Zette - Spotify for News

Company & Team Introduction

Zette was founded by Harvard alumni Yehoung Zhu @YehongZhu in 2020. Beyond Harvard, Zhu boasts an impressive resume, including previous tenures as a Product Manager at X.com and as a writer for Forbes covering consumer technology. Zhu believes in a future where anyone can access high-quality content, starting with the media we consume daily. The company has ambitious goals like increasing the accessibility and affordability of news for the masses rather than the current sea of different publications, each charging its own subscription fee. Zette is headquartered in San Francisco, California, and its team has grown to ~14 employees.

Product Overview

Zette is a browser Extension that allows users to access paywalled content from 100+ news publications like Forbes, Haaretz, McClatchy, Boone newspapers and more. The product is highly intuitive and easy to use. Users download the Zette Chrome extension and purchase a subscription; when Zette detects a paywall on one of their publisher’s sites, a popup appears asking users if they would like to use a credit to bypass the paywall. Zette is available on all major browsers, including Chrome, Firefox, Safari, and Edge and plans to build iOS and Android apps to improve the mobile news experience. No more paying a monthly subscription that is way too difficult to cancel just to read a single article from the publication.

Total Addressable Market

Zette is tackling a massive and highly fragmented market. The digital newspaper/magazine total addressable market is estimated to be as large as $38 billion in 2023 and could grow to upwards of $43 billion by 2027, for a compound annual growth rate of 2.73%. Furthermore, the industry currently faces fragmentation as each significant news publication charges a monthly fee to view their content.. but many people don’t want or have the ability to pay for 5+ different publications.

Business Model & The Numbers

Zette follows a simple 3-tier monthly credit-based subscription model. Customers choose which plan best fits their needs based on how many paywalled articles they would like to access per month. Zette allows users to try a free 30 free credit trial to test the product before committing to a purchase. After the initial 30-credit trial, users can choose between the “Light Reader” subscription, which gives users 30 credits for $9.99, “Daily Reader” which provides users with 60 credits for $19.99, or “Avid Reader” which offers users 90 credits per month for $29.99. All credits are to be used within the month timeframe, and revenue is shared 50/50 with publications.

Traction

Zette has seen strong early traction from both publishers and consumers. Zette’s Chrome extension alone has 1000+ downloads and has inked deals with over 100 top North American publishers like Forbes, The Daily News, The State, etc. The company’s Product Hunt launch earlier in the year ranked the #2 product of the day.

Competitors

The competitive landscape for Zette is quite favourable, mainly because of how difficult it is to compete in the space. Margins are thin due to low take rates, and to provide a service worth paying for, a company must already have a network of quality publishers that have opted into the service. It is incredibly challenging to convince these massive publications with 100M+ in revenue that your startup will A) survive and B) move the needle for their business. Zette’s main competitor is the European startup Cafeyn. Cafeyn is a much older business that started in 2006 but primarily targets European audiences. Cafeyn has significant market penetration in the Netherlands and Germany and uses similar pricing to Zette, offering a free month trial and then charging users $10 a month after, but in Cafeyn’s case, for unlimited monthly articles. Cafeyn acquired another competitor, Blendle, in 2020, which had strong backing from top media publications like Axel Springer Digital Ventures and The New York Times Company.

Funding

Zette has only raised a single funding round since its founding, raising a 1.7M pre-seed in August 2022. The round allowed Zette to add a list of top venture firms to its cap table, including Halogen Ventures, The Community Fund, Hyphen Capital, MGV Capital, and Afore Capital.