$8m pre-money valuation on zero revenue? Count me in...
It's an interesting concept but they've managed to spend $1.5m with very little progress. And sorry, but why are they looking for a COO and Marketing Director right now? Strikes me as insanity. Marketing Director you can sort of see the argument, but COO? What tiny company needs a COO? What Operations are there that need an officer? My little company has 12 people and my plan was to start looking for a COO at around 40-50 employees and even that feels early.
I very rarely understand the space that a company occupies on this forum but online tech startups I do. I've seen hundreds of startup pitches in the last few years alone (I'm a volunteer pitch coach for a startup accelerator, it's how I thank them for investing in my own biz.) This one falls into the middle 20% - some nice execution but hampered by disturbing noobiness.
The problem of apps:
- The only apps worth the time of day as a business are the ones that get daily usage. Pretty much all other apps are destined to fail. (Use this as a basic rule when assessing any app...)
- Second, social media has the 'critical mass' problem - every single day, you need to build a new critical mass. I'm not familiar with any startup that has become a success at building critical masses time and time again in a time-limited way. (Facebook, Instagram, Twitter, Whatsapp and Snapchat are all there when you login tomorrow. While real-time is part of the equation, it's not the whole thing either.) Non-real-time is how you keep the thing alive - your 20% most active users know that the other 80% are going to be there, too, at some point.
- Third, the strategy of getting companies/universities/etc is interesting but the inertia is too big, especially when Whatsapp already solves nearly all of these problems.
- Fourth, the monetization model ... Freemium? Advertising? Blegh.
- Fifth, how did they manage to spend $1.5m? A lot of people in startup world give people a free ride on this. I don't. If you're just starting out, you need an amazing founder team OR to be the world's most effective spender of money (ie. very good at finding cheap, unrecognized talent) or both.
- Sixth, successful social media requires existing relationships, which get transferred to the app. The lifeblood of the big five apps that I mentioned above? You're following and interacting with people you either a) KNOW or b) know OF. Social media is all about the person (ie. the social.) While celebrities can help an app (ref Instagram, ref Twitter), they don't make an app. So this could be interesting... But I doubt it. The massaging of the statistics don't make it look good at all.
I really hope I'm wrong. My advice to the founders is this: figure out what your current successful Gatherings are and tighten your app way down to that niche. Explode within that niche, and see if a miracle can happen. That's all generic startup advice, I know, but it seems to apply here.
