They're watching you...

WEIGH. THAT. STARTUP.

This may be the most interesting startup I've reviewed to date. It's incredibly irreverent, massively profitable, and perhaps one of the most unique places on the internet. The startup is Fishtank, a 24/7 livestreamed reality show where viewers can make decisions that affect the contestants. Let's get into it.

• 🐠 Sounds Fishy: Introducing the weirdest place on the internet

• 🌊 Can it scale(s)?: Can these guppy grow into a prize tuna?

• 🏊‍♀️ Sink or Swim: Will I invest in Fishtank?

SOUNDS FISHY

We’re watching you…

Fishtank in many ways, is the anti-reality TV show. Many reality shows select super attractive people, whisk them away to paradise, and force them to have superficial conversations.

Fishtank scrapes together 8 average/quirky/awkward people, plops them in Rhode Island, and then plays with their emotions to elicit top-tier entertainment. The contestants have their phones confiscated and compete for the prize of $10,000.

The house is wired with cameras, and a 24/7 livestream of every room is available online. During this time, viewers can actively participate in what goes down in the house. Viewers can purchase tokens, which can be used to do a variety of actions: take away a contestant's bed for the night, gift someone a snack, play a voice message in the house, etc.

It's 100% unfiltered, and anonymous viewers don't really hold back. For example, one viewer asks a contestant about a book he wrote in which he advises readers on how to court underage people. You can ask/say anything you want, and it really doesn't get filtered.

The show’s had some speed bumps - unfortunately the Fishtank address was leaked online and the house was swatted. Super dangerous to the cast + crew, but something that can happen when a bulk of your audience are internet provocateurs.

Part of the Fishtank magic comes in the form of tribal competition. Viewers can join clans - these are essentially teams that band together to pool tokens/influence in order to play a bigger role in the house. This was a smart move by the Fishtank team as it really fosters community, a sense of purpose, and tribal competition.

Each week Fishtank compiles all the livestream footage into a 30-minute episode so that viewers can catch highlights of what went down in the house that week.

Their irreverence, openness, and shock value has earned them a base of diehard fans in an extremely short period of time. The first season launched in April 2023, and they amassed 70,000 paying customers + millions of views. All organically, with $0 marketing spend.

That 6-week season pulled in $1.25M+, as viewers gobbled up tokens, season passes, and merchandise. More encouraging, profitability was through the roof on that revenue. After every expense, Fishtank pulled in $486,000 in pure profit from those six weeks.

The enthusiasm around this show cannot be understated. Fishtank is raising a community round on Wefunder at a $37.5M valuation, and 2,655 investors have poured in. Considering they had $0 marketing spend for their show, I'm confident that the investment is all organic as well.

This (so far) is a great business, but I want to see if they can scale this product before deciding to invest.

CAN IT SCALE(S)?

One fish, two fish….

I thought about this a good amount, and there's a lot of forces at play that determine if this show is scalable or not. To help, I'm going to break this section into positives & negatives.

Positive Forces for Scaling

• Since the seasons last six weeks, it's conceivable that Fishtank can run 4 seasons a year. Let's say they also double their audience as they evolve. If revenue per user stays flat, that translates into $10M in revenue and $3.9M in profit.

• Right now, Season 1 brought in 70,000 paying customers with each spending an average of $19. As a new show, I reckon many of these joined halfway through as buzz escalated. Therefore, it's very possible that the $ spent per user can increase, especially as Fishtank optimizes their monetization levers.

• I think there are opportunities to niche down this type of content, while keeping the core features (24/7 streaming + viewer participation). The changing variable could be who is on the show or in what environment it’s taped. For example, what if you had a Fishtank India, a Fishtank Engineers, Celebrity Fishtank, etc.

Negative Forces Against Scaling

• There is a very specific audience that watches this show. I'm thinking it's a lot of internet trolls that love the irreverence and shock factor of the show. It's really helped Fishtank build an enthusiastic base in such short period of time. However, this could place a ceiling on its growth, since the show is a little too unpolished to be a broad appeal product.

• While Fishtank can run multiple seasons a year, running multiple seasons at the same time could degrade the user experience. This would split their audience and interest would wane if there's too much going on at once. The number of seasons they can run may then be capped in a given year.

• Some businesses get worse for the user as they grow. Conferences are super impactful when they're small and operating in a niche. As they expand, the experience for the user can often decline as the value from the conference gets diluted. I worry that Fishtank could face the same issue. As they grow in popularity, your tokens might not have the same 'buying power' as they did before and the user experience could degrade.

SINK OR SWIM

Okay I’m tired of thinking about fish

Fishtank is currently working extremely well. A rabid user base, spiking revenue, healthy profits. But I want to expand my perspective to see the broader investment horizon, and see if this is worth a long-term investment.

Here’s where I landed.

I think Fishtank is an incredible cash-flowing business, but I am going to pass on investing. Weighing the pros/cons of their ability to scale, I do think they will hit a ceiling. In my opinion, that ceiling does not justify the valuation and I believe their exit options will be limited.

Their irreverence and quirkiness afforded them a diehard base of fans, but I ultimately think this will cap the maximum reach that they can achieve. At a $37.5M valuation, I don’t see enough upside to become comfortable with the risks of this business. (Note, the $37.5M valuation is for Early Bird investors. Depending on the time of investment, some investors may invest at a $50M valuation)

Aside from scale concerns, Fishtank’s founder Sam Hyde has his personality baked into the show. If he retires or something happens to him, will the entire show lose its luster? This could also be unappealing for a potential acquirer, since the product’s success may hinge on his presence.

Another deterrence to being acquired is how not brand-safe it is. It works for Fishtank as an independent company, but I know many potential acquirers would not want to tarnish their brand’s reputation by buying Fishtank.

Given scale & acquisition concerns, the most likely capital return path for investors is to realize dividend payments from the company’s cash flow. This is done entirely at the discretion of the company, and I hesitate to place my faith in that.

In summary, this is a great business to own - but not to invest in.

Shark Tank style, I’m out.