IDEA #1 | STARTUP

AI Financial Analysis 📈

No human = no human error

1. Problem/Opportunity❓

It’s earnings season, which for analysts on Wall Street means many late nights fuelled by coffee, energy drinks and other stimulants which we won’t mention here to keep this newsletter advertiser friendly…ish.

But this earnings season a certain ride hailing company has stolen all the headlines…Lyft.

Earlier this week after Lyft announced their earnings their share price rocketed up 60%. Great right?

Wrong.

Lyft’s shares skyrocketed due to a typo in their earnings report relating to their “adjusted EBITDA margin”, which is corporate speak for fake profits.

They said that they were expecting expecting adjusted EBITDA margin expansion of 500 basis points (5%) for the full year 2024, when actually they were only anticipating a 50 basis point (0.5%) increase, which they clarified after earnings were released.

Their shares tumbled in value after they announced the correction and at least one person in Lyft’s finance function lost their job.

This was a huge faux pas and typos and errors like this happen all the time in companies, big and small. So let’s create a tool to solve this problem.

2. Solution ✅

Here’s the idea…create tooling which analyses financial reports, such as earnings reports, to check for consistency and errors in reporting.

Here’s how it works. You create an AI model that’s trained on a corpus of earnings and financial data so it understands how financial reporting works and what all of that finance jargon means.

The AI model is then given access to a company’s internal documentation and financial models and checks the data for internal consistency, such as numbers in a financial model matching up to numbers presented in a slide, work which is normally completed by junior analysts in firms.

But the AI can go a step further too and sense check calculations and data based on historical data on the company on which it’s trained and flag any potential outliers to a reviewer. This increases the chance of errors, such as that typo, from being caught and shielding the company from potential embarrassment or even financial loss.

3. Business Model 🏦

Go-to-market: start by focusing on advisory firms who work on deals for clients as early adopters, then you can go knocking on the doors of big companies

Monetisation: subscription fee

Startup Costs: you’ll need a crack team AI engineers to get this off the ground so you may need to do a small raise here

4. How You’ll Get Rich 💰

The path here is to exit to a large financial data platform, think Bloomberg or MorningStar

IDEA #2 | CASH FLOW BUSINESS

Newsletter Agency for Creators 📹

Out with the old and in with the new…sletters

1. Problem/Opportunity❓

All creators share the same fears.

Becoming irrelevant, getting old, or being caught photoshopping their pictures no matter how convincing they may be.

But one fear is bigger than all of the others they have…getting cancelled.

Today cancellation is just a few poorly chosen words away and for many creators who have built their audiences on large platforms like YouTube or TikTok if they get cancelled and banned from these platforms their career is over.

Creators understand this dynamic today better than ever before and are taking steps to create a direct relationship with their fans. One such avenue they’re using for this is the humble email newsletter.

Despite the prediction of the death of email for decades now it’s made a bit of a comeback in recent years, so why not create an agency to cash in on this trend?

2. Solution ✅

Here’s the idea…build an agency to create and manage newsletter content for creators.

Here’s how it works. Creators sign up for the service and share details of what they want their newsletter to be like. What content goes in it, the tone of it, how often it’s sent and so on.

Based on this information an indicative monthly fee for this service is shared with the creator. If they’re happy with that fee then the service then goes back gives recommendations on content and ideas until a finalised newsletter format and cadence is decided on. A finalised monthly recurring fee is then finalised and the newsletter is then on autopilot for the creator.

The service could use a mixture of offshore talent and AI to keep fulfilment costs low. They could also offer a range of other services, such as translating newsletters into different languages to cater to local audiences.

3. Business Model 🏦

Go-to-market: take over the newsletter for a single creator, prove how valuable a channel it is then go from there

Monetisation: monthly recurring fee

Startup Costs: minimal, just use an email newsletter platform like beehiiv for the business

4. How You’ll Get Rich 💰

This could be a mega cash flow business. Hugh monthly recurring revenue with a low cost base.

NO BRAINER IDEA

Weather App

We all have a weather app on our phone. But they all have a big problem.

Despite all their data and sophistication they can be wrong…and often are.

Introducing the weather app that’s never wrong! How can that be? Because it just tells you to look out the window. Genius.

BIG DECK ENERGY

Peloton’s $400k Seed Deck

Year: 2022

Stage: Series A

Amount: $10m

Peloton is an American exercise equipment and media company based in New York City. The company raised $400k at a $2m valuation from 8 angel investors after pitching 3,000 angels & 400 firms that all said no. Here’s the deck they used to do it.

JUST THE TIP

How “Pokemon with guns“ has taken over the world

Very few games have managed to have the longevity Pokemon has.

Since its release in 1996 the game has stood the test of time with fans of all ages all over the world.

But there’s a new Pokemon in town. It’s called Palworld and since its release on Jan 19th of this year its taken the world by storm. With 6m copies sold the game has generated more than $150m in revenue since its launch and recently hit the second-highest number of concurrent players on Steam ever, behind only Counterstrike.

Takuro Mizobe, the CEO and co-founder of the studio behind this mega-hit, drew inspiration from a number of games for the project, but ultimately the idea came from one simple concept: what if Pokemon had guns?

With this simple concept, a team of just 4 developers and a shoestring $10k budget Mizobe and his team created the game.

The development was marred with issues and according to the founder, it’s a miracle that the game even exists. They managed to secure more funding beyond the original $10k and launched the game to stratospheric popularity.

Forbes has reported that the game has lost two thirds of its players in the last two weeks. It remains to be seen if this was simply a flash in the pan game that will keep losing users, or if it will build and maintain an audience.

But regardless, there’s a lesson in here for all of us.