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Medium Profitability Growth Strategy M&A

SneakyChat

#Tech
ProHub Comment

This case tests a candidate's ability to structure a growth problem combining user acquisition strategy with revenue monetization. The case requires candidates to analyze trade-offs between different marketing channels, understand the cumulative nature of users and revenue, and make a recommendation balancing profitability with growth targets while managing cash constraints.

Estimated Time 15 minutes
Difficulty Medium
Source Duke
50 / 100
Your client, SneakyChat, is a wildly popular Silicon Valley startup with a rapidly growing user base. SneakyChat’s App allows users to send expiring pictures as well as connect with local people in their area. A potential acquirer has offered to purchase the Company for $500m, but on the condition that the Company will generate $2m in cumulative net income over the next 3 months, and have at least 700k daily active users as of the end of month 3. SneakyChat’s CFO has hired you to help hit these metrics.

Clarifying Information

  1. SneakyChat currently only operates in the US
  2. No current revenue, as company has focused solely on user growth and not monetization
  3. Company started operations this year
  4. Net Income and daily active users are total at the end of 3 months