Okay so this post is about 1.5 weeks late, but I figured I should get around to the whole point. Trying to setup multiple sites with very little experience is very interesting.
The basics are simple. Zwift at this point is likely profitable in terms of income and employees or very very close to it. Crunchbase lists them as 100+ employees, and if you dig deeply into announcements you get things like 13000 concurrent users, over 1 million (active and non-active) accounts, etc. So I think it’d be easy to estimate (using methods previously show) that their revenue is somewhere in the vicinity of 1.5 to 3 million monthly or 18 – 36 million annually. Say 100 employees that range from high end devs to basic office stuff, we use a 100k per person per per year and get 15 million cost of labour and throw several million on top of that for offices and servers and you can see, they are in spitting distance of being in the black. With additional US health care costs and acquisitions, I might not be right but likely in the ballpark.
News stories for investment tend to latch onto the “story” used for investment. Read Venture Deals and it’ll become very very clear that investments are sold on a story. The big part of that story makes it to headlines, and that headline is e-sports…. sort of. E-racing? E-sports is playing “traditional” video games for money, fame, etc so maybe it’s going to change the meaning – blurring that line. So you can argue that the bulk of the money could be for platform expansion, but it’s likely been sold on the story of racing.
I think it’s important that I state that I use Zwift or Trainerroad in alternating winters because, honestly I think it’d be dumb to use both for the cost and Trainerroad feels tried and true, but I’ve seen very little on their main platform and I couldn’t care less about iphones, ipads, or android devices. I was very surprised to come back to Zwift a few years later and find that it’s seen some improvements, but it’s not a lot. I’m sure underneath it’s a lot of work but on the outside it’s meh. Again, they’ve likely focused on iphone, ipad, companion app, apple tv, etc. So the main original is…. meh to me. I already believe both are overpriced because I can pay for 3 years and I don’t get close to a budget triple A video game features, graphics, organization, or quality. That’s because it’s a niche market by comparison and like I said, they are focusing now on things that are boring and add zero value to me.
Recently though lots of controversy on the KISS league from Cofidis not really racing, to weight issues, etc. Don’t expect these to stop.
So if you have 120 million dollars, the expectation of a unicorn company from all the news articles and they are going to try and turn that into at least 1 billion dollars (10x is the unicorn plan). How? If your platform is reaching a very mature level that you’re branching out to other platforms and you already have great market penetration you’re now in the late adopters to laggards part of the curve, how are you going to turn 120 million into a billion dollar valuation with only 20 – 40% of your available market left?
Well, it’s not going to include “do the exact same thing we are doing now that we’re starting to level out”. (And that is my speculation only, I don’t know the numbers). It’s going to be something new. Do you think broadcasting a video game equivalent of pushing a button and every single other thing is automatic is going to make for an interesting audience engagement with millions of dollars of revenue for every broadcast? A broadcast that is about 20Mb of ANT+ data and then could just be replicated exactly to the second? There is no battling to be had besides a hidden aero algorithm, poor power meter calibration and zeroing, and height and weight measurements. To make matters worst, people are making whole videos on running Zwift as an experiment to back out how height and weight are affecting things which should just be a replica of physics, but how do you turn a height into a CdA? is everyone’s CdA the same for the same height and weight?
So all this speculative banter aside, nobody is paying thousands of dollars for front row or finish line seats here. So if you can’t count on viewership then how are they going to generate a valuation of a billion dollars.
The hundreds of thousands of existing users, that’s how. They will make money off of them. I’m not sure how, but if the headlines read something about racing and being heralded as a a unicorn company where 10x is the EXPECTED return. You better believe something is in the pipeline to squeeze money from that user base and if it involves racing, it’ll likely involve the existing customer base.
If it involves the existing one, then cheaters cheaters cheaters everywhere. And the protocols are not setup for this, and neither are the meters. The meters are all over the place. Heck, install any arm based unit with pinch bolts and not apply a sprint or some body weight before zeroing and it will ready off by a lot! You can back pedal to unload the splines, zero it and it’ll read off. All arm’s need to be vertical and stable that I know of so standing and zeroing like some might suggest isn’t normally possible, but these little tricks can get it reading nice and high.
Now take people who are paid hundreds of thousands of dollars, like managers and coaches, the existing sport corruption and you’ve got a recipe for using the easier and less detectable method to cheat. And that’s what gave rise to the video below. Here’s how to curb that a little bit potentially