Revenue and Expenses
- Let U = universe size
- Twitter has 330 million monthly active users
- U = population of US, UK, and Canada
- Then U = 435 million
- Let M = member count of all coople groups
- Then M = U x 0.46 percent
- M = 2 million (to pick a round figure)
- Assume that 80 percent of them belong in the first 50 members of a given coople group
- Assume that 40 percent of the members are in for-profit coople groups
- Let F = sum of all membership fees
- Then F = 2,000,000 x (0.8 + (0.2)(0.30)) x 0.4
- F = 800,000 x (0.8 + 0.06)
- F = 0.86 x 800,000
- F = $688,000 gross
- Net value of F = gross(0.85)
- F' = Net value of F after App Store commission
- F' = $688,000 x 0.85
- F' = $585,000
- Let D = sum of all premium user donations
- Assume that 1 percent of all members make an average yearly donation of $10
- Then D = 2 million x 0.01 x 10
- D = $200,000
- Let R = total revenue
- Then R = 585,000 + 200,000
- R = $785,000
- Let P = payroll expenses
- Assume expenses of Google AdWords and web hosting eat up $85,000, and remainder of revenue goes to payroll expenses
- P = $700,000
- P' = 700,000 x 1.27
- P' = C$889,000
- Let S = Average programmer salary
- S = C$65,000
- Let N = no. of employees if they're all programmers
- Then N = 889 / 65
- N = 14
- Results:
- U = universe size = 435 million
- M = member count = 2 million
- F = membership fees = $585,000
- D = premium user donations = $200,000
- R = revenue = $785,000
- E = expenses non-payroll = $85,000
- P = payroll = $700,000
- S = average salary = C$65,000
- N = no. of employees = 14
Pessimistic Scenario
- Let N = no. of employees
- N = 5
- Founder is 6th employee
- Founder draws a salary of C$5000/year
- Let S = average salary
- S = C$65,000
- Let P = payroll
- Then P = (65,000 x 5 / 1.27) + (5000 / 1.27)
- P = (65,000 x 5 + 5000) / 1.27
- P = (325,000 + 5000) / 1.27 = 335,000 / 1.27
- P = $264,000
- Let E = expenses non-payroll
- E = $36,000
- Let R = revenue
- R = P + E
- R = 264,000 + 36,000
- R = $300,000
- Let D = sum of all premium user donations
- Let F = Net value of total of membership fees, after paying App Store commission
- Then R = D + F
- R = $300,000
- Let D' and F' equal corresponding values in non-pessimistic scenario
- Let D / F = D' / F' = 200,000 / 585,000
- D / F = 1 / 2.925
- Let F' = D' x 2.925
- Also F = D x 2.925
- R = D + D x 2.925
- R = 300,000
- D(1 + 2.925) = 300,000
- D = 300,000 / 3.925
- D = $76,433
- F = 76,433 x 2.925
- F = $223,567
- Let F' = gross value of F
- F' = net value / 0.85
- F' = 223,567 / 0.85
- F' = $263,020
- F' = sum of all membership fees
- Also F' = M x (0.8 + (0.2)(0.30)) x 0.4
- F' = M x 0.86 x 0.4
- M = F' / (0.86 x 0.4)
- M = 263,020 / 0.344
- M = 764,593
- Let r = U / M
- r = 435,000,000 / 764,593
- r = 569
- Therefore 1 out of every 569 people who live in the 3 main English speaking countries need to be members, assuming no other countries participate
- Let d = percentage of members who donate average of $10
- Then D = 10Md
- d = D / 10M
- d = 76,433 / (10 x 764,593)
- d = 7643.3 / 764,593
- d = 1 percent
- Results:
- d = percentage of members who donate = 1 percent
- U = universe size = 435 million
- r = fraction of universe population who are members = 1 / 569
- M = member count = 764,593
- F = membership fees = $223,567
- D = premium user donations = $76,433
- R = revenue = $300,000
- E = expenses non-payroll = $36,000
- P = payroll = $264,000
- S = average salary = C$65,000
- N = no. of employees = 5
Excessive Optimism
In case the previous 2 scenarios prove to be excessively optimistic, simply double or triple the membership fees, currently $1/year/member for first 50 members, and $0.30/year for subsequent members.