IDEA #1 | VENTURE STARTUP

Smart Habit Tracker ☑️

New Year, new startup idea

1. Problem/Opportunity❓

2023 was the year. We did it. We all achieved our 2023 New Years goals, right?

Not quite.

No, 2023 was the same as every other year. We started the year with lofty goals which, despite our best efforts, we didn’t quite manage to achieve.

But now it’s 2024, so it’s time to do it all over again and for all of us to break out our favourite productivity app…a habit tracker.

But habit tracker apps have a huge problem. They all rely on us manually recording our progress, which we either forget to do or lie to ourselves about. Did I exercise today? Sure, that 5 minute workout was intense…tick!

This space is huge with habit tracker apps getting millions of downloads every year. So let’s build one that actually works.

2. Solution ✅

Here’s the idea…build a smart habit tracker app which integrates with devices and other apps to automatically track whether you’re sticking to your habits.

Say a user wants to make a habit of walking 10,000 steps per day (which FYI comes from a Japanese marketing campaign in the 1960s and has no basis in science), the app would look at the data from their wearable device or phone to see if they’ve hit that goal each day and track this over time.

This could be expanded to a range of different habits, such as reducing screen time, getting more sleep, meditation, saving more money and so on. You’d begin with a handful of integrations but the more devices and apps you integrate with, the bigger the moat is for this business and the more valuable it becomes.

The app could also have a social component where you get matched with an accountability partner to keep you motivated, as well as offering access to support groups for people who are starting to lose their way.

This could be a life changing tool for users…and for whoever builds it too.

3. Business Model 🏦

Go-to-market: Start with habits in the fitness space. Many people track these and all of the data is available through APIs. Once you’ve achieved traction with this segment then expand to other habits and customer segments.

Monetisation: have a free version of the app which is basic and allows a limited number of habits to be tracked. Then offer a premium version of the app, say $5 per month, with expanded features such as unlimited habit tracking, access to support groups etc.

Startup Costs: You would likely need to do a small seed round here to build the tech and for marketing spend to acquire early customers, but this won’t be hugely capital intensive to get off the ground.

4. How You’ll Get Rich 💰

This is without a doubt an exit play. Calculating how big a potential exit could be is difficult here, but one method of valuing this business would be:

($Customer Lifetime Value – $Cost of Acquisition) x number of users.

Therefore the focus should be on growing your user base but keeping your unit economics in check to maximise the outcome here.

IDEA #2 | VENTURE STARTUP

Incentive-based Online Learning Platform 🎓

Show me an incentive, I’ll show you an outcome

1. Problem/Opportunity❓

Online learning platforms are a dime a dozen. Coursera, Udemy, Skillshare, we’ve all used them or been targeted by one of their ads. It’s easier to walk on water than to avoid Skillshare ads on YouTube.

But online learning platforms have an enormous problem. Completion rates.

Online course completion rates are between 5% and 15% on average which is, to use the technical term, sh*t.

Online learners simply aren’t motivated enough to complete courses, which is largely driven by how cheap these courses are, so people buy multiple courses without completing them.

Fundamentally online courses are only valuable to students if they actually learn from them, so a platform needs to be designed to do exactly this.

2. Solution ✅

Here’s the idea…create a new online learning platform where the cost of courses on the platform is directly linked to the student’s completion of these courses.

Here’s how it would work.

When users sign up for a course they pay a high upfront fee to take the course, say $500. Then, for each module they complete they earn back a portion of this fee. So if the user completes half the course they get refunded half the initial amount they paid. If they fully complete the course they only end up paying a small fee, say $50.

This payment structure takes advantage of a cognitive bias called loss aversion, where the pain of losing is more powerful than the pleasure of gaining. The pain of the high upfront fee, coupled with the ability to alleviate that pain by earning back some of that money by completing the course, would massively improve completion rates.

Students who still aren’t motivated to complete the course would just pay higher course fees, so the platform makes good revenue from them. Accounting for revenue in this business would involve some funky deferred revenue calculations, but let the accountants worry about that.

If you could generate a meaningful uplift in completion rates this would be a revolutionary business in the e-learning space.

3. Business Model 🏦

Go-to-market: start with a handful of online courses in one particular area with a particularly low completion rate, maybe computer science or data analytics, and test the model out. See what completion rates look like and then go from there.

Monetisation: I think we’ve already covered this pretty well…

Startup Costs: this is not a capital intensive business, you just need to spin up a website. For reference Skillshare was founded with only $5,000.

4. How You’ll Get Rich 💰

This could be a huge exit opportunity to another online learning platform. For example 360Learning , who specialise in workplace L&D, place a huge emphasis on their completion rates. They would acquire a business like this to diversify into the B2C space. They acquired Looop Online for $20m in 2022, so they’re clearly active acquirers.

JUST THE TIP

The $100m/Year Blog

Here at Half Baked we’re not really into watches, but many, many people are.

Now we may not be watch guys, but we’re business guys, so when we heard about a watch blog doing over $100m revenue per year we suddenly got very interested in watches.

It’s called Hodinkee and it was founded back in 2008 by Kevin Rose. Kevin’s mostly known for being the founder of Digg, a news aggregator with a curated front page similar to Reddit which rocketed to fame but ultimately crashed in 2012. In case you’re concerned though, as an early investor in both Facebook and Twitter, Kevin’s done just fine for himself.

Hodinkee’s success is incredible for such a simple business. They pump out high quality content across different platforms to drive traffic to their site. They monetise this traffic through selling watches, watch insurance, magazines and more to the tune of $100m per year.

Time is money? Clearly. So what’s the lesson here?