Kelly is a representative of DeepWellWater, a venture capital company located in Dallas, Texas. Her job is to search for technology entrepreneurial companies with business potentials, and then recommend those entrepreneurial companies as potential investment projects to her company. Recently, she is evaluating a mobile app company called "10Miles". 10Miles is a mobile platform that can help sellers to find potential buyers nearby. The function of 10Miles is very similar to Craigslist.org; however, 10Miles utilizes a mobile device's location positioning function, and recommends products being sold within 10 miles in priority to potential buyers. Both sellers and buyers can download and use the app for free. To sell products, 10Miles requires the seller's real name real phone number sign up. Buyers can also rate the seller's credibility on 10Miles.
The app is currently offered to both Apple and Android users. The data center is located in Dallas, Texas. The backup data center is located in Beijing, China. Because 10Miles is actively looking for investors, the company contacted Kelly, and provided the following financial information to Kelly:
Sales Revenue of 2015: N/A
The company plans to use in-app ads to get sales revenues. Because the app is new, the company has not found an ad sponsor yet.
Fixed Cost of 2015: $1,000,000
Most of the fixed costs are salaries for staff of this company.
Variable Cost of 2015: $50,000
Most of the variable costs are for the Web traffic between the server and the user's mobile devices.
The company alleges that they had over 2 million downloads from Apple and Android users combined in 2015.
In this essay, you need to answer the following questions:
(1) What do you think are the major advantages of 10Miles?
(2) What do you think are the major weaknesses of 10Miles?
(3) If you were Kelly, would you suggest DeepWellWater invest in 10Miles? Why