Hornet

Sean Howell founded Hornet in October 2011 as a mobile social network focused on gay men. The app grew into what he described as the second largest gay social network, with 15 million members worldwide, and it was known for its ongoing Know Your Status HIV campaign.

Hornet launched without revenue. Howell said the company was pre-revenue in 2011 and first generated revenue in 2013, when it turned on the paywall. Its premium subscription gives users unlimited use of the app, unlimited photos and messages, and the option to appear offline, for $7 a month. Early growth focused on users rather than monetization. The company went after key markets including France, Brazil, Russia, Turkey, Thailand, and Italy, and it localized early. Howell said that helped its users and its growth. The team was 40 people, spread across San Francisco, Cape Town, Prague, and Brazil.

Hornet has not spent on acquisition since October 2011. Howell said most new users come through organic discovery and a viral coefficient driven by users sharing the app with friends. He was vague about how viral growth is measured, saying the company uses attribution links and tracks influencer shares on Twitter when they are popular enough to detect. He gave an example of how users spread the app in person, though he did not give numbers for it.

Subscriptions were the largest revenue stream, at about 60% of revenue. The rest came from programmatic advertising and direct deals, and Howell said direct deals were growing quickly enough that he expected them to overtake programmatic. About 5% of monthly active users pay for the subscription. Half of subscriptions are annual. Monthly subscribers stay about 5.5 months on average, which Howell said was the best outcome for the company. The company said it raised about $1.5 million very early and reached break-even through subscriptions in year three. It has not raised since. Howell said he was raising several million dollars at the time of the interview and that Hornet's valuation was based on revenue multiples. He said the dating app Grindr sold at about seven times top-line revenue. The source does not give a current revenue figure. The host's estimate of $300,000 for 2013 was a guess, and Howell's description of last year's revenue as multimillion was a range, not an exact number.

As of August 2016, when the interview was recorded, Hornet had 15 million total users and 2 million monthly active users, with about 5% paying $7 a month. Howell described subscriptions as one revenue stream within a company with a 40-person distributed team.