Investment Memo: Writesonic
The Team
Samanyou Garg: Writesonic Founder & CEO. Samanyou graduated from the University of Manchester with a degree in computer science. Samanyou is a tech enthusiast, also having founded the text summarizing tool “TLDR This” and control software “Zesture”. Prior to founding Writesonic in 2021, Samanyou was focused on building digital products but was getting stuck writing content to promote his product. To overcome this, Samanyou built a GPT-3 based landing page, marking the beginnings of Writesonic.
Samanyou Garg is the only member of the founding/executive team, and Writesonic’s organization structure is one where Samanyou spearheads the company’s direction with the rest of his team under him. Currently, Writesonic has 47 employees.
Product
WHAT: Writesonic is an AI-based writing tool that helps professionals scale content production and output by generating SEO-optimized articles, blog posts, and ads aligned with the brand’s “voice”. Leveraging cutting-edge natural language processing (NLP) algorithms, WriteSonic aims to revolutionize the way businesses generate high-quality written content efficiently. Writesonic solves the problem content-creators have of producing high-quality, relevant, and cost-effective content at a high speed.
Writesonic also includes products like “Chatsonic”, “Botsonic”, “Audiosonic”, and “Photosonic” that provide more specific content creation functionality.
Chatsonic: Chatsonic is a GPT third-party that is integrated with Google Search for better accuracy of generated results by remaining up-to-date using Google’s knowledge graph. It also has an extensive prompt library, the ability to engage with documents/links, the option to have multiple users type in the same chat, and a Chrome extension for a streamlined workflow.
Botsonic: Botsonic is a no-code AI chatbot that allows creators and businesses to handle customer interactions like humans as trained on the user/enterprise’s existing data. This enables Writesonic’s customers to have a more interactive landing page.
Audiosonic: Audiosonic generates human-like audio for more natural voiceovers. Audiosonic is also capable of bridging language barriers through multilingual text-to-speech functionality.
Photosonic: Photosonic allows users to create any type of art in seconds by typing in a prompt on the type of image to be generated. Writesonic saves users the cost of purchasing stock photos for their sites. Photosonic is also sensitive to the art style that the user specifies.
WHY: With the GPT-4 released in March 2023, generative AI is only becoming more pervasive in the workflows of individuals to enterprises. Key ways GPT-4’s capabilities extend beyond that of GPT-3 and GPT-3.5 is its multimodal capacity (i.e. has the ability to interpret images), ability to adapt to specific tones/emotions, and ability to understand longer contexts.
Companies and individual creators who do not adapt to a space changing under the guise of AI will be outcompeted with AI’s ability to generate large volumes of quality content while maintaining higher levels of accuracy than previous versions of GPT. For instance, companies like DuoLingo, Khan Academy, and Stripe have already integrated GPT-4 into their products. Writesonic stands out as a preferred option over GPT-4 because GPT-4 is currently priced at $20/month, but users can get started with 10,000 generated words on Writesonic for free. Furthermore, Writesonic has specialized features tailored to content creation through its additional products (Chatsonic, Botsonic, Photosonic, and Audiosonic). Writesonic has a wide range of templates for users to start with, the ability to generate audio, while ensuring SEO optimization and plagiarism-free content. All of the above have been key priorities for Writesonic users and makes Writesonic stand out.
Market Landscape
TAM: The total addressable market (TAM) for WriteSonic involves estimating the potential number of content creators and businesses that could benefit from an AI-powered content creation platform. Considering the transition to an “attention economy”, the TAM for this product is very large. The TAM can be calculated by considering the total number of potential customers in a given market and multiplying it by the average revenue per user. The statistics below consider the number of global users in each category, since Writesonic can generate content in 24 languages, which ensures a high degree of global coverage.
TAM=(Number of potential “Freelancer” users×ARPU for “Freelancer” plans)+(Number of potential “Small Team” users×ARPU for “Small Team” plans)+(Number of potential “Enterprise” users×ARPU for “Enterprise” plans)
TAM=(200M×$16)+(400M×$13)+(300M×$500) = $158.4B
SAM: The Serviceable Addressable Market (SAM) represents the portion of the Total Addressable Market (TAM) that a company can realistically serve or target.
If Writesonic can service 5% of users who seek an AI-powered tool specific for content creation (who believe Writesonic’s capabilities outperform that of free generative AI tools), Writesonic’s SAM would be ~$792B.
SAM=TAM × (Realistic market share percentage)
SAM=$158.4B × 5% = $7.92B
SOM: The Serviceable Obtainable Market (SOM) is the portion of the Serviceable Addressable Market (SAM) that a company can realistically capture based on its internal capabilities, resources, and strategic planning. Calculating SOM involves further narrowing down the SAM by considering factors such as the company’s distribution channels, sales capacity, marketing effectiveness, and other operational constraints. Since Writesonic is a SaaS, its market penetration rate to narrow SAM to SOM is high. The main limiting factor would be whether users are familiar with Writesonic and wish to pay for Writesonic’s subscription service. Below, I estimate that 5% of users who believe Writesonic outperforms free Gen-AI are familiar with Writesonic and also willing to subscribe. However, this figure is poised to increase as Writesonic gains more traction and brand recognition.
SOM=SAM × (Market penetration rate)
SOM=$7.92B × 5% = 396M
Business Model
WriteSonic runs on a freemium/subscription-based model for revenue generation. Writesonic is available as a free tool to let users experience how Writesonic can address their content creation needs with tiered subscription options (small team, freelancer, and enterprise) for additional features and customization options.
Key Competitors
GPT-4: Currently, GPT-4 is priced at $20/month. GPT-4’s capabilities extend beyond that of GPT-3 and GPT-3.5 in its multimodal capacity (i.e. the ability to interpret images), ability to adapt to specific tones/emotions, and ability to understand longer contexts. However, GPT-4 is not specifically tailored for SEO, does not include content templates, and is not necessarily plagiarism-free.
Copy.ai: Copy.ai was one of the first AI content generators on the market with its standout functionality being long-form content generation and SEO. Like Writesonic, Copy.ai is able to add a brand’s voice to the type of content it generates. Copy.ai stands out by letting users outline a workflow (i.e. 1. Summarize Transcript, 2. Write Blog post, and 3. Write LinkedIn post) that lets users generate various types of content simultaneously. This workflow streamline is one that Writesonic does not yet have. Additionally, Copy.ai gives unlimited word’s on its paid plan and saves previously input user data in its infobase that improves the quality of a user’s output in less time, making Copy.ai stand out in terms of pricing. In comparison, Writesonic’s pricing plan has more modularity of which plans to purchase (i.e. using which plug in and how many words to purchase) that can confuse users.
Copy.ai’s pricing is as follows:
Free
Pro: $49/month for five users
Enterprise: requires contacting Copy.ai for more information
Jasper: Jasper and Writesonic are similar in the types of AI models that they are powered by, ability to integrate with other platforms, and special features (image generation, chatbot, “brand voice” feature, etc.). However, Jasper has a steeper learning curve, with slightly fewer templates, but more advanced features that give users greater capacity to tailor their output. Writesonic serves users who want to start with easy-to-use templates for their content creation, but Jasper offers more granular control for content output.
Jasper’s pricing is as follows:
$49/month for unlimited word generation, 50+ templates, and document mode.
$125/month for 3-person “Teams” plan with three brand voices, three user seats, and additional memory
Enterprise: requires contacting jasper for more information
In comparison to Writesonic, Jasper’s pricing scheme is on the higher side but generates more value for those seeking control and flexibility.
Valuation
Over two funding rounds (pre-seed and seed), Writesonic has generated a total of $2.72M with Y Combinator and HOF Capital (invested in Uber, Stripe, and Alibaba) as leading investors. Other investors include XRM Media, Rebel Fund (invested in Instacart and Reddit), BluePointe Ventures, Amino Capital (invested in Zoom), Broom Ventures, and Soma Capital. According to the Economic Times, Writesonic is on track to reach a $1B valuation by the end of 2023 with a current valuation of $250M (3M users).
Key Opportunities
Timing & Trends: As we trend towards being an “attention economy”, leveraging AI-generation to keep pace with other users/businesses in the digital space is becoming increasingly important. In particular, smaller creators who are looking to focus on creating their product seek to have their efforts recognized but tend to not want to be bogged down on the marketing front, especially if the team is still lean. The growth of AI makes the ability to develop quality content at a high rate all the more important, and nascent companies will be looking to push their product as soon as possible. Creators will be looking for SEO to occur “under the hood”, create multilingual material, and enhance personalization, which AI-generated content creation tools make accessible. Without embracing AI-powered solutions, one will struggle to stay relevant in the content creation space.
Idea & Execution: Writesonic has established itself as a leader in capitalizing on the potential of artificial intelligence in content creation. The technical prowess of Writesonic’s platform is evident in its ability to optimize content for search engine optimization (SEO). By analyzing keywords, understanding user intent, and crafting compelling headlines and meta descriptions, Writesonic helps businesses improve their online visibility and attract more organic traffic.
Writesonic’s platform also goes beyond traditional content creation by offering the capability to build AI chatbots. These chatbots can engage with website visitors, answer frequently asked questions, and even assist with lead generation, saving businesses time and resources.
Writesonic is gaining significant brand recognition in the digital creator space because of its strong track record with companies like AdMedia and Give InKind who have experienced significant growth in business when using Writesonic’s platform. AdMedia, a digital advertising agency, saw a significant increase in click-through rates and conversions after implementing Writesonic’s content generation tools. Give InKind, a crowdfunding platform, witnessed a surge in engagement and donations by leveraging Writesonic’s AI chatbot feature.
From my experience testing Writesonic and navigating its landing page, Writesonic’s user-friendly interface and intuitive workflow make the product’s ease-of-use a standout executional strength. With Writesonic, one can streamline the content creation process and stay ahead of the curve in the ever-evolving digital landscape.
Key Risks
Ethical Risks: AI-generated written content raises ethical risks like content bias and devaluation of human creativity. AI models are trained on existing data, which may contain biased information. If this bias is not addressed, it can perpetuate stereotypes and discrimination in the content generated by AI. Furthermore, since detecting AI-assisted plagiarism is challenging, the ease of which AI is able to generate may create economic challenges for creatives. In the long term, if AI is only being built on existing research, this may also limit the creation of “new” knowledge to academic institutions who also have their own implicit biases and affiliations.
Technological: The small time frame Samanyou needed to create a first beta for Writesonic speaks to the ease of integrating open source LLMs models (like GPT) into a third party product. While using external plugins ensures that a product like Writesonic remains updated, a company like Open AI, or other competitors seeking to enter the content-generation AI space, could easily recreate Writesonic’s functionality.
Financial: Limited financial information is publicly available for Writesonic, but financial risk does not seem to be a significant concern for Writesonic. Since the team is still fairly small and developing the Writesonic landing page/product is not especially costly due to being a third-party GPT integration, Writesonic likely will achieve strong profit margins. Furthermore, personally testing the platform has developed my understanding of why the freemium plan is attractive. Seeing the number of users Writesonic has been able to convert into paying customers results in Writesonic having few financial risks.
Concluding Thesis
Recap: Writesonic is an AI-powered platform that revolutionizes content creation, enabling businesses and content creators to generate high-quality marketing content efficiently. Writesonic is a worthwhile company to invest in because it satisfies an in-demand niche of the current “attention economy”, has proven success stories, and is likely to follow a strong trajectory.
1. PRODUCT CAPABILITIES: Writesonic combines the power of artificial intelligence and human creativity to streamline the content creation process. The platform offers a range of tools, including on-brand article generation, SEO optimization, and AI chatbot creation. As a GPT-third party with Google-integration, the material Writesonic generates will be relevant and updated as open-source LLMs improve.
2. TRACK RECORD: Companies like AdMedia and Give InKind have experienced remarkable growth by utilizing Writesonic’s platform. AdMedia, a digital advertising agency, witnessed a significant increase in click-through rates and conversions after implementing Writesonic’s content generation tools. Give InKind, a crowdfunding platform, experienced a surge in engagement and donations by leveraging Writesonic’s AI chatbot feature. These success stories demonstrate the platform’s ability to drive business growth.
3. TIMING: In today’s “attention economy”, that’s becoming increasingly competitive, creators are looking to generate quality content at a faster pace than ever to stay ahead of competitors. Writesonic’s tools (chatbot capabilities, art generation, natural voiceovers) enable businesses to meet this demand efficiently. With the ability to automate tasks, analyze data, and generate personalized content, Writesonic offers a competitive edge in the digital landscape. The platform’s features, such as content optimization for SEO, multilingual content creation, and enhanced personalization, cater to the evolving needs of businesses.
Conclusion
While there is a risk that competitors may easily copy Writesonic’s product because it plugs in existing models, Writesonic’s seamless UI and increasing base of positive reviews is making the company gain traction among SaaS companies. An open-access database giant like Open AI or Microsoft may be able to develop a similar functionality as Writesonic, but they are unlikely to direct resources toward content-creation specifically. However, there is a possibility that a tech giant acquires Writesonic for a good selling price. If not being acquired, Writesonic is likely to maintain a strong growth trajectory because it is still a new company and its brand-recognition is only increasing.
