Thread: What makes it so expensive?

Whatever you are missing, I am missing as well.

I don't understand it.

Because people still have in their head that a business is this huge entity.

Originally Posted by itsgena

What am I missing here? I was just very curious how such a process could add up to this extent.

Because frankly some people are a bit naive and over pay for their dream to come true. Add to that, that most have the wrong dream.

I know a guy who is trying to start an internet company. He literally is jumping from VC firm to VC firm, investor to investor trying to get 3.5 million dollars. I have read his business plan and I have no idea how he comes up with it.

I shit you not, he has picked out a giant ass office, xerox machines, furniture. It is fucking nuts. I would never give him money it would just go to something that doesn't make any money. His whole complex site could probably be built for 100k and maintained for 50k per year.

Originally Posted by Kak

I know a guy who is trying to start an internet company. He literally is jumping from VC firm to VC firm, investor to investor trying to get 3.5 million dollars. I have read his business plan and I have no idea how he comes up with it.

I shit you not, he has picked out a giant ass office, xerox machines, furniture. It is fucking nuts. I would never give him money it would just go to something that doesn't make any money. His whole complex site could probably be built for 100k and maintained for 50k per year.

But then he can't tell people about his companies great office with nice furniture, I bet he didn't forget business cards that say CEO either. lol

I used to wonder about the same thing. A lot of entrepreneurs aren't real entrepreneurs but people who just want to run a company for their ego. So they will usually do the following right off the bat: hire multiple unnecessary employees, rent a commercial office, and spend the rest advertising. That's where that money goes.

I think we are talking about 2 different things. One is boosting how much you need to start when you are looking for an investor.

The other is how much people have ALREADY spent themselves on businesses that are making little to no money and are on the Shark Tank.

Speaking of the Shark Tank, anyone see the updates on companies that the sharks DID invest in? I have been surprised with most of them, in how little they are making even after all the money and help from a shark.

Originally Posted by 911Carrera

I used to wonder about the same thing. A lot of entrepreneurs aren't real entrepreneurs but people who just want to run a company for their ego. So they will usually do the following right off the bat: hire multiple unnecessary employees, rent a commercial office, and spend the rest advertising. That's where that money goes.

This sounds about right.

Funny thing... He could probably hire outsourcing for everything and start it HIMSELF. Instead he has been looking for funding for about a year. It is a decent idea, but not a 3.5 million dollar idea. It will never provide an ROI.

I may be old fashioned buy I will always love the good old entrepreneur.

Idea. Execution. First customers.

Treating first customers excellent and using the first revenues to keep going and grow. Re-investing profits.

A good friend of mine went out of business, because him and his wife made decent money in their first 2-3 years and they bought a house, car and traveled the world. Next year the business was in the red and they had not enough money to rescue it.

I love how in our times you can start a business with a 'minimal mind'. The people that are ready to execute their idea and live for years in a 1-room apartment not caring about all the doubts they get from their family, friends etc.

Being doubted by EVERYONE, than having a high revenue day and/or some very nice customer messages thanking you for your business. Priceless

Originally Posted by itsgena

Before I ask my question, I'll start this off by saying sorry for how stupid and ignorant I'm going to sound. For the record, I'm really young and just learning about the business world if that helps.

Now, I'm wondering why entrepreneurs who build a business around their product have to spend SO MUCH money? I was watching Shark Tank and I heard a woman who invented a 3-1 nail polish/nail file/disinfectant contraption (Nail Pak) and she said she had to invest 300k in the business. How does that work? I understand filing a patent could be about $10,000, but making something so simple cost less than $3. Plus, she made an ONLINE business, not a store! What could possibly reach a cost of 300k?

For the most part you are spot on, the Nail Pak thing, did require the patent, making molds for the smaller bottles, the snapon bottom thingy and the inserted nail file, and wipe pads crammed in there, don't know if she paid for a full production line of that or had to have them hand assembled, that and a minimum run of several thousand of units to get it going is where most of her money went.

For the guys with the note business, they had a chicken and egg issue and usually the only way to solve that is with $$$. They needed notes online for people to want to shop, nobody would put up their notes until their were shoppers. So they had to pay peeps with notes to post them, so the shoppers would show up, to make more people want to post more notes for more shoppers. You just have to have a way to prime that pump.

Impressive thinking on your part.

Originally Posted by PatrickP

Speaking of the Shark Tank, anyone see the updates on companies that the sharks DID invest in? I have been surprised with most of them, in how little they are making even after all the money and help from a shark.

Have you noticed how some of them are simply because of getting in touch with the right people? I bet you more that one was made a success just because the shark made the call when the entrepreneur didn't. Cuban says only one company he's invested in has failed and I thought it was a good one. The lady who had the Netflix-style toy rental business. I guess they couldn't handle the traffic.

I didn't know the toy rental one failed.

I thought I would not personally use it but thought it might do well.

I looked and of course you are right.

Their website says just what you said:

after much consideration we are sad to announce that Toyaroo will be closing. Then says they grew too fast and couldn't get more funding.

Here are the details

http://sharktankblog.com/2774/toygar...om-former-cto/

Toygaroo.com - Goodbye!

Originally Posted by 911Carrera

I used to wonder about the same thing. A lot of entrepreneurs aren't real entrepreneurs but people who just want to run a company for their ego. So they will usually do the following right off the bat: hire multiple unnecessary employees, rent a commercial office, and spend the rest advertising. That's where that money goes.

So that must explain what happened right before the dot-com bubble crashed. So many companies with no fundamental business taking place, but burning through millions...

Originally Posted by PatrickP

Whatever you are missing, I am missing as well.

I don't understand it.

Funny, I was thinking the same thing.

I completely agree I was thinking the exact same thing while watching that show.

Also I feel the statistic of most businesses failing is closely related to people overpaying for their dream and not looking at it from a true business or should I say risk to reward standpoint. Cost management is key.

I read up on Toygaroo and I think that it is a great idea if you want Contagion to come true.