Somee Deal Memo (Closing Date: 2022-04-01)

Muhan Zhang -

Deal Abstract

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Imagine a social network that pays you to use it. But how much advertising revenue would it generate in this model?

Financials (VRB)

Question Notes
1. Fundraising Target? $1070000
2. Fundraised So Far? $243464
3. Pre-Money Valuation? $18700000
4. Previous Year's Annual Revenue $584727
5. Previous Year's Annual Net Income (+ Profitable, - Burning Cash) ~$338361
Source

The 6 Calacanis Characteristics ("Sow Passion, Not easy mediocrity", or S2 P6 N18)

Criteria Yes/No
1. A startup that is based in SV? False: Aloha, OR
2. Has at least 2 founders? False: Two
3. Has product in the market? True: Revenue generating
4. 6 months of continuous user growth or 6 months of revenue? True: Solid revenue growth
5. Notable investors? False: Nah
6. Post-funding, will have 18 months of runway? True: Profitable
Source

The 7 Thiel Questions (Every Time Man Profits, Don't Dismiss Serendipity)

Question Score Notes
1. Engineering? 2 It's like Facebook/Instagram/SocialX but it revenue shares with you?
2. Timing? 1 Don't see demand for rev sharing social network taking off at this point in time
3. Monopoly? 1 35000 users is not much in the social media game
4. People? 1 Not much information about the founder
5. Distribution? 1 Hard to acquire users
6. Durability? 1 What's stopping Facebook from implementing this feature if they like it?
7. Secret? 1 Revenue sharing is enough to attract the majority of social network users to switch to this new app

What has to go right for the startup to return money on investment:

1. Continue acquiring users cheap; 2. Deepen value prop besides privacy and pay per use; 3. Get exclusive content/content is king in any network media play

What the Risks Are

1. Vitamin not a painkiller; 2. Very niche offering; 3. Facebook could probably clone this feature in a week if they cared for it

Bonus Muhan's Notes

Interesting idea, will be curious to see how privacy and social media go in the coming years

Updates

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Other thoughts, questions, comments, or concerns? Write me at mail@muhanzhang.com and let me know.