$757,170 - Total
Rolling Commitments ($USD)
|Offering Name||Close Date||Platform||Valuation/Cap||Total Raised||Security Type||Status||Reg Type|
|Taste||11/02/2023||StartEngine||$8,253,640||$153,647||Equity - Common||Funded||RegCF|
|Taste||04/14/2021||StartEngine||$4,970,000||$396,422||Equity - Common||Funded||RegCF|
|Taste||06/17/2019||SeedInvest||$3,000,000||$757,170||Convertible Note||Funded||RegCF / RegD 506(c)|
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One of my least favorite things in the world is being asked by a friend, “what movie should we watch?” Then it is up to me to go sifting through endless pages of Netflix, or Hulu movies in search of a needle in a haystack.
Despite all the great capabilities of platforms like Netflix, the process of finding THE MOVIE is still a burdensome, overwhelming process. Decision overload is the simplest way to put it.
And it’s not just movies. Be it sifting through restaurants on Yelp, or finding hotels on TripAdvisor, social aggregation platforms do little in the way of customizing to your actual taste/tendencies.
In spite of the fact that each consumer has vastly different preferences and tastes, we all get served up similar search results. It’s a cumbersome process and one that frankly turns myself and many other consumers off.
Making decisions when it comes to using socially curated sites like TripAdvisor is less than optimal. Perhaps, there is a better way. Just think about it, if Twitter can learn to serve you silos of opinions that reflect your closest opinions (not saying I think this is good), why wouldn’t that be possible as it relates to movies, restaurants, hotels or even books and apps?
It feels as though, this would be a lot less dangerous a tool and yet highly valuable.
Taste at its core is a data company that has identified the power of peer-2-peer recommendations. Essentially, consumers who show similar taste be it in movies or restaurants, also tend to be the best people to recommend other movies or restaurants to you.
As Taste puts it, “Your recommendations on Taste come from the collective souls of people who are extremely similar to you.”
Through its use of predictive algorithms, Taste is able to deliver reviews pertaining to the specific tastes of each consumer across a variety of products and services.
Whenever a consumer rates a product or service, the algorithm generates a personal “Match%” for each item. Consequently, consumers are able to save time finding what to watch and build a “taste profile” that enables them to gain ownership of the process. A process which is free of commercial bias ‘aka’ paid ads (though they have paid ads, just tailored to you) or generic misinformation ‘aka’ unfiltered searches on Yelp.
Through simple rating exercises like the one seen below you can rate movies you have seen and in real time begin to see your recommendations become increasingly relevant and hit more on the “Amazing” part of the scale rather than the “Meh” or “Awful” part of the scale.
Once I had rated 20 movies, which took about 5 minutes it became clear that Taste knew the exact type of movie I like. They even created a profile dashboard for me to visualize my preferences.
The peer-to-peer Taste system will ultimately enable the company to provide quality recommendations across a wide variety of categories including restaurants, hotels, music, books, podcasts, games, and apps to name a few.
At the heart of what Taste is doing is two key things.
Taste is a data first company, which can provide recommendations that are 2.5X more accurate when measured against generic rating systems and because of its stickiness users tend to rate and save 30X more than they do on platforms like IMDB, according to management.
Second, they have created a really intuitive and engaging user experience that draws you in and gamifies rating movies for your own benefit rather than just making cumbersome recommendations for others. Not only is it fun, but it actually seems to work in creating a better list of recommendations.
With a sticky user experience, more likelihood for users to contribute to the datasets, and predictive algorithms with more accuracy, this product is well positioned to drive significant ad revenues and even paid subscriptions.
The end user experience is significantly improved to current peer-reviewed tools.
The Taste app has experienced significant growth since its mobile app launch in May 2018 as 300,000 users have been added to date at a cost of $0.23 per download and users who are generating 4.4 million screen views per month.
The mobile app boasted 4,800 daily-active-users and 47,000 monthly-active-users in February of 2019. As we mentioned above, these users have likely been attracted to the app due to the fact that the match algorithm is 2.5 times more accurate than generic rating systems.
Taste has been able to generate revenue by utilizing a mix of advertising from third parties and by implementing a freemium model for its app. Taste reported 1,700 paid premium subscribers as of January. There are also over 400 data points per user to potentially distribute to third party firms.
Why We Like it
1. Product Differentiation
As previously mentioned, Taste already presents a product that is higher in quality than its competitors since it relies on other like minded individuals to create matches for you and gamifies the rating experience to be fun rather than cumbersome.
If you have ever actually left a review on IMDB or TripAdvisor you know the process is cumbersome and time-consuming. Moreover, there isn’t really anything in it for you since it doesn’t tailor recommendations to you based on those reviews.
This experience is quick and easy while helping to create better-personalized recommendations for you to benefit from! That is 10X better.
2. Executive Experience
Taste has a strong set of founders. Co-Founder and CEO John Lin has extensive experience working at two startups including MadeClose, an AI-driven ranking network of local businesses, and SquareTomato, an ad agency.
Both of his experiences feed into the core of what Taste is about; AI driven recommendations and tailored advertising.
Additionally, Co-Founder and CTO Justin Messina has experience designing and building a wide range of technology, including UGC-ready databases and social media platforms at the same places of work as John Lin.
Its AI is uniquely humanistic as it connects like-minded users. This, along with the ability to create “Taste profiles”, enables the app to create a social platform which, in turn, creates a network effect with a higher data density.
Hence, there is an extremely high ceiling for potential revenues in terms of targeted advertising and supplying data to third-party firms.
The Taste app’s ability to apply the same system of algorithms and databases across various product and service categories presents future cost scaling opportunities.
With a category expansion expected in the near future, Taste is already learning how to achieve scale as its acquisition cost per premium member is down 20% month-over-month. Thus, it is already setting up a high entry barrier for current category-specific competitors and future competitors.
Taste is a Deal To Watch. Taste is providing a unique solution to the issue of discovering products and services that are relevant to the personal preferences of each user.
They have not only created a superior product that is more accurate than generic ratings but they have also created the potential for a network effect through the implementation of Taste profiles. In doing so, the app serves as a means of receiving recommendations and connecting with friends.
One of the main concerns regarding Taste’s longevity is its ability to raise capital in the near term. The company has incurred losses from its launch of approximately $126,612.
The cash position of the company is weak as it only has $14,000 in cash balances as of March 2019. According to management, this is roughly 1.5 months of operations although the company believes that it is able to continue taking money from the revenue it generates. However, Taste must raise additional funds if it wants to continue its operations.
If it can continue to raise capital this is an exciting business that has created highly valuable tech that will be desired by the likes of IMDB, Yelp, etc. from a white label perspective or acquisition. At a current $3M valuation, it is an attractive entry point for investors because of the tight cash position the company is in.
With a quickly growing user base, investors need to think of this as a user base / data value company. The revenues will take time to become meaningful due to the nature of needing millions of users to create ad revenues that are meaningful, though the subscription revenue will help. People have shown a willingness to pay with 1,700 individuals already paying.
However, with each data point collected and each user added to the network, the value of Taste becomes increasingly valuable to a strategic acquirer like Yelp, IMDB or even Twitter or Facebook.
It has multiple options for exits and its ability to acquire and retain users is intriguing. We like the talent of the team and the value we perceive for users as a way to continue to grow this business to an acquisition or escape velocity from a user/revenue perspective.