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Notes on Consumer Social

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TL;DR

Something Never Seen Before

  • There's rarely a top-down or bottom-up analysis that leads to an insight that creates an experience that captures something and leads to tremendous consumer growth.
  • Better have a core insight into a small market. Have the ability to expand beyond that than to be going after a big market from the beginning.

Messenger = Context Network

  • All dating apps are messaging apps: Tinder, Bumble, Hinge...the point is to get in the DMs. Snapchat is photo messaging. Zenly is conversation that starts on the map. Discord, FB messenger, YOLO, Houseparty, Squad, Bunch, Roadtrip, Yubo—these are all messaging apps.
  • Some are photo-based, audio, or text. All have one purpose in mind: get people in dialogue.

Viral

A reproducible testing process is more valuable than any one idea. Innovate here first. Getting 7 adult friends to install an app on a reproducible basis is non-trivial. If you can figure out how to do that, that's a bigger idea than your original concept. (Having a reproducible user acq. process is the best way to reach PMF)

  • Getting into the hands of users and turning them into your biggest fans and proponents of the idea
  • Top social apps had viral moments enabled by their early user base.
  • Core action completion is a proxy to assess how much value is truly being created for the end-user.(Viral factor)

Easy to make progress early, increasingly hard to push the ball in even small increments later.

  • You need to know the core vectors. For TikTok, it was increasing user dynamics (stitch/use this sound) and video tooling (effects, sounds, workflows)
  • All things whose value increases as a function of [time/usage/users, etc.]

Why Consumer?

Biggest and Fastest Scale

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  • All consumers are potential customers.
  • For building companies that reach a tremendous scale, there's no bigger scale than consumers in terms of spending the time.
  • A dynamic that leads to winner-take-most outcomes.

Compared to B2B

  • There's a much higher recipe for success in B2B of finding a great founder, who really knows the space, is able to get that go to market motion going and start to build equity value, whereas, on the consumer side, there's no recipe for success.
  • Enterprise businesses are easier to get off the ground but harder to scale. Consumer apps are hard to get traction but easier to scale.

Why Social?

Social Product in Every Category Wins Eventually

  • Consumer social apps are unique. Everyone gets to have an opinion being consumers themselves. Everyone will tell you why it won’t work or what’s wrong. To succeed, it takes thoughtful conviction, being deeply attuned to often latent consumer needs, and being willing to figure out why something will work — despite all the naysayers.
  • More about taste. Social apps are the most artistic corner of the tech world. Like movies and music, the subtle details matter. Social is kind of the ultimate creative pursuit, at least in tech.
  • It's very hard to know where a hit (as they call it) might come from where you never could have looked at a market sizing diagram or Gartner report, and then deduce from that that there should be a social network that starts with colleges and sprouts from there.
  • There's rarely a top-down or bottom-up analysis that leads to an insight that creates an experience that captures something and leads to tremendous consumer growth.
  • It's so hard to go from there and actually reach escape velocity, unlock a monetization model. There are so many more steps or hurdles that there's a much higher rate of companies being started going after consumer opportunities. Iterating, iterating, iterating, and never quite unlocking or capturing that lightning in a bottle.
  • Better have a core insight into a small market. Have the ability to expand beyond that than to be going after a big market from the beginning.

Social Networks Aren't Technology But Psychology Innovations

Psychology Hacking

Building a great social product means creating something that compels our emotions, our psyche, and our identity.

Good psychology hacks are things like tinder's fast paced swiping. Out of the squillions of dating apps, the one with a good hack won. I think Facebook used an identical hack for its first version, the hot-or-not version. Twitter's basic concept. Snapchat's. Lots of examples. All good "psych-hacks" that formed a core of successful products, arrived at through a sort of natural selection process. I suspect that almost any app which does not "solve a problem" leverages some hack instead.

Habit

  • Create new habit of behavior / a habit that will become someone’s center of life / connect better
  • Habit formation requires recurring organic exposure on other networks. Said another way: after people install your app, they need to see your content elsewhere to remind them that your app exists (e.g., Instagram photos on Facebook, TikTok videos on Instagram).
  • f you can't use your app from the toilet or while distracted—like driving—your users will have few opportunities to form a habit. There is a graveyard of live video apps that didn't make it because of the attention they require.
  • People download apps to solve core human needs (1) finding love, (2) making or saving money, and (3) play. People rarely take time out of their day for anything else.
  • Audiences that exhibit obsessive behavior tend to be the best beachhead for new products—such as gamers, teens, and hobbyists. You need this obsessive engagement at the beginning to get the flywheel spinning.
  • The user is the producer
  • Total time spent per user to be a proxy for how much value users are extracting from the app’s network.
  • The best consumer social products tend to do one thing really, really well. Once you figure out what that is, just keep making it better and better. Resist the temptation to prematurely add more features.

*Gamification

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The best apps today are games in disguise:

  • Game-like apps incorporate the design principles behind good games into the core product
  • Focus on long term retention

A general framework for game-like experiences:

  • Motivation: why does a user want to use your app? the best games motivate users via intrinsic goals
  • Mastery: what are the rules of the app? users need to learn the rules of the game - how to win.
  • Feedback: how will a user learn those rules? teach through iterative feedback loops. Users need a way to learn the rules and systems as they go

How To Beat An Incumbent? An Unstoppable Social Mechanic

Break the Rules

  • Every blockbuster product is an outlier, breaks the rules and may have been the result of luck or timing. So all you can do is get to know your user better than anyone else and trust your instincts.
  • Very few people in this industry have have seen the inflection point of product-market fit first hand. Even for the founders who have seen it, take their advice with caution—including all the suggestions in this list.

Positioning

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  • ‍Positioning defines how your product is a leader at delivering something that a well-defined set of customers cares a lot about.
  • Your positioning needs to position you against the status quo if you want to convince customers to act.

Signal

  • Users should feel a sense of validation every time they show up
  • "Proof-of-work": the basic mechanism for content creation in a social network, like tweeting or posting.
  • Get them in to different world (Look cool or funny)
  • Create new social status to match new friends
  • The biggest “social” products are more about the “media” than the “social”.

Viral

  • Create a content that can travel on existing networks

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  • Bold design stands out
  • Don't worry about Facebook: incumbent advantage is frequently overstated. Well-crafted products that harness unique distribution channels can take the world by storm—sometimes in a matter of days. And if the product is retentive, investors will line up to bankroll your growth.
  • Positive feedback loops are necessary to reach "escape velocity." One heuristic I've aimed for is for each app session to trigger 7 new people to open your app. The engagement loops on Tinder and Snapchat demonstrate how these loops can create explosive engagement.

“There are network effects around social products and a finite number of different social mechanics to invent. Once someone wins at a mechanic, it’s difficult for others to supplant them without doing something different.” — Mark Zuckerberg

Hype is Dangerous

Hype applied too early in a network’s evolution can doom it because it makes it extraordinarily difficult in the beginning to know how consumers will engage once the hype subsidy is removed.

Ex: Clubhouse

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First 100-500-1K

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  • A reproducible testing process is more valuable than any one idea. Innovate here first. Getting 7 adult friends to install an app on a reproducible basis is non-trivial. If you can figure out how to do that, that's a bigger idea than your original concept. (Having a reproducible user acq. process is the best way to reach PMF)
  • Don't be embarrassed to have a narrow target audience. All big things grow from small wedges in the market.
  • If you need to launch nationwide to test your product, it's not a good test. You will prematurely exhaust your audience's attention and limit future shots.
  • The people and content on an app always trump slick design & novel interactions. So focus more on getting network effects and solving the "cold start."
  • The only way to push through the noise of the App Store is to be unapologetic about marketing to your first users. If your first users are Berkeley students, go ahead & call the app Berkeley Memes. It's hard enough to get the flywheel spinning without being obnoxiously relevant.
  • How to sort a contact list on an invite screen is critical. You don’t need a wave if your product enables network effects to form on a reproducible basis—just thru it’s mechanics. Waves have finite energy & are non-reproducible.
  • The most important piece is finding and connecting with people you know directly. This becomes your core. All of the network building is getting from your contacts into codified relationships in the product.
  • Founders spend months tweaking features, hoping there will be the one decision that makes their app blow up. In reality, 99% of an app's value is the people on it. Perhaps they should spend that time innovating on marketing, the FriendFinder, and the invite system. How do you even validate whether they will stay on it until you have a go-to-market process that reproducibly ensures 7 friends?

Great products take off by targeting a specific life inflection point, when the urgency to solve a problem is most acute:

Facebook ➝ Starting at a school

Linkedin ➝ Getting your 1st job

Slack ➝ Starting a company

FB

Thefacebook.com went up on Wednesday, February 4, 2004. “It was a normal night in the dorm,” Moskovitz recalled. “When Mark finished the site, we told a couple of friends. And then one of them suggested putting it on the Kirkland House online mailing list, which was, like, three hundred people. And, once they did that, several dozen people joined, and then they were telling people at the other houses. By the end of the night, we were, like, actively watching the registration process. Within twenty-four hours, we had somewhere between twelve hundred and fifteen hundred registrants.” — New Yorker

Tinder: Raise a party

The first version of the app was very good. It had swiping; it had profile photos; it had all the features that you’d want. But after [Tinder’s founders] invited a bunch of their friends just manually, these friends were just not sticking. There just weren’t enough profiles. So how do you get hundreds of people that are all desirable to want to use the app at the same time?

The way they did it was they went to the USC campus, which was nearby, and they decided that they were going to sponsor a birthday party for one of the folks in the sorority system there. The idea was to throw this big party, invite hundreds of people. And they had bouncers in front of the party, so that you had to download Tinder in order to [gain entry. And people went and it was a cool party, and the next day, they opened up the app, and they were like, “Wow, these are all these people that I did not get a chance to talk to.”

Sean Rad really attributes those 500 people with helping him take over the USC campus a formula that Tinder then used to make inroads at other schools.

Pinterest: Email + Apple Store Hack

"We released the app and I did probably what everyone does–emailed all my friends and kind of hoped that it would to take off. And no one really got it, to be totally honest with you. […] But there was a small group of people that were enjoying it. And those folks were not who I think stereotypically you think of when you think about early adopters. They were folks that I grew up with, people that were using it for regular stuff in their life. You know, “What is my house going to look like? What kind of food do I want to eat?” Things like that.

But we did all kinds of pretty desperate things, honestly. I used to walk by the Apple store on the way home. I’d go in and change all the computers to say Pinterest. Then just kind of stand in the back and be like, “Wow, this Pinterest thing, it’s really blowing up.”— Ben Silbermann

TBH

tbh started at one high school in Georgia. During the first week, 90 app opens per day, 500,000 messages sent, and 50% penetration of total enrollment. (According to Nikita)

They purposely gated growth by being invite only and slowly rolling out high school to high school so that they had time to collect feedback and ensure they had PMF before scaling. It took them 6 weeks to hit #1 on the charts and 8 weeks to get bought by FB for 30m.

Poparazzi

Skyrocketed to the top of the App Store on launch date because of their 500k person waitlist. They grew a 500k user waiting list through TikTok videos. They posted their own videos and let TikTokers into their beta and had them post to TikTok.


Retention Is the Key

(metrics aren’t exploding (even if it looks good) it’s not working)

  • Weekly cohort retention that asymptotes in the 30%👌🏻-45%🔥 range
  • 1M users within 2 months of launch

Get a few hundreds people to love your product, then scale it from there. Big bangs launches with poor retention won't work. Pouring a lot more resources into non-working product is likely sunk cost fallacy. It’s better to focus on a single community, gain saturation, before adding adjacent networks. Viral loops are still can be constructed, measured, and optimized. The core stickiness of an app is all about PMF.

  • WhatsApp: 70%+ (According to Sequoia Fund)
  • Facebook: 60 - 70% 6-month user retention
  • Instagram: 50 - 60% 6-month user retention
  • Snapchat: 33% 3-month user retention, 30% 24-month (source, source)
  • Twitter: 31% 3-month user retention, 22% 24-month (source, source)

Ex:

  • FB: Back in 2004 when Facebook had 70,000 users. Remarkably, 65% of users who had ever signed up were active daily. 95% of users who signed up were active monthly.
  • Snapchat: About 50% of its registered users were active each day, and it also outperformed on the amount of photos sent, sessions, etc. It had 90k daily active users off of a base of around 180k installs, with retention rates over 50% after 90 days. This compares to sub 10% retention for most apps, including other photo sharing and social networking apps. Usage is also very high; 30m snaps have been sent in the last 3 months with a median of 6 sessions per day and 18 sessions a week, relative to 1.7 sessions per day and <5 sessions a week for other photography apps. (2012)
  • Clubhouse: good retention at 2000 users, when a16z invested.

Sources