In its latest acquisition, Substack is purchasing Cocoon, a subscription-based social app. Launched in 2019 as a way for people to privately communicate with their closest connections, Cocoon has raised $3 million from eight investors in its seed funding round.
Substack says Cocoon will continue to operate as an independent company, but Substack will benefit from the skills, creativity and vision of the Cocoon team. Cocoon customers will not be impacted by the acquisition. Terms of the deal were not disclosed.
About Cocoon
Founded by Alex Cornell and Sachin Monga, who both worked at Facebook for a time, Cocoon was designed to help close connections take their communications away from larger, “noisier” social platforms into a more intimate space.
“We started Cocoon because we believed that there was a missing space on the internet — a private space, for just our most important relationships. It wasn’t that hard to imagine how an ideal space should work. The reason it didn’t exist already was simply because the advertising business model wouldn’t let it,” says Cocoon on its website.
Cornell and Monga weren’t interested in perpetuating the advertising model. Instead, they opted for a subscription-based freemium model. When the app launched, it was free to use. It is still free to use, but using the freemium model, subscribers can pay $4.99 a month or $24.99 a year for an enhanced experience. Though the Cocoon will be adding features, the first feature is a complete history of the subscribers Daily Albums. Free users only have access to the last two weeks of history.
“As the app moves away from a venture-backed model, the costs to maintain and develop the product will drop significantly. We’re optimistic that our paid subscription (Cocoon Memberships) can provide the necessary wind in its sails to thrive,” Cocoon said.
Cocoon’s growth
Cocoon says that the first version of their app was only available on iOS and was designed as a way for long-distance families to stay in touch. Within a week of the app’s launch, tens of thousands of families downloaded the app. After being featured on the Today Show, there were so many sign-ups that the app temporarily crashed. Since then, the COVID pandemic hit and the need for an app like Cocoon grew beyond their expectations. In addition to long-distance families, close friends, couples, support groups and others have joined the Cocoon community.
“We’ve been blown away by how deeply and immediately this premise resonated with people all over the world,” Cocoon said.
Substack announcement
Substack’s Chris Best announced the news in a “Welcome Cocoon” post on August 24, 2021.
“I’m thrilled to announce that the world class team from subscription-based private sharing app Cocoon has joined Substack,” Best wrote.
“When something is built with care, using it lets you learn about the people who made it. The first time I used the Cocoon app, I could tell it was built with a thoughtful ambition. A desire to make something new, different, and better, born of respect for the people who use it, and backed up with real craft. That rare alchemy is what we value at Substack, and Cocoon was a product we would be proud to have built,” added Best.
Insider Take
This is the latest headline for Substack who is laser focused on growth. In April, the company announced they’d raised $65 million to expand their paid newsletter platform. In August, Substack acquired newsletter platform Letter, and later in the month, Substack partnered with OpenNode to accept Bitcoin on its platform. It isn’t clear how the acquisition of Cocoon will help Substack grow, since they offer completely different platforms and have separate audiences. They do, however, share a similar goal – building community and fostering direct relationships between people without the interference of advertising.
