jkap

jae

@jkap

CEO of posting

  • they/them

butch jewish d-slur
one third of @staff
married to @kadybat
icon by @osmoru
can also be found at @yrfriendjkap


last.fm listening


Hi folks! You may remember from the patch notes a few weeks ago that we're approaching our cost limits for activating new users. We're going to activate another batch of 250 today, but will have to slow down for a bit after that. Since slowing down activations isn't ideal for anyone, we wanted to provide transparency on our financials and why we're choosing to do this. We plan to do this as a monthly update, as we do our internal auditing once a month for our all-hands1 member meetings.

To start with, let's talk about conversion rates. "Conversion rate" in this instance refers to the percentage of cohost users that are subscribed to cohost Plus!. Based on our research, we know that industry standard conversion rates for "freemium" services are between 5% and 8%. In order for us to reasonably hit sustainability, we don't want to drop below 5%, as getting back up above that number would be extremely difficult.

Right now, we keep track of two user ceilings: one for 5% conversion and one for 6% conversion. Subscriber churn is a real thing (we've already seen 4% churn just for users that subscribed in July) and so targeting the 6% ceiling helps ensure we can endure some churn. Another way to think about this is that with every new cohost Plus! subscription, we're able to activate another 17 users.

Now that that's established, let's talk numbers.

Every employee of anti software software club makes a base salary of (currently) $87,285.00. When we started the company, we made $80k flat. We do cost of living adjustments once per year, based on the change in the Consumer Price Index over the past 12 months. (As you probably know, inflation is hog wild right now so our increase for 2022 was fairly substantial.) We don't do any other pay increases or bonuses. On the benefits front, we also have a QSEHRA2 available for all employees which pays premiums for an ACA gold-level plan.

For our expense estimates, we've (safely) overestimated at $86k per quarter with three employees. We usually come in a couple thousand below this at the end of the quarter, but having the buffer makes me feel way less nervous when we have unexpected expenses.

As of August 3 (most recent date stripe gives us data for), we have 358 active cohost Plus! subscriptions, accounting for $1,692.36 of Monthly Recurring Revenue. Taking this and our expenses into account, we would expect to lose at most around $81,000 for Q3 2022. July was an exceptionally good month for us from a gross revenue standpoint (lots of new subscriptions and merch sales from launch) so we only lost $21,217, but we don't expect that to hold through the quarter.

At this exact moment, we have 369 subscriptions listed as active in our database (stripe's numbers lag a few days) with 6,068 activated users and 17,801 total users. We only count activated users in our conversion rate as they incur less cost by virtue of not being able to post3. At this moment, we have a conversion rate of 6.08%. With 369 subscriptions, we have a 6% max of 6,150 users and a 5% max of 7,380 users.

As of our last all-hands meeting, we had a total of $158,711 in the bank and anticipated (with current MRR) that we will end the year with just under $24k in cash. This is obviously not enough money to keep existing, so we will be seeking additional funding before the end of the year, as we do not anticipate becoming sustainable within 2022.

With three employees, we'll need around 5,700 subscribers to break even. With a 5% conversion rate, this requires around 114,000 activated users, which is around 96,000 more than we currently have total. At 2% conversion (the current rate when accounting for all users) we'd need around 285,000 users. At our current subscription growth rate (roughly 3.6 per day in July, 4.2 per day so far in August), it'll take a few years to break even.

We're posting all these numbers because when we say "we have to slow down activations because we don't have enough money," we want y'all to know we're being serious and not secretly rolling in cash.

Like I said, we're planning to update these numbers once a month. If something Major happens mid-month then we'll post a small update, but otherwise expect to see these after our Member Meetings.

That's all for now. As always, thanks for using cohost (and for subscribing to cohost Plus!) :eggbug: :host-love:

~jae


  1. which i admit is a silly term since there's only three of us

  2. "Qualified Small Employer Health Reimbursement Account" -- basically how we give everyone health insurance without a group plan (we are too small for a group plan). more details on our corporate health insurance forthcoming from one of our personal accounts because holy shit it's a mess to an extent that even we never expected.

  3. also, if we did count them in the conversion rate we'd be at about 2% and i would be having a panic attack constantly


i know this is a long post, but imo it's important.

tl;dr: we are not profitable, we will likely not be profitable For A While, You Can Help by signing up for cohost Plus!


in reply to @staff's post:

i've genuinely considered (and we might someday ship) a Gift Subs feature where you can either give cohost plus to someone specific or, if you wanna just give us more money, set it to be randomly assigned to someone who doesn't already have it

gifting subs would be such a great community building feature too - it’s always the best part of streams when the chat is gifting a lot at once and it’s visually chaotic! most importantly, I’d love to share cohost with a friend and get to be like “here is a year of pro!”

right now we're looking for another loan from our current funder -- they've expressed that they're both willing and able to extend us more financing to bridge us to sustainability.

also i think once you implement the patreon-esque features and get to have a cut of that will probably help some too as it will let more popular users start to drive up revenue

Some people (like me) unfortunately are not able to use any of the payment methods.

You probably considered PayPal and there's probably a good reason you don't support it. I know they probably take a chunky fee but you could possibly have the subscribers pay that fee by having paypal be a tad more expensive? I'm guessing that could up the conversion rate by a bit.

there's so many "probably"s in this

the main reason we don't support paypal is actually just implementation complexity. while stripe (unfortunately) doesn't work for everyone, at this point we don't have the engineering bandwidth to support more than one processor. this is something we want to add once we can!

"[W]ith every new cohost Plus! subscription, we're able to activate another 17 users."

Is this for a monthly subscription? Does that mean a yearly subscription can activate 170 users?

Also, when someone cancels a subscription, do they still have access to the features through their full subscription period? Or do they lose access immediately?

1 sub = 17 users, monthly or yearly.

if you cancel, you still get access through the end of your subscription! if you'd rather have a refund, you can contact us and we'll cancel immediately and refund the remaining time.

In addition to subscribing, is there any way we can let cohost utilize any of our spare compute/bandwidth/disk? I've got a server that does mostly nothing, but also it's on residential fiber internet, so probs not 5 9s of uptime or anything.

One of the most attractive things about this place is that @staff had a “no crypto” policy from the start, which closes off the most obvious use for random compute power and disk space.

Thanks for posting. Big transparency W + great insight into just how difficult membership-based business models are to keep running.

Echoing the sentiment that being able to pay more for Cohost Plus would be great. Also wondering if there any plans for more merch options. Personally I would wear an eggbug hoodie everywhere and at all times (and I mean all).

pretty serious time dilation if it's been a few weeks since 9 days ago lol, I'm sure it's been hectic for you all though

holy shit I'm one of the 6%, and 17 other users rely upon my wallet to post! getting a big head here tbh :host-shock:

so do you feel that the three of you will be able to moderate 114k (or even 285k, yikes) users worth of posts? I figure we're probably fairly low maintenance at the moment, almost everyone here is a sweetie, but surely we're going to get more troublesome people closer to that number of users...

also can I just say that $80k plus inflation adjustments really gives me confidence in this site. It's just really healthy, and it makes me doubly happy that I subscribed.

"can we moderate [x] users" remains the big open question. as it stands, we have literally no idea. the moderation workload is already waaaaaaay smaller than we thought/feared it would be, so clearly our estimates there aren't great. just one of those things we're gonna have to play by ear.

I don't know how long I'll be able to stay subbed- I might drop off after a month or two and pick back up once there's more shiney features, or I might ditch my Apple Arcade for a while (probably the better decision tbh fuck the big company)- but after seeing that under 500 people are in the Cohost Plus Club I had to drop what I was doing and go give y'all five bucks now at the very least. it's not much but i wanna help :')

also: another revenue idea would be possibly a 'buy someone else an activation code' option, or having a plus subscription skip the line for activation? I don't actually know if this would work, but I'd definitely consider buying my friends cohost invites as presents. Maybe three bucks for one user? Not as much as a month of plus, but also significantly more than the 29 cents each user costs in your 1sub=17new math. As for plus subscriptions getting you to skip the line, it might be a little overambitious, but it would probably reel in a couple users, especially if you made a cohost plus dedicated page with this kind of transparency info on it.

this is probably brain poisoning from working at a social media company, but i had a hard time figuring out where to go to subscribe to cohost plus and would sincerely love if it was more prominent in navigation, or even a dismissable banner on the feed. (for anyone else who is looking, it's under Settings)

First off: this post is amazing, and I'm grateful to be able to see this sort of transparency. You all continue to impress me.

And now, my dumb questions and stupid feedback:

What are the chances we end up in a situation where people aren't getting activated because there isn't enough income, but people won't subscribe because they aren't going to pay if they aren't allowed to post, and it's not clear when they would be allowed to either? Could that become a fatal feedback loop here?

Also, I suspect this goes against some core company beliefs, but why not activate people that subscribe? Clearly they want to post enough to pay upfront, it's not giving them a pass to be an asshole (you can't buy your way out of moderation), and...if a subscription activates 17 people, then the one person that's doing pay-to-play gives 16 other angels their wings, which seems like a reasonable tradeoff. But that's just me, I'm sure y'all have thought about this more than I have.

(And based on replies, clearly people want to be able to gift subscriptions...I can think of several people I read here every day that I would cover in a heartbeat, both to show appreciation and to let them know they're a valuable member of a growing community, so that's a +1 from me. It doesn't even need the obnoxious Reddit UI to gift something on every post, just a "enter this string of characters someone paid for and it'll turn into a year subscription on your account" or something.)

Yeah, gift subscriptions would be cool. I hope that's implemented! Agree about the transparency.

As far as a pay-to-post system – one of the most consistent criticisms I've seen of cohost is from people mad about the invite system, the general sentiment being that some people have the social capital to get backdoor invites, and some don't. I personally feel it's a system that makes sense as far as a small business needing to get traction, but I see how it could be frustrating.

I think being able to pay one's way into posting would activate that group even further – though I'm not sure how many people actually care about it. But, it's a thought.

But yeah, I hope the team can do what they need to do to stay afloat. Can't support right now due to finances, but hope others do!

Can you make Cohost Plus easier to find? I didn't know it was a thing until this post and went searching around the site to find it. I even went to the settings page but just didn't scroll down at first instead trying to find it in the sidebar