STILO: STYLE ADVICE ON THE GO

BUSINESS PLAN PREPARED BY

Jesse Clayburgh, Meghan Clyne, Angela Gorden, Kasia Grobelny

The Problem

There is tremendous waste in the style-content industry. Even dedicated readers of fashion magazines and beauty blogs don’t find every article interesting; regular viewers of makeover TV shows don’t find every episode engaging. The reason is that style content is almost entirely one-directional: Without any opportunity for dialogue or interaction, editors, publishers, and producers simply present content to readers and viewers on a take-it-or-leave it basis. And many choose to leave it. Potential consumers of style content do not read Vogue, or watch What Not to Wear, because these offerings do not speak to them. Middle-aged moms are tired of airbrushed models whose physiques could not possibly exist in nature. Teenagers are tired of skin-product reviews they can’t trust—because they’re “written” by the manufacturers. Cash-strapped college students are tired of glossy pictures of outfits that would be amazing—if they didn’t come with four-digit price tags. Women of color are tired of hair and makeup tips intended for every texture and complexion but theirs. And men are just tired. These potential consumers want to see what real people are wearing. They want to know how people like them are cutting their hair and applying their makeup. And they want their style questions answered on their timetables—not Anna Wintour’s. Stilo cuts out this waste. Through our mobile app, we allow users to pose their pressing style questions—to a broad community, or to a few trusted friends—and get timely, crystal-clear, honest answers. Our snap-poll approach eliminates time-consuming forum posts; our clear, binary answer format eliminates vague and unhelpful feedback. With Stilo, users present the questions they have along with the specific advice they need. All that the rest of the community has to do is vote. Stilo’s technology aggregates the responses into a simple, straightforward answer—delivered exactly when the user needs it. In short, we transform style content from a one-way broadcast into a two-way conversation—one that is simple, helpful, fast, and fun. Our Customers

Have you ever found yourself at your favorite clothing retailer, trying to decide what to buy and desperate for a second opinion? Maybe you’ve  deliberated  endlessly  over a potential haircut, or needed trustworthy advice on a styling product or makeup. In  today’s  hyper-connected online world, there still isn’t a quick, easy solution for the fashion and beauty dilemmas we all face. That’s where Stilo comes in. Stilo is for those times when you aren’t sure what to buy or wear—or when you want feedback from friends, family, or anyone in the public with a fabulous sense of style. With Stilo, you can ask for help and gather the results in minutes. Stilo fills a critical need. Our user research shows that consumers want real-world fashion and beauty advice, often from people they know and trust. In the interviews we conducted, potential customers reported that they most frequently solicit these style opinions from family members, friends, and significant others.

Figure 1 Question: To whom do you turn for fashion and style advice?

As Figure 1 illustrates, 46% of those surveyed reported turning to family and friends for this advice (far more than the 17% of respondents who consult magazines). These customers told us that their inability to collect style advice from trusted sources in a timely manner has been an obstacle to making fashion and beauty decisions—such as what outfit to buy in a store—in the past. Their frustration is needless: Today, smartphones are constantly at our fingertips, and a vast network of advisors is just a click away. Stilo bridges the divide between these two communities. On one side are men and women who are tech-savvy, style-conscious, and seeking answers to pressing fashion and beauty questions. On the other are users with a keen sense of style and knowledge of the latest trends. They love weighing  in  on  other  people’s  clothes,  hair,  makeup,  and  style.  And  with  Stilo,  their  enthusiasm  for fashion and beauty can become a valuable resource for people in need. Market Opportunity

Our key customers are socially engaged, style-conscious females between the ages of 15 and 35. Secondary market segments are older women  and  single  men  of  all  ages.  Stilo’s  appeal  will be particularly strong for people who use smartphones, have disposable income, enjoy shopping, and are comfortable with social media. According to the 2010 U.S. Census, there are nearly 60 million females 15-35 years old. Smartphone use among this group is extensive. More than half of all American adults own a smartphone, according to a 2013 report from the Pew Research Center. According to a Nielsen report from fall 2013, smartphone usage rates are even higher among teens and young adults: 70% of all teens aged 13 to 17, and 79% of young adults between the ages of 18 and 24, own the devices. And many of these users are likely to have disposable income to spend on apps and

fashion retail: According to the Pew report, smartphone usage is highest among individuals with household income above $75,000 a year. Figure 2 Potential Market Estimates, Based on Target User Demographics

Demographic # of people in demographic

% of potential market we expect

to capture

Total potential Stilo users

Girls age 15-19

21,689,114 15% 3,253,367

Women age 20-29

21,038,081 15% 3,155,712

Women age 30-39

20,103,219 10% 2,010,322

Women age 40-49

21,996,493 7% 1,539,755

Women age 50-59

21,506,008 2% 430,120

Adult single men in US - all ages

48,000,000 2%

960,000

TOTAL POTENTIAL

MARKET 11,349,276

There is also evidence to suggest that key segments of our target demographics have the requisite comfort with social media. Teens in particular are sharing more information about themselves than ever before: A recent Pew Internet Project study found that 91% of teenagers post photos of themselves online, up from 79% in 2006. We expect these customers to be drawn by the social aspect of Stilo, which connects them with users from all over the world that share an interest in style and beauty. Women are major players in the world of social media and online shopping. The top apps for women are those that, like Stilo, have social functions. Information is Beautiful found that 58% of women use Facebook; overall, they found 99 million more female users of social media than male users. At the same time, women are big spenders: Nielsen’s  Women  of  Tomorrow  report found that women hold $5 trillion in U.S. consumer-spending power and $20 trillion in global consumer-spending power. Ogilvy Mindshare found that 22% of women shop online at least once a day. Interestingly, 92% of women pass along shopping information to others. Taken together, these data suggest that women are enthusiastic about social media; comfortable with shopping for fashion—and talking about that shopping—online; and would be excited to use an app like Stilo. There’s  also  exciting  potential  for  cross-gender conversations through Stilo. Although men aren’t  the  traditional consumers of beauty and style apps, Nielsen reported that men spend 29

hours and 32 minutes a month on mobile-app usage. There are many situations when men are wondering what’s  appropriate  and  what’s  not  when  it  comes  to  their  style  choices.  With  no  partner to guide them in their style choices, Stilo would serve as a great sounding board for single men in particular. Questions that might be posed range from: Should I wear this on a first date? to How should I dress for an interview at XYZ firm?

The Solution

Our Product

How, exactly, does Stilo create value? The best way to understand our product is to walk through the user experience step by step, following customers named Julie and Mari. (Mockups are available in Exhibit 1.) First, Julie registers to join the Stilo community. It’s easy and free—the only price of admission is some information. Julie provides her name, age, sex, occupation, and zip code. She selects from among a few dollar ranges to estimate how much she spends on fashion, beauty, or style each year. She clicks a few buttons indicating what beauty content she already consumes—magazines, TV, etc. She selects from a list of prominent retailers to flag her favorites. Finally, and most important, she indicates what subjects she’s most interested in—hair? nails? skin? makeup? women’s fashion? All of this data allows us to ping Julie with polls and ads that are most interesting and valuable to her lifestyle and interests. In other words, Stilo is personalized. Next, Julie is ready to start using Stilo. When she signs in, she has four options for activities: She can POLL, VOTE, BROWSE, or CONNECT. A simple tap selects any of the four options. Unlike existing style content, the Stilo experience is customizable. If Julie chooses to POLL, it’s time for her to pose a question to the Stilo community. Let’s say she’s looking to buy a dress at her favorite retailer. She really likes one, but isn’t quite sure it’s the right cut for her. She knows the sales clerk will say whatever it takes to make her feel good about the dress to secure the sale. Julie wants more objective feedback. Julie snaps a pic in the dressing room mirror and tags the photo with the question, “Love this dress, but the neckline—too plunging?” She classifies the poll with one tap, selecting from a menu of “Fashion and style,” “Skin & Makeup,” or “Hair and Grooming.” Stilo’s default “yes/no” answers are pre-programmed; if she wants, with one tap, she can have a bit of fun and change the choices to anything she wants—maybe “YOLO—looks great!” and “Cover up, honey.” She figures she’ll be in the store for another 15 minutes before she has to decide, so she chooses a 15-minute deadline for answers. She’s at J. Crew, so she tags J. Crew as the retailer. Finally, she selects her recipients from her list of Stilo contacts. Julie is time-limited, so she definitely wants to put the question to the whole community to make sure she gets several responses. She taps “Community.” But she also really wants her mom, sisters, and best friends to see, too. She’s pre-programmed these women into a contact list called “Besties,” so with one tap, they all get push notifications as soon as the poll goes live. Once Julie reviews and posts, she’s done. Stilo is easy. Mari loves J. Crew. When she first registered for Stilo, she chose J. Crew as one of her favorite retailers. She also selected “fashion” as a style area she’s especially interested in. So when Julie’s poll goes live, Mari—part of the Stilo community—gets a push notification. Mari’s bored

on the long bus commute home, and loves weighing in on other people’s fashion choices. She opens Stilo, and Julie’s poll has been moved to the front of her queue. She deliberates for a moment. She doesn’t know Julie, and Julie doesn’t know who votes which way, so Mari can be perfectly frank. She decides Julie should go for it, and swipes left to choose “YOLO.” Because Stilo votes are anonymized, Stilo is honest. Mari’s screen displays the real-time voting stats to see how her opinion stacks up against others’; when the poll concludes, she’ll get pinged with final results. Mari then moves on to the other polls that have been selected for her based on her preferences; just to mix things up, she goes back to the home screen and chooses VOTE to swipe through random polls—photos with questions superimposed—voting on the ones that look interesting. Before she knows it, she’s at her bus stop—the time has flown by. Stilo is interactive. By the time Julie’s 15 minutes are up, Mari, 32 community members, and three of Julie’s eight Besties have weighed in. 68% say “YOLO,” 32% say “Cover up.” Julie decides to buy the dress. Stilo is timely, useful, and fun. This is the magic of Stilo. Our app pairs users who hunger for good advice and insights with people who have an insatiable appetite for style content, allowing each to fill the other’s needs. Along the way, we’re offering style content that’s personalized, customizable, easy, honest, interactive, timely, useful, and fun—in ways today’s existing style content can’t match. The Competition Though there are many beauty and style apps, and several question-and-answer  apps,  there  aren’t  any apps that combine these two ideas to offer users the best of both worlds. Pinterest, Instagram, and even group text messages are alternative ways for people to share clothing and style questions. But these  services  weren’t  designed  specifically  for  this  purpose; as such, they do not provide a seamless, timely, and intuitive user experience. Our competition also includes the familiar universe of fashion magazines and style blogs. But these traditional media models do not allow users to customize. Stilo, by contrast, gives users the power to choose exactly what fashion content they want to read and see. One app that closely resembled Stilo—Go Try It On—no longer exists. This app allowed users to share photos of themselves wearing different fashions and to solicit feedback. But Go Try It On was acquired by Rent the Runway in 2013 (industry analysts concluded it was largely a talent acquisition), and so there remains a need for a vibrant, independent community of mobile style advisers. Pavo—an app focused on the community aspect of fashion—is another competitor. Users can save outfit inspiration, post outfits, and follow members with styles similar to their own. Other style apps include Pose (user-submitted fashion photos), Stylebook (a digital catalogue of users’ closets), Snapette (user-uploaded photos of items), and Cloth (outfits catalogued by setting and

weather). These apps feature some fashion and style elements, but do not offer solutions as user-friendly and streamlined as Stilo. Another app, Fitting Room, has similar features, allowing users to pose style questions and conduct polls. It is our closest competitor, and we intend to monitor its growth and progress carefully. Nevertheless, Fitting Room’s content is limited to fashion and clothing, and its user base is very heavily reliant on young teenagers. Stilo, by contrast, has mass appeal to women and men of all ages, thanks to its sleek design and easy-to-use interface. Another important aspect that sets us apart is our more generalized coverage of hair, skin care, and other beauty topics, not just fashion. The remaining category of competition is question-and-answer apps like Jelly or Deciderr. But these programs focus on an incredibly wide variety of topics, and do not provide honest, knowledgeable, and directed feedback in one specific area. On matters of beauty and style, Stilo is clearly superior. Stilo’s  Competitive  Advantage The advantage that we offer to our users is a one-of-a-kind app that is focused only on beauty, fashion and style. Instead of having to filter through thousands of questions like they would on Q&A apps, users will be able to ask beauty and style questions, post photos and videos, set polls (timed to the duration of their choice), and acquire honest feedback from a pre-determined user base. This could be a quick ten-minute poll about a lipstick color during a last-minute shopping spree for a date, or a longer-range poll asking what type of dress to wear to a wedding. The opportunities are endless. Users will be able to customize and control their settings, giving them the option to poll the public, a set of friends who are also Stilo users, or everyone except their friends (for times when they want a surprise “reveal,” like a prom or wedding dress). In short, Stilo is a flexible, user-friendly solution for beauty and style needs on the go.

The Business Model Who Else Benefits?

Lots of people. In addition to the core poll-vote activity, users can BROWSE concluded polls to glean immediate insights into users’ questions and preferences. If they want to share more detailed comments or advice with a pollster, they can CONNECT by Stilo’s messaging function. Pollsters, voters, and browsers can all save polls to their personal folders, building, in effect, snapshot albums of targeted fashion advice. 85% of the content in a month’s Vogue might be irrelevant to them, but everything in their Stilo portfolios is exactly what they wanted to know.

Of course, some of the users who will benefit most are the people who will sustain our business—those who have a willingness to pay for what Stilo offers. How will we make money off this experience?

● Advertising. This can be achieved through a few mechanisms. One is through sponsored ads that are themselves Stilo polls—giving advertisers not only a chance to promote their products but also to get valuable direct feedback. Another is through a weekly e-mail that will go to Stilo users, providing ads and offers that will be of most interest and value to them based on their registration preferences and polling and browsing patterns.

● Relatedly, Stilo will earn revenue through affiliate links. These, too, will go through the weekly e-mails. Additionally, if a user likes a product she sees on a retailer-tagged poll, when she votes (or browses completed polls), she can tap on the retailer to be directed to that retailer’s e-commerce site.

● Data sales. Stilo will collect and package extremely valuable data for retailers, consulting

and financial firms, publishers, and other businesses. We will sell poll results (scrubbed of all individually identifying data), using keyword parsing of the text component of the poll question (and language identifiers to determine positive versus negative sentiment on custom-crafted response options), as well as the retailer tags. Resources permitting, we would like to invest in photo-recognition software to increase the value of our poll data to the businesses that will purchase it.

● Stilo Premium Content. Because the app has enormous network effects, we need to

keep the basic service free to encourage as many people as possible to use it. There will, however, be some core users willing to pay for extra features. Principally, we will offer the option to send a poll directly to a professional—a professional hair stylist, beauty writer or blogger, makeup artist, personal shopper, fashion and image consultant, etc. We will pay these professionals a certain amount per month (detailed in our financial documents) to respond to user polls, both by voting and with concrete and specific suggestions, set at some minimum quota of responses per month. To ensure quality, the Stilo user will rate the response along measures of timeliness, clarity, and helpfulness; those professionals who do not achieve acceptable average ratings will not be retained.

Incentives

The mechanism of payment for premium features will be points, the currency of Stilo. These are also crucial to the incentives that will allow Stilo to function properly. What do we need to incentivize? As our operation requires people to post and vote, both of these activities need to be rewarded with points. In our user testing and beta stages, we will experiment with how to calibrate these incentives to maintain a proper poll-to-vote ratio. (Clearly, this needs to be below 1; the theoretical ideal would be a ratio number as close to 0 as possible while still maintaining robust pollster activity and sating voter demand for new polls.) We need to determine how many responses users require in order to feel that poll feedback is valuable; to determine what the natural polling versus voting balance is (we can see scenarios in which either could be more popular than the other); and to see how strong the point incentive has to be to

induce an extra poll or vote on the margin. With this information, we will set our rewards accordingly, and are open to adjusting them as needed. We also need to incentivize profit-making behavior. We will therefore reward points for tagging retailers in posts, and for clicking through to an affiliate’s website. Finally, we need to incentivize users to keep Stilo beautiful, welcoming, interesting, and honest. Stilo will have a code of conduct that all users must sign as a condition of registration. We will prohibit profanity and lewd and inappropriate pictures and questions. We will prohibit false tagging of retailers (if it’s a self-portrait seeking haircut advice, the pollster can’t tag Old Navy) and retailers or other business interests posing as users (on either the polling or voting side). We will encourage the use of proper grammar, spelling, and punctuation (we’ll incorporate standard smartphone autocorrect); clear, aesthetically pleasing, and well-illuminated photography; and interesting, relevant questions. To enforce prohibitions, each poll will have a “Report” button; there will also be a general “Report” button on the main welcome page. Any user reporting activity that, upon investigation, is determined to violate the code of conduct will receive a significant point bonus. Any user who engages in banned conduct will suffer a severe point deduction and may lose her Stilo registration privileges altogether. While the quality of polls cannot be strictly enforced, we will include an overall five-star quality-rating feature. Voters and browsers will be rewarded with points for rating active and concluded polls, respectively. Users will receive a monthly point bonus proportional to their ratings from the community (people with higher average ratings will receive higher monthly bonuses). What can these points be used for? Behavioral research indicates that the most enticing rewards offer access and status rather than specific goods. To that end, we will establish a four-tier system of Stilo membership based on a user’s point balance (similar to airline status). Tier 1 [Platinum]: Through agreements to be negotiated with designers and retailers, these users will be part of the style “in crowd.” Style enthusiasts will be able to participate in early testing, focus groups, and so forth, giving retailers feedback on their decisions about seasonal collections, designs, etc., before these products get launched in front of the full market. We anticipate retailers and designers will find value in this agreement because we have done the work of identifying and contacting knowledgeable, loyal consumers for them. Tier 1 members will also enjoy all the privileges of Tier 2 and below. Tier 2 [Gold]: These members will be invited to special retailer and designer shows and events. They will receive special access to purchase from collections before they go on sale to the general public. They will enjoy all of the privileges of Tier 3 and below. Retailers and designers will find value for the same reasons noted above. Tier 3 [Silver]: These members will receive great discounts on retailers and products selected for them based on their stated and revealed preferences. We anticipate retailers will agree to this arrangement because, even though they are discounting their products, we are driving high-

volume consumers of style products and content to their businesses, identifying and connecting them with likely loyal (lifetime) customers. Tier 3 users will also receive Tier 4 benefits. Tier 4 [Bronze]: These users will receive a free month of Stilo premium access to professional style experts, subject to a (reasonable) upper limit on the number of questions that can be posed. Stilo will benefit as some portion of these members, upon growing accustomed to having professional style guidance at their fingertips for a month, convert to long-term paying users of our premium features. For all of these levels, the point bar will be set very high (though not unattainably high such that it discourages users from even trying) in order to ensure net positive value for Stilo and our retail partners. Stilo members will also be able to purchase points if they wish to boost their balances to reach the next level of benefits. This will generate yet more revenue for Stilo, though we will have to price points such that it is still far more advantageous to earn them (as we need earned points in order to provide the incentives discussed above). Marketing Strategy

Our marketing strategy will focus on several aspects. First, the Stilo team will utilize social media to introduce our app to the world. As a free tool, social media has incredible potential to help Stilo acquire potential users and advertise itself. Then, the Stilo team will reach out to several retailers, ranging from mainstream affordable options  like  H&M,  Macy’s,  Zara,  and Topshop to more high-end retailers such as Neiman Marcus, Bloomingdales, Barneys, and more. The goal of these connections would be to introduce our product to the very places that will benefit the most—the retailers where our users will be shopping and asking style questions to the Stilo user base. For the retailers, the added benefit of knowing who shops in their stores and for what would provide crucial data that they can then utilize. For Stilo, being introduced in the very places where many Stilo polls could potentially take place would be a natural beginning for a young app. Stilo will host events at various retailers to introduce our app to the general public and help spread the word. These events will start off small: mini-fashion shows with drinks and appetizers that feature local guest hosts like popular fashion bloggers, local news anchors, and radio hosts. Eventually,  we’d  like  to  take  part  in  style  and  beauty  conferences  as  sponsors  where  we  can  also  advertise our app and acquire users and feedback. Another  marketing  strategy  we’d  like  to  employ  focuses  on  bloggers.  As  an ever-growing set of influencers, they  are  the  perfect  demographic  to  help  spread  the  word  about  our  app.  We’ll  create  partnerships with fashion and lifestyle bloggers to help launch a marketing campaign promoting Stilo. The bloggers will share their experiences using the app with their wide range of audiences. Sharing the Stilo experiences of our partner bloggers on our own social media sites would also be a cross-promotional  marketing  tactic  that  we’d  employ. Expenses and Financials

Please see Exhibit 2.

Timeline

With an early-stage prototype iPhone app in development, we are excited to demonstrate viability of the idea within three months. As we continue to gather user feedback, the prototype will undergo constant iteration. In summer 2014, we plan to begin alpha testing of the Stilo app. During this time, we will initiate relationships with advertisers, retailers, and leading online stylists with social media presence. We will also coordinate the day-to-day workflow of our operations. Our goal is to launch the Stilo iOS  app  on  Apple’s  App  Store  in  fall 2014, in time to showcase fall fashion trends and play a role in the back-to-school and holiday shopping seasons. Immediately after launch, we’ll  begin  iterating  on  our  user  interface in response to observed usage  patterns.  We’ll  also  begin  talking  with  advertisers  and  style  content  partners  in  more  depth. Over the long term, we plan to build algorithms to further automate and personalize the browsing aspect of Stilo, and adjust featured posts and access to stylists based on user feedback. As Stilo grows, we will expand our outreach to retailers and our rewards program for users. With little competition in the mobile, personalized beauty-and-style-advice space, we anticipate Stilo becoming the go-to destination for relevant and timely advice and feedback. As more and more consumers shop online and use social Q & A forums to find and give advice, our iPhone app is a fun and useful platform for accessing and creating unique and personalized content

The Team

Jesse Clayburgh Jesse is Stilo’s Chief Technology Officer and is graduating this June with a B.S. from Stanford University, where he has focused on human computer interaction, web applications, and iOS development. Jesse has a passion for building immersive and intuitive mobile applications. In his spare time he enjoys riding his motorcycle and Crossfit. Meghan Clyne Meghan is an MBA candidate at Stanford’s Graduate School of Business. Previously, she spent ten years as a writer and editor in New York and Washington, D.C. She is no stranger to high-pressure, high-stakes environments, having worked as a daily newspaper reporter in New York City and in the White House as a speechwriter to the President and First Lady. Most recently, she was immersed in the world of start-up journalism while helping to launch the non-profit domestic-policy magazine National Affairs. It was her experience as Managing Editor of National Affairs that led her to Stanford, where she is interested in new media business models and serves on the leadership team of the GSB’s Future of Media Conference. She holds a B.A. in English and Spanish from Yale.

Angela Gorden Angela is product manager and user research lead for Stilo. She earned her editorial and project management chops in the print book publishing world of psychology. Angela has a MFA in nonfiction writing, and has trained in empathy building and user research at Stanford’s Design School and the Learning, Design, and Technology Master’s Program. Angela has a talent for keeping her eye on the big picture and is a budding interaction designer skilled at organizing content and designing intuitive and useful experiences for users. Kasia Grobelny Kasia is an experienced writer and editor with a passion for fashion, lifestyle and beauty content. She graduated from Arizona State University’s Walter Cronkite School of Journalism & Mass Communication with a bachelor’s degree in Print Journalism and a minor in Sociology. Currently, she is completing her master’s degree in Communication and Journalism at Stanford University. During her undergraduate career, she interned with several local publications including a lifestyle magazine, entertainment website and a state business magazine. She has written on a variety of topics including style, travel, business news, health care, sustainability, entrepreneurship, philanthropy, tourism, and dining.

Exhibits Exhibit 1

Exhibit 2aItem Rate Amount Rationale/Notes Sources

Users

Users, Month 18,500

Based on general question-and-answer app Jelly. From Mashable: "Jelly had 8,275 active users on its first day alone."

Monthly Growth Rate, Months 2-6 35,000 Extrapolating from Jelly's initial growth, increasing slightly to reflect stronger performance expectations for

Stilo

Quarterly Growth Rate, Month 7-2412.5%

Extrapolated from medium-term growth of Stylitics (500k-1m around 24 months after launch), adjusted downward 50% to reflect very conservative estimates

Annual Growth Rate, Months 25-36 125%In third year after launch, Wanelo grew from 1m to 6m users (500%) in five months (Nov-March). Assume a

quarter of this growth rate across all of year 3.

RevenuesAdvertising

Ad revenue, Month 1 $1,275 Estimate based on Forbes blogging figures; grows with usersCPM $3 Very conservative estimate based on Federated Media figures for comparable sitesImpressions per user (per month) 50 Estimate

User data sales

Price per user data profile$0.01

Conservative estimate based on Atlantic information

Purchases of complete user data set, Month 1 5 Estimate; grows with usersAffiliate links

Affiliate link revenue, Month 1

$30,926.43

From Fashionista : "for personal style bloggers who recommend up to 30 products a day, affiliate links can bring in serious money. ... Chelsea Cain, an account consultant at RewardStyle, told us: 'In Q4, we expect our top style bloggers to earn upwards of $50k/month with rewardStyle.'" Assume $50k/month after 3

months fully operational; work backward discounting at same rate as user growth; then project forward using user growth rate.

Stilo Premium

Stilo Premium users (as % of total users)

20.57%

Assume Glamour is comparable audience. Take Glamour 's circulation (people who pay for the content, either through subscriptions or single-copy purchases) and divide by total audience (including people who

consume free). =2,374,170/11,543,000

Stilo Premium revenue per user per month $5

Human resources Staff

Staff salaries, Month 1

$25,000

Assume $75k/year * 4 staff members = $300k/year total initial salary. Based on $40k a year minimum living wage for two-adult household in San Francisco, plus $35k premium reflecting need to pay down student

debt and to partially offset opportunity costs of forgoing much more lucrative opportunities awaiting Stanford graduates.

Annual Salary Growth Rate 2.00%

From Bloomberg BNA: In 2014, project year-over-year national wage increases of 2.0% (assume extends to Year 3)

Freelancers Average freelancer pay per month (style experts) $25 Estimate

Number of freelancers (as % of total users)

5.00%

Assume Stilo Premium users pose average of 5 questions a month (more than 1/week) and that each freelancer answers 100 posts (about 3 a day). So every freelancer can handle 20 Stilo Premium users, thus the # of freelancers you need is 5% of total Stilo Premium users. More realistically, we would increase the number of posts answered per month along with a commensurate increase in pay, so the total pay figure (for compensated freelancers) should be the same. We expect many freelancers will not require pay--the promotional value of Stilo is sufficient compensation

Graphic Designer (one-time up-front cost) $10,000 Estimate; paid over the first three months of beta testing and development

Technology

Data storage costs, month 1-2$0

For the first two months, assume free data. Each month thereafter, assume data costs grow by $500/month. Given growth assumed in revenue models, $500/month budgeting should last 5 years.

Growth rate (assuming increased data needs as a result of both growing user base and added features)

$500

Assumes increasing requests per second that our database can serve by 40 every month and roughly increasing our database by 50GB month.

Total up-front capital expendituresExternal monitors $2,000 2 Apple Thunderbolt monitors @ $1000/ea

Useful life (months) 36 CTO estimateOther technological equipment $1,500 CTO estimate

Useful life (months) 36 CTO estimate

http://www.forbes.com/sites/tomiogeron/2013/03/27/inside-wanelo-the-hot-social-shopping-service/

http://mashable.com/2014/01/14/jelly-hands-on/

http://blog.rjmetrics.com/2014/01/14/jelly-data-an-outside-looking-in-analysis/http://beacon.wharton.upenn.edu/entrepreneurship/2014/03/wharton-business-plan-competition-series-rohan-deuskar-founder-ceo-of-stylitics/

http://www.condenast.com/brands/glamour/media-kit/print

http://www.forbes.com/sites/larissafaw/2012/04/25/is-blogging-really-a-way-for-women-to-earn-a-living-2/https://advertisers.federatedmedia.net/explore/?f=7&at=&as=&sort=demo&g=56&a1=1992&a2=1969&hi=0

http://www.theatlantic.com/technology/archive/2012/03/how-much-is-your-data-worth-mmm-somewhere-between-half-a-cent-and-1-200/254730/

http://fashionista.com/2013/08/how-personal-style-bloggers-are-raking-in-millions#1&awesm=~oEbYazTZLK3Pkp

http://livingwage.mit.edu/places/0607567000

http://www.bna.com/wage-trend-indicator-p12884902670/

https://parse.com/

Facilities, administrative, and other overheadRent

Office Rent, Month 1 $2,200 Based on WeWork 4-person San Francisco office (between $2100-$2300/mo)Annual Rent Increase Rate 7.20% Applying expected San Francisco rental office space increase from last year

Recurring expensesTelecommunications costs per month (constant) $500 CTO estimateCTO subscriptions to online programming services (per year) $1,000 CTO estimate

CTO subscription to Applecare for Business (per year)$500 CTO estimate

Administrative supportLegal fees, months 1-12 $250 Assumes $3,000 in year one, based on CUNY Journalism estimate for large blogsLegal fees, months 13-36 $83 Assumes $1,000 for year two, based on CUNY Journalism estimate for large blogs

Accounting$5,000 Assumes $5,000 year, based on CUNY Journalism estimate for large blogs, paid in April (around tax filing)

MarketingTotal marketing and promotion, month 1 $5,000 Estimate

Growth rate, months 2-3 50.00% EstimateUpon full launch, all marketing and promtion, including travel and events, as percentage of total revenues 9.00%

According to Small Business Administration, firms with revenues of less than $5 million should spend no more than 7-8% of revenues on marketing; we will assume 9% and extend it across all three years (to

reflect increased revenues in later months)

TaxesAssume corporate tax rate of 35% 35%

http://www.wework.com/location/soma/http://www.entrepreneur.com/article/227319#

http://www.newsinnovation.com/models/http://www.newsinnovation.com/models/

http://www.newsinnovation.com/models/

http://www.sba.gov/community/blogs/how-set-marketing-budget-fits-your-business-goals-and-provides-high-return-investmen

Exhibit 2bJul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15

1 2 3 4 5 6 7 8 9 10 11 12Total Users 8,500 43,500 78,500 113,500 148,500 183,500 191,146 199,110 207,407 216,048 225,050 234,428 % change -- 412% 80% 45% 31% 24% 4% 4% 4% 4% 4% 4%

RevenuesAdvertising $0 $0 $0 $17,948 $23,555 $29,176 $30,404 $31,684 $33,018 $34,408 $35,857 $37,366

CPM $3.00 $3.12 $3.15 $3.16 $3.17 $3.18 $3.18 $3.18 $3.18 $3.19 $3.19 $3.19Affiliate links $0 $0 $0 $30,926 $40,463 $50,000 $52,083 $54,253 $56,514 $58,869 $61,322 $63,877User data profile sales $0 $0 $0 $5,675 $9,715 $11,337 $9,956 $10,370 $10,802 $11,253 $11,721 $12,210Stilo Premium revenue $0 $0 $0 $116,724 $152,718 $188,712 $196,575 $204,765 $213,297 $222,185 $231,442 $241,086

Total Revenues $0 $0 $0 $140,347 $185,988 $229,225 $236,935 $246,820 $257,118 $267,846 $279,021 $290,662

ExpensesHuman resources

Staff $25,000.00 $25,000.00 $25,000.00 $25,000.00 $25,000.00 $25,000.00 $25,000.00 $25,000.00 $25,000.00 $25,000.00 $25,000.00 $25,000.00Freelancers $0 $0 $0 $29,180.92 $38,179.44 $47,177.96 $49,143.71 $51,191.37 $53,324.34 $55,546.19 $57,860.61 $60,271.47Graphic Designer $3,333.33 $3,333.33 $3,333.33

TechnologyData storage $0 $0 $500.00 $1,000.00 $1,500.00 $2,000.00 $2,500.00 $3,000.00 $3,500.00 $4,000.00 $4,500.00 $5,000.00External monitors $2,000.00Other equipment $1,500.00

Facilities and other overheadOffice rent $2,200.00 $2,200.00 $2,200.00 $2,200.00 $2,200.00 $2,200.00 $2,200.00 $2,200.00 $2,200.00 $2,200.00 $2,200.00 $2,200.00Telecommunications $500.00 $500.00 $500.00 $500.00 $500.00 $500.00 $500.00 $500.00 $500.00 $500.00 $500.00 $500.00CTO subscriptions $1,500.00

Marketing and promotion $5,000.00 $7,500.00 $11,250.00 $12,631.23 $16,738.91 $20,630.27 $21,324.11 $22,213.80 $23,140.61 $24,106.10 $25,111.86 $26,159.59Administrative support

Legal $250.00 $250.00 $250.00 $250.00 $250.00 $250.00 $250.00 $250.00 $250.00 $250.00 $250.00 $250.00Accounting $5,000.00

Total Expenses $41,283.33 $38,783.33 $43,033.33 $70,762.15 $84,368.35 $97,758.23 $100,917.82 $104,355.17 $107,914.96 $116,602.28 $115,422.47 $119,381.06

EBITDA (41,283.33)$ (38,783.33)$ (43,033.33)$ 69,584.85$ 101,619.53$ 131,466.94$ 136,016.72$ 142,464.84$ 149,202.98$ 151,243.23$ 163,598.20$ 171,281.04$ Depreciation $97.22 $97.22 $97.22 $97.22 $97.22 $97.22 $97.22 $97.22 $97.22 $97.22 $97.22 $97.22

EBIT (41,380.56)$ (38,880.56)$ (43,130.56)$ 69,487.63$ 101,522.31$ 131,369.72$ 135,919.50$ 142,367.62$ 149,105.75$ 151,146.00$ 163,500.98$ 171,183.81$ Taxes (at 35%) -$ -$ -$ 24,320.67$ 35,532.81$ 45,979.40$ 47,571.83$ 49,828.67$ 52,187.01$ 52,901.10$ 57,225.34$ 59,914.34$ Interest

Net Income (41,380.56)$ (38,880.56)$ (43,130.56)$ 45,166.96$ 65,989.50$ 85,390.32$ 88,347.68$ 92,538.95$ 96,918.74$ 98,244.90$ 106,275.64$ 111,269.48$

Monthly Shortfall (41,380.56)$ (38,880.56)$ (43,130.56)$ -$ -$ -$ -$ -$ -$ -$ -$ -$

TOTAL SHORTFALL (123,391.67)$

REQUESTED CAPITAL 125,000.00$

Year 1

Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-1613 14 15 16 17 18 19 20 21 22 23 24

244,195 254,370 264,969 276,009 287,510 299,489 311,968 324,967 338,507 352,611 367,304 382,608 4% 4% 4% 4% 4% 4% 4% 4% 4% 4% 4% 4%

$38,940 $40,579 $42,287 $44,068 $45,923 $47,856 $49,871 $51,971 $54,159 $56,439 $58,815 $61,291$3.19 $3.19 $3.19 $3.19 $3.19 $3.20 $3.20 $3.20 $3.20 $3.20 $3.20 $3.20

$66,538 $69,311 $72,199 $75,207 $78,341 $81,605 $85,005 $88,547 $92,236 $96,079 $100,083 $104,253$12,719 $13,248 $13,800 $14,375 $14,974 $15,598 $16,248 $16,925 $17,631 $18,365 $19,130 $19,927

$251,131 $261,595 $272,495 $283,849 $295,676 $307,996 $320,829 $334,197 $348,121 $362,626 $377,736 $393,475$302,789 $315,422 $328,583 $342,292 $356,573 $371,450 $386,948 $403,093 $419,911 $437,431 $455,681 $474,694

$25,500.00 $25,500.00 $25,500.00 $25,500.00 $25,500.00 $25,500.00 $25,500.00 $25,500.00 $25,500.00 $25,500.00 $25,500.00 $25,500.00$62,782.78 $65,398.73 $68,123.68 $70,962.17 $73,918.92 $76,998.88 $80,207.17 $83,549.13 $87,030.34 $90,656.61 $94,433.97 $98,368.72

$5,500.00 $6,000.00 $6,500.00 $7,000.00 $7,500.00 $8,000.00 $8,500.00 $9,000.00 $9,500.00 $10,000.00 $10,500.00 $11,000.00

$2,358.40 $2,358.40 $2,358.40 $2,358.40 $2,358.40 $2,358.40 $2,358.40 $2,358.40 $2,358.40 $2,358.40 $2,358.40 $2,358.40$500.00 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500

$1,500.00$27,251.03 $28,388.01 $29,572.43 $30,806.27 $32,091.58 $33,430.53 $34,825.33 $36,278.34 $37,791.97 $39,368.75 $41,011.32 $42,722.42

$83.33 $83.33 $83.33 $83.33 $83.33 $83.33 $83.33 $83.33 $83.33 $83.33 $83.33 $83.33$5,000.00

$125,475.55 $128,228.48 $132,637.84 $137,210.17 $141,952.24 $146,871.14 $151,974.23 $157,269.20 $162,764.04 $173,467.09 $174,387.02 $180,532.87

177,313.69$ 187,193.88$ 195,944.72$ 205,081.69$ 214,620.91$ 224,579.16$ 234,973.93$ 245,823.44$ 257,146.69$ 263,963.43$ 281,294.27$ 294,160.67$ $97.22 $97.22 $97.22 $97.22 $97.22 $97.22 $97.22 $97.22 $97.22 $97.22 $97.22 $97.22

177,216.47$ 187,096.66$ 195,847.50$ 204,984.47$ 214,523.69$ 224,481.93$ 234,876.71$ 245,726.22$ 257,049.46$ 263,866.21$ 281,197.05$ 294,063.44$ 62,025.76$ 65,483.83$ 68,546.62$ 71,744.56$ 75,083.29$ 78,568.68$ 82,206.85$ 86,004.18$ 89,967.31$ 92,353.17$ 98,418.97$ 102,922.20$

115,190.70$ 121,612.83$ 127,300.87$ 133,239.91$ 139,440.40$ 145,913.26$ 152,669.86$ 159,722.04$ 167,082.15$ 171,513.03$ 182,778.08$ 191,141.24$

-$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$

Year 2

Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-1725 26 27 28 29 30 31 32 33 34 35 36422,463 466,469 515,060 568,712 627,953 693,365 765,590 845,339 933,395 1,030,624 1,137,981 1,256,520

10% 10% 10% 10% 10% 10% 10% 10% 10% 10% 10% 10%

$67,746 $74,881 $82,767 $91,484 $101,119 $111,768 $123,539 $136,550 $150,931 $166,827 $184,396 $203,817$3.21 $3.21 $3.21 $3.22 $3.22 $3.22 $3.23 $3.23 $3.23 $3.24 $3.24 $3.24

$115,112 $127,103 $140,343 $154,962 $171,104 $188,928 $208,608 $230,338 $254,331 $280,824 $310,076 $342,376$23,323 $25,753 $28,436 $31,398 $34,668 $38,280 $42,267 $46,670 $51,531 $56,899 $62,826 $69,370

$434,462 $479,718 $529,689 $584,865 $645,788 $713,058 $787,335 $869,349 $959,906 $1,059,896 $1,170,302 $1,292,208$525,531 $580,352 $640,892 $707,746 $781,575 $863,106 $953,141 $1,052,569 $1,162,368 $1,283,622 $1,417,524 $1,565,395

$26,010.00 $26,010.00 $26,010.00 $26,010.00 $26,010.00 $26,010.00 $26,010.00 $26,010.00 $26,010.00 $26,010.00 $26,010.00 $26,010.00$108,615.46 $119,929.57 $132,422.23 $146,216.21 $161,447.07 $178,264.47 $196,833.69 $217,337.20 $239,976.49 $264,974.04 $292,575.50 $323,052.12

$11,500.00 $12,000.00 $12,500.00 $13,000.00 $13,500.00 $14,000.00 $14,500.00 $15,000.00 $15,500.00 $16,000.00 $16,500.00 $17,000.00

$2,528.20 $2,528.20 $2,528.20 $2,528.20 $2,528.20 $2,528.20 $2,528.20 $2,528.20 $2,528.20 $2,528.20 $2,528.20 $2,528.20$500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500 $500

$1,500$47,297.83 $52,231.70 $57,680.26 $63,697.18 $70,341.78 $77,679.51 $85,782.70 $94,731.18 $104,613.15 $115,525.98 $127,577.20 $140,885.58

$83.33 $83.33 $83.33 $83.33 $83.33 $83.33 $83.33 $83.33 $83.33 $83.33 $83.33 $83.33$5,000.00

$198,034.83 $213,282.81 $231,724.03 $252,034.94 $274,410.38 $299,065.52 $326,237.92 $356,189.92 $389,211.18 $430,621.56 $465,774.24 $510,059.24

327,496.64$ 367,069.44$ 409,167.71$ 455,711.55$ 507,164.92$ 564,040.18$ 626,903.17$ 696,378.80$ 773,157.17$ 853,000.43$ 951,750.24$ 1,055,336.14$ $97.22 $97.22 $97.22 $97.22 $97.22 $97.22 $97.22 $97.22 $97.22 $97.22 $97.22 $97.22

327,399.42$ 366,972.22$ 409,070.49$ 455,614.33$ 507,067.69$ 563,942.95$ 626,805.95$ 696,281.58$ 773,059.95$ 852,903.20$ 951,653.02$ 1,055,238.91$ 114,589.80$ 128,440.28$ 143,174.67$ 159,465.01$ 177,473.69$ 197,380.03$ 219,382.08$ 243,698.55$ 270,570.98$ 298,516.12$ 333,078.56$ 369,333.62$

212,809.62$ 238,531.94$ 265,895.82$ 296,149.31$ 329,594.00$ 366,562.92$ 407,423.87$ 452,583.02$ 502,488.97$ 554,387.08$ 618,574.46$ 685,905.29$

-$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$ -$

Year 3