Commissary Club is raising a Crowd SAFE at a valuation cap of $10 million with no discount. Considering the company’s significant pre-COVID revenues and the success of parent network 70 Million Jobs, this valuation is fairly reasonable. The price score for Commissary Club is above average.

It is difficult to gauge just how large Commissary Club’s market size is, as there really isn’t a “social media for the formerly incarcerated” market. If we consider that a third of US adults do have a criminal record and the US social media market as a whole comes in at $61.4 billion, that’s roughly a $20 billion market size. As efforts to cut down on the US’s bloated prison population gain political traction, that market is likely to expand. There are some other social media networks with similar target markets.For example, the platform FlikShop is specifically geared to connect people inside prison with friends and loved ones on the outside. As of yet, though, 70 Million Jobs was the closest thing to a dominant player in the social media market specifically geared towards formerly incarcerated individuals. Given its first mover advantage and the high number of people with criminal records, the market score for Commissary Club is quite high.

Commissary Club, like its original platform, is headed up by founder and CEO Richard Bronson. Bronson got his start on Wall Street and spent time at the infamous Stratton Oakmont from Wolf of Wall Street. He was arrested in 2002 for illicit activities at his own securities-brokerage firm. He spent two years in Federal prison and, upon emerging, found it nigh-impossible to re-enter the job market. Drawing from his experiences and knowing that his position of privilege must have made it easier for him, he began working to better the lives of the formerly incarcerated. In 2014, Bronson began working to break the pattern of prison recidivism in earnest with Defy Ventures, which trains people in prison to become entrepreneurs. Bronson’s story is an apt narrative to capture Commissary Club’s mission. 

Adrienne Hatter serves as Commissary Club’s director of programs, as she did with parent company 70 Million Jobs. Hatter, who holds a bachelor’s degree in rhetoric from UC Berkeley, started out as a legal assistant in Ireland involved in corporate law cases. It looks like 70 Million Resources is a passion project for her. Since 2018, she has also been involved with Winner’s Circle, a 501(c)(3) dedicated to teaching coding and technical skills to women imprisoned in California.

By and large, it looks like Commissary Club has the same leadership as 70 Million Jobs, and given the success of that platform prior to the pandemic, Commissary Club looks to be in decent hands. The company’s team score is high as a result.

Commissary Club is now less a job-search website than a general social media platform, which means it goes up against the likes of cultural behemoths Facebook, Twitter, Reddit, and so on. To that end, the platform doesn’t offer anything unique on a technological level. It holds no patents and is hardly defensible in any real way.

However, it is the first social media network that’s tailored for formerly incarcerated individuals. The platform also combines various features together into one package. In addition to pure social connections, it also offers job hunting, mentorship, and housing resources. With niche social media networks on the rise, Commissary Club could be well-timed and well-positioned to secure a large audience. It is unlikely that a major platform like Facebook or Twitter would pivot to only targeting people with criminal records. This audience-focus gives Commissary Club a much-needed distinction in the social media market. Therefore, the differentiators score for the company is above average.

While Commissary Club’s target market is unquestionably niche, it is an unfortunately large niche. After three years of operation, parent website 70 Million Jobs took in $40 million in revenue (largely through advertising and fees). It also acquired 11 million users, giving Commissary Club a good head start. In addition to attracting users who were formerly incarcerated, Commissary Club also hopes to engage family members of those with criminal records, who number around one 100 million.

Commissary Club is pre-profit but saw significant revenue in its previous form. In this case, recent trends are something of a downer, as the COVID-19 pandemic slashed 70 Million Jobs’s business to practically nothing.The company as a whole holds significant long-term debt in excess of $1.7 million. However, Y Combinator and Founders Fund are co-investors in the company, and its monthly burn rate is just under $56,000. Given the strong traction of 70 Million Jobs and the company’s success in securing past funding, Commissary Club’s performance score is very high.

The pandemic has created a time of definite scarcity, and in times of scarcity, marginalized communities are generally the ones that suffer most. If employers were unwilling to offer people with criminal records chances at redemption before the pandemic, they have likely become even less so as jobs have evaporated. The driving question behind the success of the business is whether employers return to the newly-rebranded Commissary Club.

In addition, Commissary Club is running on an ad revenue-based model. As with all ad-based revenue streams, this is an extremely low-margin model, requiring a suitably huge user base. Commissary Club will need to prove that its platform can work at scale, providing an attractive and unique service to formerly incarcerated individuals. Commissary Club represents an urgent attempt to compensate for 70 Million Jobs’s sudden shortfall, but there is no guarantee that employers will see the need to return to their previous engagement with 70 Million Jobs.

As far as companies with social impact missions go, Commissary Club has the moral authority. Marketing to a huge marginalized community with growing social sympathy is a winning strategy, one that saw the company backed by Y Combinator, Founders Fund, and a previous successful raise on Republic.

Commissary Club’s future success will likely depend on how well the jobs market rebounds in the pandemic’s wake. In the short term, the re-branding as a general social media platform for ex-prisoners is likely to have some positive impact, but it could be a couple of years before the company begins taking in significant revenue again. Still, those 11 million users are still out there.By expanding its platform, Commissary Club could start to see revenue in the millions within a few years.

Commissary Club is a re-branding of successful career network 70 Million Jobs, which sought to connect Americans with criminal records to employers willing to offer them a second chance. Founder Richard Bronson oriented the company away from its strictly jobs-focused mission as the COVID-19 pandemic devastated the jobs market. He has given the platform a fresh look as a more generalized social media network for the formerly incarcerated to connect, share advice, and engage in community events.

While the company’s pre-COVID success was significant and its mission holds moral weight, questions of how quickly the jobs market will rebound and whether Commissary Club has a product-market fit cast doubt on the company’s future prospects. The company has time to build back up, but even if it does see future success, investors are likely not to see the company operating at its previous success level for a while. As a result, Commissary Club is a Neutral Deal at this time.

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Analysis written by Benjamin Potts.