proposal.md

Idea

Generate and host a RESTful API from raw data. Public or "open data" is hosted free of charge. Private data is hosted for a fee along with user management, usage statistics and other premium features.

Opportunity

Remember "open source" before GitHub? It was a federated mess of links to source control repositories. Currently "open data" is in the same situation. Looking for some kind of data: nutrition facts, public transportation schedules, census information? You have to google the topic, scavenge a website for the raw data, download and parse the data format (CSV if you're lucky), and pipe it into your own database for later use. Not fun.

Combining the wide adoption of REST with the rich data sources spread out across the web, BitMachine will automate the above process to create a central, standardized platform that is powerful, easily accessible, and totally rad for developers.

With the continued move towards mobile and complex front-end applications, most new services will need an API. Instead of taking the time and money to build a custom backend, BitMachine will offer another solution. Automatically generate and host your API for a low monthly price - perfect for people who just want to focus on what they're good at, client-side development and design.

Competition

These companies offer similar products but are not focusing on solving the same problem.

• StackMob ($7.5 million) - Service backend (hosting, tools)
• Parse ($7 million) - Mobile backend (hosting, tools)
• Mashery ($34 million) - API consulting (training, engineering, hosting, tools)
• 3Scale ($ 0.8 million) - API consulting (training, engineering)

Currently StackMob is the most direct competitor in the space. However, given the amount of money and new companies invested in the API industry I still consider this a "blue ocean" strategy just in a defined market that is still maturing.

Goals

Measurable goals that will be used to evaluate the experiment over the 5 month timeline:

1. Launch the app within the first 2 weeks
2. Get picked up 3 times on a major news outlet (techcrunch.com, the startupfoundary.com, news.ycombinator.com)
3. Speak at 3 different events about the app or a tangent topic to reach out to developers
4. Bring in 3,000 free accounts and 30 paid subscriptions

Investment

Highgroove will own a convertible note of which can be traded for equity in the company after the 5 month experiment is up.

Salary per month (before taxes):        $ 7,083.33
Highgroove's overhead per month*:       $ 7,083.33
Server cost per month:                  $   976.00
Cost of incorporating, trademarks, etc: $   500.00

• Overhead (benefits, office space) was calculated by taking %150 of my salary and subtracting out the profit (%20 of revenue)

Total cost for the entire experiment:

  $ 21,249.99 (salary for 3 months)
  $ 21,249.99 (overhead for 3 months)
  $    976.00 (servers for 5 months)
+ $    500.00 (business costs)
-------------------------------------
  $ 43,975.98

While only 3 months of salary is shown, this will be split up over 5 months starting with 1 full month of straight development.

After 5 months we will evaluate the success of the experiment based on profitability, adoption and operating costs. At that time, depending on the evaluation, we can discuss further investment, pivoting to a more promising product, or ending the experiment.

Marketing

Getting developers in front of the product (even the free version) will be the easiest way to get subscriptions.

• Advertise launches on hackernews and other social media websites
• Import various sources of "open data" and advertise free access via a way better API
• Create or contract out an iPhone app or web app that uses BitMachine for the backend
• Release a new version of the hovercraft gem under BitMachine
• Go to local mobile and front-end meetups (as well as ATLRUG) to give talks on how to build an app with the service
• Offer free drinks in return for a 5 minute demo of the product

Price Analysis

With an expected 1% conversion rate on public to private accounts and average hosting cost of $0.39 per account per month, we'll need to charge an average of $50 a month.

Average space per account:    1 GB
Average requests per account: 10 per minute
Storage cost per account:     $  0.125 (100 GB on S3)
Server cost per month:        $ 57.60 (2 m1.small)
Database cost per month:      $ 75.60 (1 m1.small RDS)

Monthly cost per user (at 500 users):

  $  62.00 (storage)
  $  57.60 (servers)
+ $  75.60 (database)
---------------------
  $ 195.20 / 500 users = $ 0.39 per month