The investment opportunity I’m about to introduce you to is different from all my previous ones. Our economy and society have undergone enormous changes in the past few months as a result of the COVID-19 pandemic. And changing times require changing approaches.
It’s not only about investing in “hypergrowth” anymore. Or investing in disruptive ideas or technology. What do those terms even mean when the biggest disruptive force right now is the global coronavirus outbreak that’s slamming the brakes on economic growth?
Whatever disruption a startup is offering, it must take into account this global health crisis.
Here’s my idea of the perfect investment in the age of the coronavirus…
- It cannot depend on face-to-face communications or gatherings.
- It should be attuned to new and emerging pandemic-related needs (physical or emotional), including the longing for connecting with others – whether it’s members in one’s social, familial and community circles.
- It should be extremely cheap to buy or use. Everybody is closely watching how much they spend.
- It should ride trends that were gaining popularity before the coronavirus began and that will continue to gain traction once it abates.
- It is preferably designed or easily adapted for in-home use.
- It serves a big market and is scalable.
WhereBy.Us meets every one of these requirements. WhereBy.Us provides creators and publishers a low-cost, no-code way to connect to readers through an emailed newsletter. (For more details on this “soft pivot,” click here.)
And it’s in the final months of developing inexpensive automated tools to help anybody – creators, influencers, community leaders, marketers, small and large publishers, etc. – reach out, communicate, engage, energize and monetize their community and followers.
Now that its beta phase is ending, it’ll soon begin using data along with artificial intelligence (AI) to help customers understand their user community, automatically build a website from their email newsletters, grow their audience, avoid missteps and generate increasing revenue.
The coronavirus pandemic has accelerated the underlying trends that were already driving WhereBy.Us’ growth. Its growth is exploding… because of the coronavirus pandemic. People crave content more than ever. And WhereBy.Us is trying to onboard as many customers as possible to keep up with surging demand.
I’m extremely familiar with WhereBy.Us because I recommended First Stage Investor members invest in it almost two years ago. I have been keeping close track of its progress ever since, which isn’t hard to do since the company sends out monthly updates to all its investors.
I would expect no less from WhereBy.Us. This is what WhereBy.Us does.
WhereBy.Us scored high ratings in my four M’s (market, metrics, monetization and management) when we first recommended WhereBy.Us in mid-2017. Two years later, it’s clear that I underestimated its performance in these categories. Let’s see how it’s doing now…
Market demand is surging. And it’s creating the kind of problems all startups wish they had. WhereBy.Us can’t keep up with demand. The waitlist for WhereBy.Us’ services more than doubled in March. The publishers and creators that are now waiting to be onboarded serve 3.5 million subscribers. In March, WhereBy.Us signed up customers that serve 850,000 subscribers. Before March, WhereBy.Us customers served a total of 86,000 subscribers. That’s 40 times growth in the number of subscribers the company’s software will soon deliver to. And WhereBy.Us’ pipeline is stuffed with 176 customers (serving an additional 8.5 million subscribers).
By 2024, the company wants to have 500 customers on its platform generating revenue of around $100 million a year.
Many ways to monetize. WhereBy.Us charges an annual $200 subscription rate that generates recurring revenue – the best kind of revenue, in my book. It also employs a revenue-sharing model. The company takes a percentage of advertising revenue plus a percentage of the revenue its customers get from their own subscribers. The more services its customers sign up for, the higher percentage it takes.
Revenue growth headlines strong metrics. Revenue should exceed $2 million this year, a healthy increase over 2019’s nearly $1.5 million. According to WhereBy.Us, its worst-case scenario (factoring in the coronavirus pandemic depressing the economy) for 2020 revenue is $900,000. (But if it happens, the company would amazingly still break even.) Its best-case scenario of $3 million is more likely, given its large and growing pipeline of customers.
Early metrics show enormous promise. WhereBy.Us pays only $2.26 on average to acquire customers and gets 20 times that back from customers who don’t charge for subscriptions. And it does even better with customers who charge subscriptions. That multiple is just under 170X.
That’s great for a volume business. But that’s not WhereBy.Us. It needs to significantly increase the annual and lifetime value (LTV) of orders per customer. Very doable, in my opinion. A lot of that will be accomplished organically as its publishers grow. And bringing larger publishers (like Hearst) into the fold will automatically increase LTV.
In many ways, these metrics are typical of an early-stage software-as-a-service company. They should show significant improvement over the next couple of years.
Management has brought WhereBy.Us to the brink of hypergrowth. Before founding WhereBy.Us, Chris Sopher managed a portfolio of investments for the Knight Foundation (the Knight Enterprise Fund is a leading investor). He also helped fund a number of urban and media projects before participating himself in various civic projects in Miami. That was when he discovered the need for a better way to connect with communities. To solve this problem, he turned to co-founder Rebekah Monson, a product and technology leader with extensive experience in newsrooms and media companies. Chris also enlisted co-founder Bruce Pinchbeck (who worked at New World Symphony, Philly.com and Comcast) and director of engineering Michael Schofield (who hosts his own podcast on best practices called Metric).
But it’s Chris who I know the best… from nearly two years’ worth of conversations. He has matured into a dynamic and opportunistic (in the best sense of the word) CEO. He’s fulfilled his vision of a company that, in his words, “can build a great brand in one place – from content to data to ads to subscriptions to growth.”
He’s brought WhereBy.Us to the start of what promises to be an enduring hypergrowth stage, one that should continue long after the coronavirus has faded.
Chris’ leadership was also instrumental in giving First Stage Investor members (who invested at the time of my original recommendation) a 3X gain.
How to Invest
WhereBy.Us is raising up to $1.07 million on Republic. If you don’t already have a Republic account, you can sign up for one here.
Once you verify your account and are logged in to Republic, visit the WhereBy.Us deal page.
Then click the blue “Invest in WhereBy.Us” button. Enter the amount you want to invest, starting as low as $100, and proceed through the required steps. Be sure your investment is confirmed, then you’re good to go.
Risks
This opportunity, like all early-stage investments, is risky. Early-stage investments often fail. WhereBy.Us might need to raise another round of funding in a year or two, if not sooner.
If it executes well, this shouldn’t be a problem. But that’s a risk worth considering when investing in early-stage companies. The investment you’re making is NOT liquid.
Expect to hold your position for five to 10 years. An earlier exit is always possible but should not be expected.
All that said, I believe WhereBy.Us offers an attractive risk-reward ratio.