For a while since listening to the podcast episode: Invest like the best – Bill Gurley: All Things Business and Investing I have been considering Tinybeans as an investment

Notable key takeaways from the episode include:

-       Picture an X-Y graph

• Y axis = value to customer
• X axis = penetration into the market
• If the trend is up and to the right you have a “network effect business”

In my opinion this does not apply to Tinybeans due to the privacy such a service provides how each sequential user cannot adding value to the next.

-       “If you’re in an advertising-orientated world, you should not try to monetize until you’re north of 10 million users” Why? – Your ability to get a decent CPM isn’t high enough to warrant losing the screen real estate and whatever other growth mechanism you could have put in there

• If you look at the app reviews users (especially paid users) are pretty peeved about the “curated stories” now presented to them on logging in
• Also somewhat counterintuitively Tinybeans has been using emails provided by users to send unsolicited spam to people unless they subsequently unsubscribe

These concerns combined with the runaway valuation has led me to exit my small position

Tiny beans is facebook for millenial parents. Value proposition is increased privacy with sharing requiring an invite. To advertisers it provides a clear target demographic.

Revenue is derived from

- Premium subscription fees

- Advertising

- Printing services

Company is very promotional likely because it has less than 1.5m left in the bank and burning approximately 500k per quarter.

~40m market cap on track for 4m revenue FY19 - 10x revenue seems expensive

- They need to raise cash and likely will soon because of the share price appriciation. 

- User growth is high currently BUT it is unclear what happens to these users as thier children get older. I suspect once the parents go back to work the social media time will decrease.

- Likely to be a winner takes all market so if things go badly could easily be a zero and right now they are NOT the market leader see Lifecake owned by Cannon with 2mil users 2 years ago.

On the surface metrics are all trending in a positive direction but I am wary of extrapolating these numbers into the future.

On the plus side the two largest shareholders with approximately 20% each are the CEO and CTO.

High risk / high reward