Building and scaling a consumer business is difficult, especially as we head into an economic downturn where both consumers and VCs have begun tightening their wallets. Founders are facing simultaneous pressure to ensure their product/service is something consumers are still willing to pay for and that their companies are profitable. One way to build and scale a consumer business is to identify a niche demographic, often referred to as the “super-specific who.”
Today we’re covering:
One of the most important steps of starting and growing a consumer business, according to podcaster and angel investor Lenny Rachitsky, is to identify a super-specific who. Many iconic figures in the start-up and investing community, including Y combinator founder Paul Graham and former Facebook executive Andy Johns, have said that one of the biggest mistakes entrepreneurs made in the early days is that their target customer base is too large. They argue that to scale a consumer business, companies must first establish a niche of early adopters with certain characteristics. Once they’ve identified a super-specific audience that loves their product or service, they must double down to own that demographic before scaling their business using networks and connected audiences.
Rachitsky says there are several questions founders must ask themselves when they’re trying to determine their “super-specific who:”
An even more simplistic way for a founder to identify their super-specific who is to guess which people in the following six characteristics would be most interested in their product or service:
Once founders have done that, they should target customers based on three of these characteristics and continue to narrow their definition of their super-specific who, as they gain more information about who most likes their product/service.
When Pinterest CEO Ben Silbermann started growing his company in 2010, he initially targeted his friends in his tech circle but failed to gain traction. He coincidentally attended a summit in Utah for female bloggers and designers and found that they were interested in what he was building. Once Silberman identified his super-specific who, he was able to attract over a million users within a year.
1. DoorDash — Mom-and-pop restaurants in suburban areas.
2. LinkedIn — White collar workers in Silicon Valley
3. TikTok — Influencers with small followings on other social media platforms
Rachitsky notes that founders can still build successful businesses even if they misidentify their super-specific who, as was the case with Pinterest. However, it’s not in their best interests to do so, as this can deceive them into thinking their product has no viability and deprive them of their most valuable resource: time.
Crypto is a word that provokes a spectrum of reactions. Some believe it’s a giant Ponzi scheme, while others think it’s the future of finance. The problem with this unproductive debate is that it distracts us from the underlying blockchain technology and its immense potential. Inovative and disruptive technology is usually the subject of widespread skepticism before it is eventually adopted by everyone.
Former Kickstarter CEO Yancey Strickler points out that a new technology’s first use case isn’t necessarily the one that becomes its most popular use case. The film industry is now worth billions of dollars and movies are an integral part of our lives. However, Strickler notes that movies only became a popular use of film 30 years after the latter was first invented. Similarly Strickler argues that while crypto is the first use case of blockchain, future use cases will be more significant.
One of the most important observations Strickler has made since he went down the crypto rabbit hole is that most people conflate crypto, web3, and blockchain as having the same meaning. Strickler believes that crypto and blockchain shouldn't be conflated as the same thing. Given how much skepticism there still is about crypto, He argues that blockchain-based innovation will be restricted as talented people will be reluctant to work in the web3 ecosystem due to misconceptions about the two terms. While he isn’t looking to dismiss crypto, he argues that new blockchain-based use cases will emerge that don’t involve crypto.
Crypto: Digital and virtual currencies expressed in the form of tokens that are managed on a blockchain.
Blockchain: Publicly managed database that allows for transparent transactions and applications.
Web3: Universe of products with blockchain-related tech as their plumbing.
1.The decline of platform lock-in
Most web2 businesses such as Facebook have platform lock-in where user data is stored on its platform. In Web3, tokens are stored on digital wallets which are owned entirely by the user and can be integrated into other platforms. Strickler says platform lock-in will diminish, but not vanish, as more platforms are built on the web3 infrastructure.
2. Distributing ownership and influence outside an organization
Web2 platforms have relied on network effects to gain traction, however contributors rarely have ownership stakes or influence in the decision-making process. In 2021, YouTube made $28B in revenue, of which 55% ($15B) went to creators. While this is great for creators, it’s worth noting that previously most web2 platforms didn’t compensate them.
Blockchain-native platforms provide ownership tokens to all contributors rather than a select group of insiders, enabling them to have influence in the networks they’ve helped create.
3. Permanent Agnostic archiving
Blockchain’s public ledger lets creators store their work on an accessible platform that ensures their work will live on even after they pass and no matter how the large internet becomes. This is contrary to web2 where a creator’s work tends to disappear once the platform becomes defunct.