Consumer startups: what are the triggers of scale
Let’s face it.
In the modern world, if you are in the consumer technology space, app-stores are your pantheon of promise (or failure). With millions of apps taking pride of place amidst billions of smartphones in the world, if your idea does not make it to the top 10 list of all the app-stores, it’s pretty much not going to make it in the long run.
But then, what are the reasons that make a consumer app successful these days? Is there a science to it, or is like box office where you never know which movie will be hit until it is released and survives the first Friday?
I think there is a bit of both. But one thing that is absolutely critical about consumer apps, is that they require phenomenal scale and growth in a very small amount of time. Scale that cannot be bought by marketing, PR and paid media alone. Scale that cannot be managed by distribution alone.
This scale can only be created if consumers feel an inherent organic reason to want to use the product and keep using it many times in a day. At the same time it has to appeal to consumers of different ages groups, across different cultures, across different languages, different needs and different economic standings.
This is incredibly difficult.
How can you as a builder, find inherent human reasons that resonate equally across so many diverse parameters at the same time which your product can solve for?
The answer to this is of course in creating a product that delivers ongoing repeat value to consumers of all all types across all demographics, whereby they feel compelled to use it and tell others about it. Once you have that early momentum, marketing, sales and PR can help you get over the line.
But how do you find the reasons that make them want to use it in the first place?
While there is no exact science to this, if we see the successful consumer apps of today there are some consistent parameters that we can learn from and use those learnings to build our solutions. (once we have identified a problem large enough to solve for).
Here are a few of these observations and learnings:
Does your product solve an existing problem (to which there are existing solutions) in a better way ?
This one is easier, because you do not have to define the problem or find a reason. Those are already there and you already know the market potential. You also know what the solution is. You just need to find a way to make the experience better, easier, cheaper and faster.
Once you have been able to do that, then you need to find your first cohort of early adopters and rabid users who find the newer experience of solving an older problem like a breath of fresh air and jump ship. If that early momentum is high, then these early adopters create enough advocacy that influences a lot of other people to jump ship as well and then your product becomes like the swing state on an election day final count.
None of this is easy, but your focus just needs to be on creating a more valuable experience, the early growth that is required to advocate for this valuable experience and then having a solid marketing/sales push to scale that growth.
Does you product help in creating or promoting social status?
Social status is one of the primary inherent drivers of human psyche. Being social animals and being part of a societal fabric, social status is something we are attuned to and aspire for from our childhood. Earlier, this was confined to in-person cultural situations and context. These days it has expanded to our online virtual selfs where we have the ability to extend our sphere of influence beyond in-person relationships to hundreds of additional online distributed relationships. (for work or leisure)
The internet leveraged our inherent need to be social and find social acceptance and gave it phenomenal scale by expanding the total adressable market (TAM) that we as individuals could attempt to influence. The whole concept of “followers” came from this. It stemmed from our inherent vanity to feel important that “X” number of people follow us, ie find us important enough to “listen” to. That “listening” could be to what we were posting, tweeting, saying and so on.
Once this reason of feeling socially important was identified as a powerful inherent organic habit driver, successful entrepreneurs just had to build products and features that allowed this to happen easily and frictonlessly. By removing barriers of entry, democratising access and scaling everyone’s inherent creative ability to create content, successful consumer apps went on to create a new breed of “socially important” class of people who did not exist a decade ago.
The Influencers. The digital nomads. The creators.
And as millions watched from the sidelines, many wanted to be the same. So networks became important. The need for more followers became important. The number of followers, likes, shares etc became important social status signals( in real life as well). So while we worked hard (read used the product many times a day) to improve our social acceptance (“ follower numbers”), the algorithms took care of the (self) promotion.
But likes, shares and follows are not the only way social status can be created or promoted. If your product can create other kinds of social statuses (in an easy way) which people inherently care for, it has every chance to be successful at scale.
People care immensely about how they feel and what makes them feel good about themselves. They will change habits, products, brands and incumbents even if they experience a tiny improvement in that feel good quotient.
Which brings me to my third observation. That is — to enable all this, people need to be able to find other new people (easily) with whom they can try to extend their sphere of influence.
Does your product create serendipity?
Serendipity is important, because serendipity makes life exciting. It has the promise of the unknown and the power of allure. It also gives us access to people and incidents we didn’t believe we had access to.
Human beings by nature need the comfort of the known and the excitement of the unknown. Boredom with status quo is the primary driver for this. Two decades ago our ability to access was limited. The internet solved this problem. Now “literally” everyone is accessible.
Sophisticated algorithms went one step further. They could connect us to people who were “like” us. Who liked the same music we did, or the same pictures we did or the same political viewpoint we had. A slew of consumer products gave us this rare privilege of building our own virtual communities comprising of people who were outside our immediate first degree networks but were like us or like those whom we aspired to be or had traits we were interested in.
It was classic serendipity with a splash of dopamine. Easy, relatively effort free, with a real time self validation loop.
It was dopamine and validation on tap.
However, we have not exhausted all the ways of surfacing serendipity. If your product can allow people find access to people in different niches to whom they would never have access to otherwise, it has all the chances of being wildly successful. It’s not easy, but doable, as long as your product makes it frictionless to find new people, connect, engage and then deepen the engagement over time if required.
And this brings me to my final observation. All engagements are some form of transaction and we eventually get bored of engagements which don’t return us some form of tangible value that matters to us.
Does your product help people earn value?
Value is a subjective proposition. Value can be financial, access, knowledge, power, love and so on. It depends on the time, context and the individuals involved.
We will quit dating apps that don't land us dates, writing apps that don’t land us writing gigs, learning platforms that don't land us jobs and creator platforms that don’t allow us to earn money.
The more value we get (read dates/ jobs/ money) the more we will use those respective platforms. The more compounded will be the impact. The more will be the growth and valuation of these companies.
A great relatively old school example is Apple’s app store. From 2008 to 2021, Apple has paid developers $200 billion in payouts. Since Apple has its closed ecosystem and millions of users, developers find it easy and motivating to create for the iOS and MAC platforms. It is guaranteed money if they can create a hit. They don’t need to worry about distribution or platform. So they keep coming back and keep building apps because the relationship is symbiotic and (tangible)value driven.
A relatively new example is TikTok. They have a $200 million dollar creator fund to just pay video creators who create great content. Or Medium which has a partner program for writers to earn. Or Substack which has a paid newsletter version. The more engaging the video, the more exciting the content, the more creators will earn. The more they will keep coming back to the same platforms as long as the platforms can keep expanding their reach and increase their earnings potential.
But we are at the seed stage of the D2C /influencer/ creator trend. As creators with niche expertise expand their connected communities of loyal paying customers, there are enormous opportunities to explore in this value game. As payment formats decentralise, as technology upends incumbents, (driving more inclusivity and lower costs), value will have different definitions and methods of distribution.
Take into account Austen Aldred’s Lambda school or Seth Godin’s AltMBA. These alternative “schools”, shot into prominence and gained massive scale within a year, because their value was associated with job creation.Their PR and communications were drilled into this aspect.
So as long as you can find a way to align growth in value creation for consumers with increasing time spent on your product, there is every opportunity that your product can be the next viral hit on the appstore charts.