC money before you really need it to scale up (hopefully you'll never need it).

If you don't know anyone yet, spend a year wisely on finding and validating a good partner. Work together in the same room on some small tasks projects, and make sure you found the best match. Some coding on the way might help with this.

Stuff like this already exists as private applications owned by larger players. They all have strong incentives to keep it all proprietary and not sell it as a separate service. This is one of those things that I decided not to do 2 years ago because I figured someone was doing it. Then 2 years passed and nobody did it.

This is a very basic enterprise application that serves a very low level (but very time consuming and important) part of the process of doing my job.

In terms of scale it's hard to say... but it's pretty large. It's something that every company in my industry would pay 100/mo per user for without blinking. I would pay three times that. This is mostly because it makes a ****load of people in the back office redundant and eliminates a bunch of routine tasks for people whose comp is quite a bit higher.

EDIT: Not super hard to exit either. Very easy sale as a bolt on acquisition to lots of established players with money burning holes in pockets. I'll admit to being honestly surprised nobody has done it yet... But they haven't.

Never assume that anybody is doing anything or that they can do it as well as you, unless it's something like mass market consumer software.

Is this software really the way you want to go? Mightn't you better off growing your business? Software is an enormous pain in the butt, and risky besides. For every product that goes live you get plenty of failures. Basically if I'm wondering why you think your highest EV here is in chasing the software angle and trying to sell it commercially.

I think you'd need to find a way to estimate this and compare with your alternatives.

Yeah it's a much better business than the one I'm in. When I say 'big' I mean it's a billion plus in annual revenue big at 50% adoption. Every truck driver would have it on their phone and every single employee that deals with trucks would have a subscription if it existed as I visualize it today.

Some off the cuff thoughts...

1. If you have the money to self-fund the prototype, that is a huge win. Make sure you have a tight specification on exactly what you want and agree on project / milestone based payment. Don't pick some obscure / trendy technology stack that it's hard (or crazy expensive) to recruit people. Make sure you have a tight legal agreement for non-disclosure / ownership of all IP / and potentially non-compete (might be overkill).

2. Don't give up significant equity to any partner/staff unless you know them super well and know for sure you are good 'getting married' for the long term. When we started, none of us had any cash and so we all got equal equity. That ended up being a huge problem when there wasn't any vesting / earning component and people didn't pull their weight.

3. Minimum viable product and initial customers should be your total focus. If you can't find customers that will jump on board with a super early phase product and help you build it out (for potentially a great deal on price), you won't go anywhere. Focus all efforts on that initial product and initial customers. Customers that won't pay early on don't count. They need skin in the game. We gave great pricing to our initial customers (and even a free pilot period to the first customer), but we got them to pay early on. Provide absolutely killer customer service. For years it was our ownership team that was doing customer service...it kept us close to those early customers and let us rapidly advance the product.

4. Let those customers drive your product development. But also use your brain...your priority is features that lead to more revenue and things that will benefit all customers. Often those early adopters have really stupid processes or idiosyncrasies that won't apply at all to the potential generic customer base. You'll make mistakes here and it's okay. Don't get in the business of customizing your code base for specific customers unless it's absolutely necessary...that won't scale and it's no fun.

5. Everything will take WAY longer / move slower than you think.

6. Just to repeat because it's my #1 hard lesson learned...protect your equity. Don't hand it out to anyone other than people you want to do business with long-term or for needed cash to get off the ground or if you feel like you need to scale faster.

Disclosure - we boot strapped our business with some family & friends type money. We never had to take any VC and have built it very organically, so my views are colored based on that.

Billion is a big number. Intuit for example, accounting software that has 30 million small businesses and 80% market share, only makes $4 billion/year in revenue.

Does it require an ecosystem/network set up? Or can you input that manually until it's set up?

It is an ecosystem. Well the first step in an ecosystem. Lots of room for others to build on top of the platform. Also very expandable to selling other services once we have them on the one.

EDIT: Also I'm not a successful startup guy. I'm a very successful independent freight agent though. My operation has less in common with what most people think of as a startup than a real estate brokerage. You can be a new real estate brokerage and I'm not going to think of you as a 'startup'. For starters I expect a new entrant to an established space to generate returns almost immediately, and obviously that's not the case for people who are trying to do something new.

Thanks for this post. I'll keep all of that in mind.

One of the nice things about this idea is that I'm my own best initial customer. This is something I have been absolutely crawling up the walls to buy for a long while. Knowing that other shops had their own version of this and I didn't has been seriously irritating.

I plan to essentially force every truck I speak with to test my software whether they like it or not lol.

As for additional paying customers I have a good angle on getting them pretty quickly and easily. I know who they listen to and some of those people listen to me.

write a product requirements doc so its more than just an idea.

Good call. Doing that now.

99% of the time Quora is a gutter, but there is a guy on there named Jason Lemkin who is absolutely the most knowledgeable and informative writer when it comes to SaaS. Read all his stuff, it's authoritative.

I spent two years exploring software startups and I would caution you that there are a lot of headwinds to this endeavor. Beyond the inherent difficulty of the project, the early stage VC market is suffering a depression (https://techcrunch.com/2017/11/30/th...king-about-it/), and the SaaS marketplace in particular is oversaturated with offerings at the moment. You don't strictly require investment capital to make SaaS work, but just be aware it's harder than ever to get that capital at early stages (VCs have basically figured out that, rather than bet on various early-stage horses in winner-takes-all markets, it's better to just flood the market leader with late-stage capital and ensure they become the winner). If you are still thinking about it, you'll find quickly that VCs won't fund you unless you have a great product and traction (i.e. many paying customers, a high net promoter score etc.).

But it's possible to bootstrap successfully. You'll personally have to wear two extremely important hats: product design and sales, and the second is the more important one. Nobody's going to be beating a door to your software, you'll have to figure out a way to get them to see/try a product demo. It's not realistic to wait until your product is perfect to begin selling, so you'll have to start selling with just a prototype and get presales.

Anyway, read Lemkin and good luck.

This is good advice.

I'm an engineer, worked for a couple startups and then at a top seed stage VC. Paying an agency tens of thousands to build your prototype is a fool's errand - you'll want to pair with a strong engineer to have a fundable team if you go the VC route. Maybe you don't need to raise VC right off the bat if it's as cheap to acquire customers as you're saying, but if this has the kind of potential scale you're talking about, you'll probably want to raise VC so you can scale as fast as possible since it sounds like there isn't a big technical moat to be built here at least with the initial product.

Tons of successful startups are built by people from Google/FB/etc. who solve a class of problem internally there and then quit and hack together basically the same thing and package it into a SaaS tool. Sounds like you might be in a similar situation. You might look into pulling a good engineer out of one of those big companies you mentioned (of course being mindful of non-competes etc.), ideally one who has some startup experience in addition to working at the big player.

Don't listen to the "early stage VC market is brutal right now!" stuff - a lot of garbage was funded and now isn't being funded. Real businesses with great teams will get funded and the macro stuff is just noise. If you and a good engineer pair up, maybe adding 1-2 other people depending on how much of the sales/business side you can tackle and whether or not a second engineer is needed almost immediately, build something good enough to sell for $100/head and can credibly convince VCs that there are however many people in the same boat that will also buy it once you can reach them and that there's a believable path to a $100m business, you can raise from pretty much any VC. Cut that in half and you can still raise from plenty.

I'm intrigued - feel free to PM me if you want to talk. I'm not going to sign an NDA or anything and I just started working on another project with a buddy after I spent most of the past year traveling, but I might be able to help you think through some of the early stuff, connect you to relevant people, or at the very least shoot you some resources.

Yeah honestly it's not really money I'm worried about. 90% of why I would even consider a VC is resources they could bring to the table like access to good technical people.

To start, you'd probably want to be more specific about what you are doing. I understand you want to keep your cards close to your chest, but seriously, you can find things on github that could be a total business in itself but languish because no one is selling it.

Why doesn't the companies in the industry not offer this add-on already? If it's just a matter of adding an additional piece of software and everyone is demanding it, why wouldn't they want to add it in for this $100 per head?

VCs aren't Shark Tank investors.

Finding a good technical person is a function of paying good money for knowledge.

Not really though. Paying someone to make something is just the first step. Then you have to make sure they deliver.

The existing players have zero interest in sharing their software advantages with their competitors. Further no one will ever feel comfortable sharing sensitive business information with massive competitors with long established track records of doing all sorts of shady stuff to get new accounts.

I'm a big believer in doing business inside your circle of competence whenever possible. If I want to be in the software business I'm going to need to learn about software. The single biggest reason why I need to do this is that trying to hire people for a task you don't understand is one of the more effective ways to get ripped off I know of.

So I'm frantically trying to learn js and trying to talk to as many smart people as I can.

I'm more than happy talking about my idea privately, I just don't want to blab about it on a public internet forum. I know that most people in BFI think that ideas are worthless... But my thoughts on this particular idea are pretty fleshed out, and when it comes to sales process they border on the execution of the idea itself.

I'm not qualified to really research the technological side of it so I'm not going to sound foolish by making pronouncements about how easy it is. But I have done my digging on the business development side... and that side looks pretty great.

Ok I know how cut throat some industries can be. I do work in ecommerce, lol.

I mean... yeah, you can get ripped off pretty easy by shady software developers. The silly irony is that it's easier to rip off a person who knows a little than it is to rip off someone who knows nothing, though really, it's possible for grizzled pros to get ripped off. JavaScript alone really isn't enough knowledge to evaluate the person in front of you.

I'm not discouraging you from trying, but I'm only saying this because I've met a lot of jaded types who know enough to be dangerous and calls every developer a moron. I'm good and that attitude will chase me away and attract exactly who you aren't trying to attract.

You probably need someone who is a bit of a domain expert in supply chain logistics. There's a few startups in the space, so I know there's a decent amount of developers who know their stuff. Apparently others are building the product, though for all I know it's just a shoe horned Excel sheet.

You don't know the ins and outs of software and won't until you've done a few actual projects. High level competence in coding is like most other things - thousands of hours.

To me this whole situation screams "partner", and real world partner at that. You need a talented tech guy for design, development, hiring and coder management, and he needs a cut. Preferably someone fairly young and hungry and poor and controllable.
Yeah I think Dave is 100% wrong here. You shouldn't divulge a thing. This isn't some vague idea.

I don't think studying up on on JS is going to help you much, if at all. Studying product management, & product design/UX would be more useful skill wise anyways.

You are going to need a partner (CTO essentially) in this who can handle the tech stuff while you focus on the sales/product side of things.

Go to some meetups, conferences, hackathons, etc. Reach out to people in your network or a connection of some kind who works at a startup or bigger tech company and take em out to lunch or something.

Finding a person and figuring out if they are qualified to develop your software and scale your tech team is the easy part. Figuring out if you can work with this person 24/7, rely on them and trust their judgement etc is the hard part.

Yeah TS that's basically where I am. I'm just trying to learn how to recognize a decent coder as quickly as I can. I've already made my peace with the fact that the best I can do by myself is a super ****ty prototype. And I completely agree that they need to be taking up one of the two empty seats in my office. I'm not giving someone a double digit stake in this project remotely.

I gotta say young, hungry, poor, and controllable sounds pretty great lol. My problem is that I don't get the impression that going out and selling some CS grad student at my local college is a particularly good way to find a great technical person.

If your idea is so great, why don't you pitch someone that will hook you up with a serial startup CTO who can execute your idea? You'll lose like 60% of the company off the top, but it'll actually have a chance of being a success.