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

swampthinker 7y ago
Except you also need to get money from those users on a recurring basis.
smt88 7y ago
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.
gravypod 7y ago
That's something PayPal did initially.
baddox 7y ago
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."
thesausageking 7y ago
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.
- gonesilent 7y ago
  Also jet.com subsidizing sales.
- pg_is_a_butt 7y ago
  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.
- jaredsohn 7y ago
  >but let them grow at 7-10% / day. not seeing that math
- beaverden 7y ago
  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
objektif 7y ago
Yeah but they would not be active.

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

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.

gravypod 7y ago

That's something PayPal did initially.

baddox 7y ago

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."

thesausageking 7y ago

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.

gonesilent 7y ago
Also jet.com subsidizing sales.
pg_is_a_butt 7y ago
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.
jaredsohn 7y ago
>but let them grow at 7-10% / day. not seeing that math
beaverden 7y ago
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

objektif 7y ago

Yeah but they would not be active.