Founded in May this year, RapHappy is a social networking site that does for rap what spray paint did for grafitti: now everyone is an artist! Or, at least, anyone on the Web can pitch-in to a mashup with a thump or a rhyme — no special hardware; no software downloads. Just hit the site, then hit ‘record’ on the cassette deck graphic.

Even from our initial business plan for RapHappy, one thing I and my cofounder, Matthew Fargo, focused on was our ability to keep a low overhead. When you don’t have much money you have to be very careful about how you spend it.

RapHappy was going to be a social-networking site, meaning our community would make or break us, so we knew that we’d need to first prioritize getting the word out to potential RapHappy users. This would be important for building our user base, but also because we hadn’t spent tens of thousands of dollars on alpha or beta testing (it’s cheaper of you test your service live!). So we knew we’d also have to begin collecting user feedback on RapHappy’s features as quickly as possible, and that this might cost us.

We took a do-it-yourself approach to many startup tasks that we might otherwise have outsourced, if we’d had the money to spare, like: the site’s graphic design; programming; marketing. What Matt and I couldn’t do ourselves we were lucky enough to fulfill with a bit of free outside help – we’ve got friends in key places, a.k.a. students at New York University’s Interactive Telecommunications Program (ITP) just like us, who’ve got ambition to spare (just like us).

When we felt confident that the basic’s of RapHappy’s code was right, and were happy with our site design, then we began spending on(1) building the user base and (2) collecting user feedback.

To do this, we held several contests on the site.

*We started with themed rap contests to build our content base.

*We also had users send in videos of themselves and paid them $100 for each one.

*Then we leveraged the outlay by making these contests into ‘beta tests’ of the site, by deliberating setting them up to strain certain parts of the code.

We paid our users between $50 to $500 for concentrated site-testing. All in it cost us: $1,500.

*The ideo idea turned out to be an especially great one, because we received some beautiful footage, which made for handy and free marketing.

Apart from contests and paid-user testing, we spent a little bit of the money on low-key advertising materials like stickers, posters, etc. that students love to disseminate Total spend: $600.

But by far our biggest outlays were related to our RapHappy mobile application—this had us really excited—and our Facebook widget.

*We spent a chunk of dough an Asterisk (interactive telephony):server $3,000.

*Then we hired our friend Yasmin to develop the Facebook application. Labor spend: $1,000.

The site changed dramatically in the few months after we received the Digital Incubator grant. Most of the progress was directly a result of the comments and suggestions we got from our “paid” contest-users-as-testers.

I suppose it’s needless to say that we didn’t pay ourselves very much. We still have roughly half of the $30,000 grant to spend. Most of which is earmarked now for creative marketing concepts.
Check out raphappy.com for the latest. Thanks!