Yesterday we covered building the technology for our startup product, LeadPilot. In short, we’re using Meteor, NodeJS and MongoDB to build our product as it allows for fast iteration. You can read Part 1 – The Idea here, and Part 2 – The Technology and MVP here.
Today we’re discussing the company/product name for our startup as well as the business plan (most important). If you’re following along from Dan Norris’ 7 Day Startup, you’ll notice that these posts and high points are a bit out of order, but the essence is the same.
The Name – LeadPilot
The business name was one of the first things I had actually decided on because I had it in a list of startup names that I had already thought of. LeadPilot was short, catchy and, most importantly, available in the domain registry. Thus http://leadpilot.co was born. The logo design is simple and makes sense for the application. Its two chat bubbles with dots on top slightly overlapped as if they’re two people interacting. That is the focus of LeadPilot, warmer cold emails with your prospects that hopefully ignite a relationship with your prospects and products.
Business Plans – You must make money
The point of the 7 day Ramen Noodle Budget Startup is to keep costs low. We don’t have the luxury of venture capital money, so we must attempt to build our product around a profitable business model from the start. Now, nothing is guaranteed and this is a first revision, so its really a best guess. Reader beware, this will (and should) likely change.
The highest cost within our architecture is the inbound email checker. This service is responsible to connecting to every IMAP server (one per user) and checking for inbound emails to scan for responses. This has to happen once every few minutes to keep the web interface up to date so that we’re not sending follow-ups to people who have already responded, and this happens for every user on LeadPilot. We estimate based on current usage and timings that one “worker” node with 2GB of RAM can handle about 50 clients and costs roughly $20 a month. If we’re charging somewhere in the $14 range per month, then we’re getting $700 a month inbound, so that is not a bad percentage cost. Lets say that we want a small $2000 per month for our labor costs, we should aim for about 175 customers to have some breathing room to address our hosting costs and take home what we want (You should always invest more into your business and expand marketing efforts, we’ll cover this later). At 175 customers, we’ll be pulling in $2450 a month.
Napkin math aside, the general point here is that at the root, we have a viable business opportunity here, or so we think. The launch and usage over time will validate this, but its a good guess!
The pricing tier in our business should ideally be based on the value that the customer gains from using our product. Ideally if the customer has more prospects, then they should get more value due to the higher response and engagement rates on their emails. Our email sending costs are relatively low as we’re using the email providers that our clients already pay for.
Lets say $14 gets you 2,500 concurrent prospects. This is cheap compared to other tools in the space and should be a great fit for budding startups.
Perhaps $20 gets you 5,000 concurrent prospects for the more ambitious.
If you need more than 5,000, perhaps an enterprise tier would be ideal where the customer can call us to discuss their needs. We can also add in consultation (or concierge onboarding) time to develop custom email sequence templates and analysis to optimize the customer’s campaign. We might want something in the $100 range monthly to cover the hour or so we’re estimating to create a viable template sequence and answer the customer’s questions.
Overall, our Day 3 planning was a success. Tomorrow we’re getting into Day 4 – Marketing Website which explains some of the decisions we made about our website and the tools we used to launch it so quickly. You can view that article here.
Side Note: This project has been insanely difficult (and fun!) to get done in just seven days. It is a personal challenge to myself and to other entrepreneurs. If you ever need help, you can catch me in the Startup Study Group Slack chat. This group has been a great help in answering my questions and relieving my doubts about many of my other endeavors. If you are planning on building any sort of business, you NEED to be in this group: http://startupstudygroup.com/slack/ (its free!)
More articles in this series: