To put it in perspective:

WhatsApp: $55/user

Instagram: $20/user

Given the timing, network effects, potential, address book data and $0 CAC, they were stealings and I can’t believe Honey sold for $4B. Sounds off by x5+

You’re saying Honey is worth $20B?

Pretty sure parent means the other direction.

He is saying it is 5x too high. So the valuation should be 1/5th (20%).

So he is suggesting a valuation of $800,000,000 ($800M). Which in my opionion is about right.

That puts the value per user right at $47 per user. Again, which given PayPal's previous acquisitions, looks accurate.

Skype : $240/user

Broadcast.com: $10,000/user

Couldn’t you basically start any website and pay users $200 and get as many users as you want?

That's literally what PayPal did. They gave users $20 if you created an account. Over time, they lowered it to $10 and then $5. The program cost them ~$70m, but let them grow at 7-10% / day. They went from 800k accounts in March of 2000 to 4m in September, and then 11m in September of 2001.

Reminds me of the Monese rush my colleagues have. I heard they're giving referral money to both the inviting and the invited. So far, I've seen only the person who actively invites people to actually use it, because no one else actually needs it in the heavy presence of Revolut in our market. Basically, if you give away money, make sure people are actually using the product

>but let them grow at 7-10% / day.

not seeing that math

Also jet.com subsidizing sales.

I paid for a semester of college at least thanks to that paypal program... I think it started out at $75 referral... then $50 to you and $50 to them, then 50/25, 25/25, 10/25, etc.

Within a month everyone on campus had an account.

In order to do that and get PayPal to acquire you for at least that much money, you'd have to convince PayPal that your users also spend money that makes it back to you. Honey's pitch probably wasn't just "we have x daily active users," but rather something like "we have x daily active users who are big e-commerce spenders, and we can make money by connecting our users with retailers."

Yes, but when potential investors or acquirers were doing their diligence, they'd find out that your cost of user acquisition was extremely high.

It's likely Honey did have a high cost of acquisition, but nowhere in the ballpark of $200/user.

Except you also need to get money from those users on a recurring basis.

Yeah but they would not be active.

That's something PayPal did initially.

Yeah that was the first thing I calculated when I read that. That’s pretty nuts. Having an installed use base helps. They’ll continue to make cash off a large portion of checkouts.