N ormally I don’t kiss and tell when it comes to evaluating pitch-decks that are send to me. On average, I get anything between 4 and 10 pitch-decks sent to me, and some of them are almost a whole business plan. I am not going to dive into how a good pitch-deck is supposed to look in this blog. What I will be doing is pointing out what you definitely should not be doing. This week, I got a pitch-deck that looked quite promising at first glance, but as I read more on it and dived more into the subject, I got angrier as time passed by. Why beat around the bush with it? It frankly pissed me off. Now anyone that knows me personally would tell you I might as well be the reincarnation of a distance cousin of Budha, so it does take some effort to get me to that point. I’ll discuss it bit by bit where it really went wrong with this pitch this week, and hopefully, they are also reading this!
So what’s the pitch?
The pitch focused on providing podcast tours of cities, neighbourhoods and cultural sights via an application (revolutionary, I know, right), which are both available on the App Store and Google Play. They provide 45minute tours, which sound like a podcast, conversational in format. They create the content and control the tours’ tours’ whole process, which combines freelancers and full-time content creators. So the whole point is they write a script, edit it, record the audio and publish it on their app.
I downloaded the app on both android and iPhone on different OS systems ranging from Android 8 up to 11 and IOS 12 to 14. I don’t own a phone shop, but when 50% of the today’s entrepreneurs put words like “market disruptive” “innovative app”, you are forced to see if the app actually works on various platforms. What is the point of having an app when it only works for, let’s say, on Android 8.0 and not 11? So far, so good, decent app, and it looks fine, so what are some stats on this matter?
What they claimed
I always look at what the pitch-deck claims to be or will be, for that matter. I have put up some screenshots of the pitch and blurred out their company name for obvious reasons. I kept it to the most obvious part and spared you much of the sales jargon. It might be a bit daunting but bear with me, it is worth the read.
The reviews
Since this is an app, there some claims they make regarding the review, completion rate and how many guides per trip the user completes. I can’t check the completion rate and how many tours they take on each trip.
I can however check the reviews on the app stores… so here is when the major red flag started, they claim over 1300, 5-star review which on it’s own is bullshit. No new app in the AppStore history has managed to score 98% 5 start rating during the launch and development period. One look at the reviews I immediately can see the reviews have all been bought sometime in October 2020. Now call me a bit of a sceptic, but who in their right mind thinks I am going on a tour mids of a pandemic ?! and then decides to give it all wonderful reviews I mean come on ! think people… think! then when you go over to the reviews of the Google Play store it gets even worse, it seems some random aliens have apparently visited our planet and decided to go on the tour and leave some nice reviews afterwards… now isn’t that nice of them…. at this point I’m just agitated to read the rest of their pitch but fuck it… let’s do it.. and get it out of our system.
Partnerships
After a great start lets move to the next part, so it now claims to have a first-mover advantage. Let’s have a look at these platforms like Tripadvisor which is one of the bigger players of the mentioned partners. One look at Tripadvisor you can see there are other digital/virtual guides being offered. Matter of fact if you look at the same app store, there are like dozen other apps offering this. I don’t mind not being the first, being first means nothing in many industries. If you look at history, you will see many first movers were actually paving the way for others while they suffered a fatal blow themselves. But claiming to have the first-mover advantage on your pitch while this is clearly not the case, is yet another cringe. As said before, it is alright not to be the first, but don’t put it on your pitch!
Finances
Alright fuck it you know, let’s talk numbers. I let the fancy talk and the attempt to buy thousands of reviews to make it more legit and a success slide. At least give me some numbers I can work with and that makes sense. When they send me the pitch-deck their app cost £4.99, however in this projection they put down £8.37 per sale. This means the adjusted projection would slash the revenue by 40%. I won’t even delve into the fact that £8.37 is really high and £4.99 is more realistic when you have so many competitors already on the market. On top of that, the AppStore takes another 30% and not 15%.
Taking their own projection of selling 15 a day this would mean £27,320 and NOT £45,826. After subtraction the tour costs and 30% commission, this would leave a profit of £18,162, which is a far cry out from £37,952 !. For heaven’s sake, I haven’t even touched the fact that there is no way you would get that amount every day because of a tour being seasonal it will fluctuate enormously, so the actual profit would be much lower.
Total revenue and exit strategy
Okey at this point I am in need of some sedatives, just shoot me up with some horse tranquillizer, wine, weed…just anything to get me through this pitch. So their plan is to have 3000+ tours by 2024/2025. Well, that’s a tad ambitions, that would cost you a little over £3,000,000 to get that content and I have not even touched on the subject of the scaling costs that it will bring with it. With a projected annual sales of £50m in 2025, that would mean selling 10 million tours a year? are you freaking mental? That would mean on in 2025 the app must have been downloaded 4 million times and. In comparison, the audio travel guide app with the highest download currently in the app store has just over 1million downloads and it has been on the market for more than 6 years. But let’s just calculate what is needed to get an annual turnover of £50m
By the best estimates of their numbers that would mean
- 3000 tours in the database
- over 40 sold each day per tour, 12000 app sales a day
- 365 days
- at £4,99
Someone was on crack when writing this, I have not other explanation for this….how can you project £50m in your sales when just 1 diagram before that your best case scenario is almost 1/3 of that!? and the cherry on top, you are putting a valuation of £1Bn on it? pardon my french but fuck off…Oh, and did I already mention the fact there is no way you would be selling this 365 days a year, each tour will fluctuate depending on the location and season.
Conclusion
At this point, do I even need to close this post off with something enlightening? don’t lie and fuck up your pitch. The sad part is, I reached out to the CEO, who send me the pitch-deck and explained that this does not look good in any way, and they went silent.
The numbers don’t add up, and I know many pitch-decks numbers don’t really add up with reality, and we kind of turn a blind eye to this. What really pisses me off, and basically any investor is the lying and manipulation of the reviews in an utterly shameless and amateur way. I mean, if you are going to buy reviews, make sure they are decent least. You pitch for millions, and you went and purchased the first review you could get your hands on? I contemplated whether to publish their name here, but we all make mistakes, and I hope they actually read this and take notes from it. And to other entrepreneurs looking for an investor, just be honest about it. We don’t expect brilliant accountants churning your numbers but be honest because you are asking people for their money, trust and resources.