WhereBy.Us (July 2017)

Modern newspapers for city-dwellers. WhereBy.Us operates city-centric local email newsletters (newspapers in the 21st century) that are lean and community focused. Their first newsletter was The New Tropic, which I read daily while living in Miami as a young professional and new transplant. Among my demographic, The New Tropic had almost universal name recognition, and had already expanded to Seattle, WA with The Evergrey at the time of my investment.

Deal

WhereBy.Us a.k.a. publishers of The New Tropic.

https://www.seedinvest.com/wherebyus/seed

Minimum: $1000 Crowd Note, July 2017

*This deal memo was written a year later in Aug 2018, some thoughts may have hindsight bias.

Decision

Yes.

If yes to investment:

Why investing

I was a user and customer of the product—both in reading and going to the events. In addition, everyone in Miami who was my demographic (young, professional, new to Miami) recommended it.

What the risks are

  1. The business is not as scalable as previously thought—what’s the advantage of having one national WhereBy.Us rather than Seattle, Orlando and each city having their own corporation? The only upside seems to be the software backbone and playbook.
  2. Uncertain the membership model will work unless people really feel clear, unequivocal value.
  3. Are the readers action takers? I went to events, and bought tickets to WhereBy.Us events, but seldom clicked ads or paid for things there. If the ROI isn’t there, firms may pay less in marketing dollars.

What has to go right for the startup to return money on investment

  1. The sense of community created in each vertical has to make readers tip in action orientation—healthy core subscribers, event attendance, demonstrating return on investment for exposure.
  2. Other cities and their funding/entrepreneurial ecosystems miss the timing of launching similar Knight-funded newsletter companies.
  3. Launching cities, brands, and teams becomes a highly routine process where the company is in 6-12 markets by 2020.

Review these deal memos every time the startup raises a new round

Test if original thesis still applies

Notice trends in how you think

If no to investment:

For each startup you don’t invest in, write clear notes on reasons why you passed

Review these notes to see how bad you are at this and how improving over time

Updates

[November 2017] WhereBy.Us shares an investor update. Team is at 16 full time members with $5MM valuation.

[March 2018] WhereBy.Us launches in Orlando and Portland. Jason Calacanis’ LAUNCH accelerator invests and brings the team to San Francisco. Total cities now served are: Miami, Orlando, Portland, and Seattle.

[August 2018] Calacanis raised a convertible note round for his startup Inside.com which seeks to operate 250 newsletter at the New Tropic’s (WhereBy.Us’ Miami newsletter) size. The question now is whether WhereBy.Us and Inside.com are competitors or complements. Inside.com focuses on a great deal of topics where as WhereBy.Us focuses on geography specific reporting. One could see Inside.com operating a Miami, Seattle, Orlando, and Portland vertical that are just WhereBy.Us’ publications rebranded. WhereBy.Us at roughly ~25 employees.

01/23/19: WhereBy.Us is raising a new round of capital, totaling 2.5MM at a valuation of 12MM. Follow up capital is only allowed to accredited investors. Valuation is 2.4x larger than when I first invested in July 2019.  “The funds from this round will help us launch our next cohort of 6 cities, and complete development of the next stage of our technology, focused on content and events personalization.”

“We’ve gone through a lot of growth and hit some major milestones since our last raise in 2017:

  • Doubled the number of active cities—from 2 to 4, with simultaneous launches in Portland, OR (Bridgeliner) and Orlando, FL (Pulptown)—the first implementation of our “city-in-a-box” model that lets us launch multiple cities at once (adding to our existing brands in Miami and Seattle)
  • User growth—we grew opens of our newsletters more than 2.2x from Q4 2017 (553k) to Q4 2018 (1.2m)
  • Revenue growth—we grew cash revenue 1.24x from 2017 ($775k) to 2018 ($920k)
  • Product developments—our self-service newsletter advertising technology has grown quickly and now represents more than 35% of our revenue
  • Scalability gains—our two new cities (Portland and Orlando) hit our target growth curve at less than half the cost of our Miami and Seattle launches
  • Membership launch—we launched our new membership program in beta with our superusers three weeks ago with an introductory price of $8/mo, and already have more than 300 members generating more than $2k/month in recurring revenue
  • Notable investors (all of whom are participating again in this round) include Jason Calacanis, McClatchy, Krillion Ventures, Knight Foundation’s Enterprise Fund, and Mark Kingdon (Quixotic Ventures)
  • We’ve also grown our mission-driven impact, helping locals get more engaged in their cities and building stronger local communities. We’ve deployed new projects from local voter guides in each of our cities, to a user-driven series on homelessness in Seattle where we drove a partnership with 8 other local news organizations. If you’re interested in digging deeper on our impact, you can check out this deck.”
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