# FY1 S0 Finance Plan We target to be operating at over $1M yearly positive free cash flow by D10K. # Income ## Pricing Philosophy 1. **Price is independent from cost.** It is possible to end up spending major effort (high cost) while delivering minor utility (low price). Opposite is also true. Customer has no interest in what it costed us to make the product. They are only interested in the utility that they get from our product. Minimize cost and maximize utility so that we can increase profit for us and prosperity for the humankind. 2. **Price to satisfy.** Low price helps customer acquisition, and high price helps customer satisfaction. Customers take interest in the price only before purchase. After purchase, customers do not consider low price to be a valid reason to forgive a disappointing product. Our current top priority is to grow, not the number of customers, but the satisfaction of the customers. And it is way easier to satisfy customers when we have more capital to work with. Therefore, price sufficiently to deliver great satisfaction, then lower price later only when we can deliver the same or greater satisfaction at the lower price. 3. **Price to motivate.** What we tie pricing to changes behaviors. If we tie pricing to customer satisfaction, then our team members will maximize customer satisfaction automatically. If we tie pricing to wasteful consumption, then customers will reduce waste or yield to other customers with greater demands. Consider carefully what we are incentivizing and disincentivizing with our business models. ## Business Model We tie our business models to the satisfaction of our customers. Developers of online apps today focus on 2 metrics: Daily Active Users (DAU) and Annually Recurring Revenue (ARR). To motivate our team to maximize DAU and ARR of our customers, we consider the following 2 business models: - **Commission on Distribution:** We help developers distribute, and developers pay us per user we helped them get. - **Commission on Monetization:** We help developers monetize, and developers pay us per dollar we helped them get. Today, we lack the power to help them monetize. We will first focus on helping them distribute their apps to as many users as possible as soon as possible. ## Pricing Plan For helping them distribute their apps to users, we will charge developers: - **A cent per user per day:** This motivates us to help developers get one more user one day faster. Reaching many users is not only critical to monetization, but is also innately fulfilling. If we help developers get more users sooner, then developers will feel greatly satisfied. - **With a minimum of $3K per month:** Assuming every user returns every day, $3K in a month is a price for 10K users. By setting this minimum price, we are declining developers who expect less than 10K users. It is improbable that an online app with less than 10K users can deliver meaningful impact to the society. While we lack the ability to support a high number of customers, this minimum price will help us focus our limited capacity on developers who do expect more than 10K users. One risk of this pricing model is that, if the marginal monetization opportunity per user for a developer diminishes as the number of users grows, then this pricing model demotivates the developers to acquire one extra user or retain a user for one extra day. To mitigate this risk, we need to expand to help developers monetize their apps such that their total revenue grows proportional to, or faster than, the growth of the number of users. This means we will soon need to expand to support monetization. We will be making sure that our customers prosper, because we made sure that we get to prosper only when our customers get to prosper. ## **Advance Engagement** While we are still developing the App Platform, we will offer customers the opportunity to enter Advance Engagement with us with a $3K deposit. Advance Engagement Customers will get: - **Opportunity to preview product and share feedback during development:** Advance Engagement Customers will get to influence us while our product is still plastic. - **Invitation to private opening:** Whereas our product will deliver utility that money cannot buy until general availability, Advance Engagement Customers will get the opportunity to buy our product with money. - **$3K credit for the first month of service:** Once we start service, the $3K deposit will convert to $3K credit with which they can pay for the first month of service. This means $3K deposit is just an advance payment for the service. ## Payment Options For customers with insufficient cash, we will offer the following special payment options: - **Payment by Debt-Financing (Payment Deferral):** We will let customers with insufficient cash to defer 90% of fee for upto 6 months. - **Payment by Equity-Financing (Post-Money SAFE):** We will let customers with insufficient cash even after payment deferral to pay upto 50% of fee in equity, using the Y Combinator template for “Post-Money Simple Agreement for Future Equity with Discount Rate and No Valuation Cap". # Expense ## Cost Deflection Whereas we plan to bring in the following costs in the future, we deflect them for now to operate lean while we test the more unsure bets: - **3P Cloud Services:** Customers will directly pay 3P cloud service providers for the 3P cloud services we integrate into our product. - **Content Moderation:** Customers will directly submit mobile apps to app stores. Apple and Google will review contents of the apps, and decide whether the contents are safe for users. ## Cost of Sales We earn revenue when users use apps on our platform. For every active user, we pay the cost of **Server Capacity for Online Memory:** While a user is using an app on our platform, the user’s client is connected to a 1P server which federates computing of multiple other servers to compose one coherent online app experience for the user. We have no estimate for this cost today. We will grow to also pay the cost of **Server Capacity for Offline Memory.** To deliver great utility to their users, developers need access to fast, reliable, and cheap way to store, process, and retrieve data. Since this is critical to the success of our customers, and the entire humankind, we will bring in the Cost of Information and actively drive it down. We have no estimate for this cost today. ## Operating Expenses All our operating expenses will be spent on investing in talent. For Product and Technology, we will grow a 1P team. We expect the cost of 1P talent will grow to $1M by D10K. For Distribution, we will not hire separate talents dedicated to sales or marketing. Instead, we will assign 1P team members in Product and Technology to also participate in sales and support. This is not to save capital on talent. On the contrary, we are giving up potential immediate gains in order to increase expected accumulate gains, by investing in growing our talent. Whereas it is more cost-effective to assign Product and Technology talents on developing product and technology, and hire marketing and sales talents to drive marketing and sales, we will instead give Product and Technology talents the opportunity to meet customers in reality (versus in summary). This will make sure that our product and technology are made with our customers in mind and that our talents can grow the skills necessary for filling critical positions in our company as we grow. For Defense, such as Law and Accounting, we will partner with 3P professional service providers. We expect this cost to grow to $100K by D10K. # Financing We will finance our operation with cash flow from the sales of our product. We do not expect we will need external capital investments by D10K. If we do, we will consider options such as crowd-funding, debt-financing, and equity-financing. For now, we do not need more money. We need every second we can use in each day to be spent on increasing the satisfaction of our customers.