Today (July 5) we got an email from Kyle Beamsderfer that I thought was particularly well written. It’s a great note, and one I want to answer publicly. First, the email:
I have been using iConsumer for a few months and I admit I think it is a novel idea and hope to see it succeed beyond anyone’s wildest dreams. I do however have some concerns, namely the slow growth and how the company expects to achieve profitability. I believe the company’s own literature states they need something like 250,000 members before they start making money.Looking at the SEC filings, I discovered the company has been around since 2010. As of July 5, 2018, iConsumer is only listing 52,102 members. This seems awful low. In fact, I may have seen that number only tick up by a few hundred in the year or so I have been using the company.
How does iConsumer plan to remain solvent? I have not seen any sort of promotion or advertising online. Looking at the financials, it seems the company lost over $1 million in 2017. This cannot be sustainable. By my rough calculations, it will still take another several years to hit that 250,000 member threshold. I will remain a loyal customer for the forseeable future, but how can you assure myself and the other 52,000 members that the company has a plan in place to stay afloat? Thank you for your time and I look forward to your response.
Thanks for the great set of questions. I hope I’m able to answer them clearly. First, I want to thank you for being an iConsumer member/shareholder. We’re a public company, so there are some limits on what I can say. You will see me referring to our offering circular (OC) a lot. We’ve tried to answer most of these questions in there.
You ask “how are we going to remain solvent?”
As we’ve laid out in our OC, we need to raise money in order to grow to the size where we can be self sufficient. Until we’re self sufficient, we’re dependent on finding investors and my support. And we need to grow. That’s what the OC is for. We are in conversations every day with people who are considering investing. The other thing we’re doing is making sure our member/shareholders understand that their company needs them to shop in order to thrive.
What about slow growth?
Our growth was amazingly rapid last summer when we spent significant money on advertising. We added about 30,000 member/shareholders in about four months. But we only had so much money, and we needed to start spending it on the final push to having our stock be actively traded. Until we were traded, we weren’t really a complete company.
It took way more time and money to get to that point than anybody thought. It wasn’t until March, 2018 that the first trades could happen. And by that time, we had used up our marketing budget completely.
But as of June, we’re complete. You’re right, it’s time to start marketing again. And we’re actively working to raise the money to fund aggressive new member acquisition.
You’ve been around since 2010. What’s with that?
While that’s the official date of our corporate founding, iConsumer as a company didn’t really exist until June, 2015, when we launched. Before that, it was a web page that directed traffic elsewhere.
You lost over $1,000,000 in 2017!!
Yes and no. For right now, we’re focused on cash. A book loss (the $1,000,000 number) is important, but it’s cash that pays the bills. In 2017 we spent about $355,000 in cash more than we took in from operations. You can see that in our statement of cash flows in our financial statements (which are included in the OC). Still a big number, but not quite so scary.
Back to slow growth … only 52,102 members?
No PR, no social media, and no advertising since the fall. It’s all word of mouth. Members telling members. And it’s actually working pretty well.
New members who’ve joined since January are very promising. They’re paying for themselves in less than 45 days. That is, they join, they shop, and the amount of cash we get for that shopping is greater than the cost of the cash it took to attract them to be members.
But you’re so right. We need more members to be cash flow positive. Which is why we’re out raising money!
Or, if each member made one purchase a month, we’d be golden. I’m not picky.
What’s your plan to stay afloat?
It’s pretty simple, though that doesn’t make it easy. Raise money. And help members understand that their shopping supports their business, which we hope raises the stock price, which benefits us all. It’ll certainly make it easier to raise money, and less important as well. I spend most of my time working on that very problem. Check out our invest page. Check out the offering circular. Check our our Crowdfunder page. These are the tools we use to work with prospective investors.
Lastly, this isn’t all on my shoulders alone. We all stand to benefit when iConsumer exceeds our wildest dreams. So, getting friends involved will help. If you have acquaintances who can afford to risk $250, have them consider investing. We’ve worked very hard to make participating in a start up, with all of the risks and fun, easy and affordable for ordinary people. Certainly, they should become members and you should earn $5+ in BTC.
We’re really just like almost every other early stage business, except we’re funded by 52,000 people and their shopping. For fun, compare us to Tesla, which if it doesn’t raise more money will go out of business. It needs billions of dollars to stay afloat. We only really need another $500,000 to get us over the hump.
Thanks again for your support.
/s/ Robert N. Grosshandler