PinkDate is a one-stop platform for connecting sex workers with customers.

Pre-sale right now at 17 cents. Beta product goes live in Toronto on the 28th.

ICO opens March 12th at 59 cents.





Please read the disclaimer.

(* Analysis of Revenues and Prices* added at the bottom on 2/15 )

Pay to show appreciation - not much behind the wall.

Disclaimer : I am an investor in this project. Please do your own diligence. I am also (mostly) convinced that this is not a scam and performed this analysis without that discount. You should allow for that risk in your personal investments (I did).





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Key Take-Away

This means that an investment of $1,700 (10,000 shares right now- at the pre-ICO) is projected to be worth around $150,000 by early 2021.

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Questions

How realistic is the PinkDate Financial Projection? Are there appropriate incentives to jump-start the platform? What other factors can we imagine for PinkDate's finances? What are the prices and dividends projected to be ?

A Note on Words

PinkDate and this article uses words such as Escort/Provider/Seller/Sex worker as synonyms. In the same way, Buyer/Client, Date/Transaction/Service are treated the same.

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How realistic is the PinkDate Financial Projection?

Let's start at Year 1:

These numbers assume revenues of around $4K per provider, and about $80 per transaction.

Because PinkDate revenues are 20% of the transaction amount, these numbers assume the average provider will make $20K on PinkDate in the first year, and that the average transaction amount is around $400.

Furthermore, this implies that each provider will serve around 50 clients in a year .

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Is $20K a year (from PinkDate) for the average provider realistic?

Market size research indicates that the average sex worker (pg. 175) can make $500~1000 a night. Furthermore, the industry advocate research shows that the median income for sex workers in Canada is around $32K (after converting to USD).

Therefore, if PinkDate can become the primary source of income for providers on the platform, a $20K/year income is very realistic.

Is $400 per transaction realistic?

Market size research quotes $150-300/hr for Internet (backpages.com etc) and $600-1000/hr for Escort (agencies + independent). It also claims (from interviews with local and federal law enforcement) that "prices charged for underground commercial sex across cities were fairly consistent." (pg. 58)

Therefore, if PinkDate pulls in as many providers from say, Backpage.com, as it does from Eros.com, $400 per transaction is very realistic.

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Is 950+ providers by year-end realistic?

The exact number of sex workers is not clear, because they tend to avoid census takers. However, Eros.com shows 30+ escorts for Vancouver, 100+ for Toronto, almost 200 for Miami, and 300+ for New York City. Considering this service costs $100+ a month, it is clear the supply of potential providers is high. (PinkDate will not charge ads/listing fees.)

Is 50 clients per provider by year-end realistic?

While men (and it is overwhelmingly men) who pay for sex are also not the most enthusiastic census takers, a low estimate (100M adult men in the US * 15%) still counts 15M men in the US who have bought sex in their lives.

Considering that TheEroticReview.com (reportedly) has over 1M registered users , has over 50K users online at the moment, and $30 a month to access the full site, it is clear the supply of potential clients is high. (PinkDate will not charge registration/membership fees.)

However, we arrive at Ghost Town Problem : Sellers don't want to sign up to a platform with no buyers, and buyers don't want to sign up to a platform with no sellers. Without good marketing and appropriate incentives, the platform cannot grow.

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Are there appropriate incentives to jump-start the platform?

What are the incentives for Providers?

According to my Slack interviews with Nick (interim CEO), PinkDate plans to have at least a hundred providers on the platform before launching at a new city.

This is a time-consuming process, as PinkDate must register every provider to ensure they are not underage, and who they say they are. This is also a painful process for providers, because they must provide identification to an unknown/anonymous company.

For these reasons, PinkDate will focus their incentives on providers at first, and gradually balance out the provider/client incentive ratio as PinkDate rolls out in the new city.

Provider incentives can include rebates & fee waivers (on-platform cash) as well as advertising subsidies (off-platform cash) and professional photo shoots (related services).

Are these incentives attractive ?

Providers operate as entrepreneurs, and are very conscious of their bottom line. Market size research indicates two things very clearly.

Providers love the Internet because it is...

Despite being responses from 2010, the trend towards online advertisements and social media is clear.

...safer, faster, and easier.

Over the years, the Internet became an easier way to get money without having to take so many chances as far as injury or assholes on the outside. You never know what happens at night — a lot of creeps come out. The Internet was a safe haven for everybody. A guy calls and comes to a location where the girl and you are comfortable. Or you go to a location where he gives you an address and you know where to go to. It’s modern day. (quote from pg 192)

But it is not secure,...

Police can seize servers, set up fake accounts and sting operations.

Officers set up a sting in a condominium just blocks from downtown by posting online ads and exchanging explicit text messages with potential buyers. Police used CityVibe, Backpage, Eros and other websites to talk with potential buyers. ( Tribune - Sep 2nd 2017 )

...it is expensive,...

Online ads can be expensive, and the structure of these websites require providers to post a lot and often (backpage.com), or pay a fee (eros.com).

That’s where a lot of money went to: posting. Each girl would post at least five times a day [on Backpage]. I think it was $5 – 10 per post... Craigslist was the best one to post. It was the same: $5 or $10 (quote from page 207)

Setting up webpages can cost thousands of dollars, not to mention maintenance.

Maintenance was like $40 or $50 a month to keep it going. It wasn’t real extensive. He spent $1,500 to build it, [and the company] did the hosting. (quote from page 194)

...and it is unreliable.

Websites that do not allow sexual content are unreliable outlets for marketing. (craigslist, instagram, facebook etc)

Respondents frequently updated and reposted classified advertisements, as posts were quickly bumped from the front page by competitors or flagged as inappropriate and removed by host websites. (quote from page 193)

The same is true of social media. Recent trends indicate that sex workers are using Twitter, Instagram, and Snapchat to advertise. When a carefully managed profile with good network effect is taken down by the platform, it can be a painful loss to sex workers.

A secure and reliable online platform that is free to use is a very attractive value proposal for providers.

You didn't answer the question. Are these INCENTIVES attractive ?

That is true. The above only answers "is the platform attractive?" Assuming PinkDate is correct and that providers see value in the platform, the incentives only need to be enough to get them to register and be active.

If providers are given half of the marketing budget, each provider will receive $750 in various incentives in the first year. This number goes up to $1000 in the second year, and $2500 in the third year. This is very generous and clearly attractive.

What are the incentives for Clients?

Nick, the interim CEO, has said client incentives will include waiver of all or part of the 20% fee, sign-up incentives, coupons, and free spendable-cash.

How much of the incentives are going to the individual client?

In order to figure out the answer, we must first estimate the number of clients the platform needs to meet its financial goals.

The average client buys sexual services 4 times a year, according to the industry advocate research. This means that in order to meet the goals of 50 transactions for 1000 providers, the platform must register over 12,500 clients in 6 months (assuming linear growth).

Using the same formula, to meet the goals of 72 transactions for 4000 providers, the platform must register over 72,000 clients by the middle of year 2. To meet the goals of 100 transactions for 6000 providers, the platform must register over 150,000 clients by the middle of year 3.

Still assuming a 50-50 split between providers and clients, client incentives range from $60 to $100 for the first three years. Client incentives will include fee waivers, coupons, bonus cash. Since the median transaction is $400, these incentives add up to 15~25% of the client's first transaction.

However, it is likely these incentives will favor influential customers who are active in new cities and in referring other clients.

Are these incentives attractive?

In and of themselves, not really . Multiple sources claim that people who use escort services have high incomes (estimates range from $80K~150K). We are assuming they are spending an average of $1600 a year on the platform. A $100 in incentives is not going to dramatically change their behavior.

Assuming influential customers (10~25% of total) capture all of the incentives, $400~$800 of incentives will be given to clients. 1~2 free transactions for referring 4~10 new members is an attractive incentive. There are issues with this, however.

Market size research also clearly shows that escort services have very flexible pricing, with the "same service" being offered at multiple price points according to what the buyer will pay. Because the product (the providers' time) is a constantly depreciating product (can't store/transfer time), dynamic pricing is the most reasonable structure.

Dynamic pricing can alienate buyers and can be difficult to structure for maximum profit. Whereas the big data created through the use of PinkDate can be really useful for pricing structures, it can not solve the problem of buyer alienation. Consider the ride share or hotel rooms: big agencies have created incredibly dynamic and powerfully efficient pricing structures, but the end-user often feels short-changed.

Because the sexual service industry is more emotionally charged than rideshares and hotels, this end-user experience must be even more carefully considered. The current set of incentives seem copy & pasted from the ride-share industry, and does not account for the difference in transaction size & frequency, buyer income, and user experience.

Few users will consider being overcharged on rideshare apps (due to surge pricing) a reason to quit using these services, and many will consider a $20 off coupon to be a good reason to take a ride instead of a cab; Many users will consider being overcharged on PinkDate a personal affront, whereas not many will consider even a $50 coupon to be that meaningful.

Finally, referrals are going to be less common due to the nature of the service.

I urge PinkDate to reevaluate their client-side incentives. It could be more meaningful to provide providers with larger incentives, provided that these incentives trickle down to the clients. For example, providers can be given "time extension" coupons they can give to preferred clients. Fee waivers and referral incentives are still valid and can be useful.

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(FEB 12th EDIT) : Nick, the interim CEO replied to these concerns. The following was taken with some minor edits from the Slack channel.

NICK: "... PinkDate doesn't disagree with [the] assessment that clients earn well [but] we think $100 is a good discount ... to get them to try the platform. [Once] they try it, they will love it. There are no others like it. AND, the incentive doesn't have to be a $ discount. The incentive is that they can Swipe. Select. Book. Pay. ALL confidential. And, they get confirmed once, via the company's secure platform. So that they don't have to give some girl they never met, all of their personal information. THAT is the beauty of the platform. And THAT is the incentive that will keep them using the platform.

What other factors can we imagine for PinkDate's finances?

Opportunities

Expansion Opportunities outside of North America

PinkDate projects 30 cities with active operations by the end of Year 3.

This list shows that with 30 cities, the largest of North American cities will be covered. By that time, the platform would be optimized, well-known, and trusted. If that is the case, expansion to Europe, Asia, and other regions is an opportunity for exponential growth.

Market expansion opportunities & paradigm change

PinkDate is focused on serving professional providers at the middle-upper range of the market. It's possible to develop the platform to allow more complicated transactions (multi-party, shared pricing, etc) to increase the market the platform can serve.

This might necessitate a parallel platform with lower verification standards or more advanced logistics.

With the success of the platform, social paradigms might change to allow for more casual sex work--as the gig/sharing economy made renting out your garage/car/labor casually acceptable, the same may happen with sex work.

Threats

Competitors & Copycats

The success of the platform will force existing agencies, websites, and stakeholders will also innovate to compete. Eros.com, for example, may start providing direct messaging services on the platform - similar to how taxi companies started providing more services with the arrival of rideshares.

Foreign and under-served markets will see local copycats spring up, with many providers using multiple platforms at once.

Law enforcement and Social backlash

With paradigm change comes social and legal backlash. Small sting operations that do not affect the platform at large may still create large losses in trust; social campaigns that vilify the platform may gain traction.

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Price and Dividends

Let's take a look at the juicy numbers now.

Earnings per-share price

PinkDate will pay out 50% of its earnings (revenue - costs).

They project annual earnings of 30 cents a share based on 100M shares. This means annual dividends are projected to be 15 cents a share.

PinkDate has sold 36M shares by 2/15/2018. 34 million shares are available for the ICO. This means that Earnings per-Share Price will most likely be higher, because of "token burn".

Any Pre-ICO or ICO tokens not sold will be burned, that is, taken out of circulation (Whitepaper pg. 17)

30 cents a share comes from projected a projected revenue of $30M.

This means that by the 13th quarter, PinkDate projects revenues of $7.5M/Q. Based on 100M shares and 50% of revenue in dividends, this adds up to 3.25 cents every quarter .

This means that on investment of 10,000 shares (which is $1700 right now in the pre-ICO) is projected to pay out $325 in Q13, not counting around $900 in the Y2 & Y3.

Reference per-share price

Apple stocks are $173 today. (2/15) Apple's Earnings Per Share (EPS) is at $9.73, which means that it has Price Earnings Ratio(14.60). PER varies widely; mature industries have lower PER, good startups have higher PER.

A P/E of 50 is realistic if PinkDate achieves it's goals. It's downright conservative if you consider the private and secure nature of these earnings. If you choose not to pay taxes, you can. That will make these earnings 10~40% more money in your pocket.





This means that an investment of $1,700 (10,000 shares right now- at the pre-ICO) is projected to be worth around $150,000 by early 2021.

This uses a conservative estimates for the burned tokens and should be increased by 30% because the pre-ICO seems unlikely to sell out. The minimum investment is now $500.





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(* Analysis of Revenues and Prices* added 2/15)

Disclaimer : I am an investor in this project. Please do your own diligence. I am also (mostly) convinced that this is not a scam and performed this analysis without that discount. You should allow for that risk in your personal investments (I did).

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Handy Links