The Next $1B Consumer Startup: Vertical Social Networks and Building Better Online Communities

The Next $1B Consumer Startup: Vertical Social Networks and Building Better Online Communities

In today's digital landscape, there is a growing fatigue around swiping and liking static content. Users are craving more curated and meaningful connections, as well as digital experiences based on their online and offline interests. This is where the next group of billion-dollar consumer companies can thrive: vertical social networks. These platforms enable users to share content that they can't post elsewhere, providing them with a unique value proposition.

One key aspect of successful vertical social networks is providing users with the best tools to enhance their status within their existing network. Platforms like LinkedIn, Clubhouse, and Quora have capitalized on this by giving users the ability to build a following, whether it's for personal or professional reasons. This creates a strong incentive for individuals to join these new networks and actively engage with the community.

Moreover, these vertical social networks act as a "System of Record" for users, holding all the important data related to their profiles and interactions within the community. This not only encourages frequent engagement on the platform but also makes it harder for users to churn. By creating a comprehensive ecosystem that caters to the needs and desires of its users, a vertical social network can establish itself as the go-to platform for a specific niche or interest group.

The emergence of new devices and advancements in technology also play a crucial role in the success of vertical social networks. When new devices are introduced, they expand the amount of time and ways in which we can be "present" on social products. This creates opportunities for new networks to thrive and engage users in unique ways. Additionally, these devices often enable new types of content, which can act as a launching point for a new social network. For example, AR filters were a significant factor in Snap's success as they attracted users beyond their initial high school student user base.

Unbundling is another strategy that can lead to the success of vertical social networks. While platforms like YouTube serve all types of content, there is a significant opportunity to build products with killer features for specific categories. By focusing on a particular niche and delivering tailored experiences, these networks can attract a dedicated user base and differentiate themselves from broader platforms.

Transitioning to the topic of online communities, it is essential to understand why most of them fail and how to build a better one. Psychology tells us that if we can get someone to buy into something, they are much more likely to stick with it. Avoiding cognitive dissonance is key. To build a thriving community, it is crucial to get members to buy into the community's purpose and values. This ensures that the community is comprised of positive contributors rather than individuals solely focused on self-promotion or tapping into the audience for personal gain.

The most valuable communities are often curated groups of people who are active and engaged. Quantity does not always equate to quality. A huge community with no activity or filled with spam is not enjoyable for anyone and leads to high churn rates. Instead, focusing on creating a strong value proposition and fostering meaningful interactions within a smaller community can yield better results. There is a limit to the number of communities individuals can meaningfully engage with, known as "Dunbar's number." With thousands of online communities, breaking through the noise requires a compelling value proposition.

Building a community is a challenging endeavor that requires active management. Dropping an audience into a digital space without actively curating and managing it will quickly lead to chaos. Sparking meaningful discussions and connections is also a difficult task. To build a better online community, there are several actionable steps to consider:

1) Start with "why." Pay attention to signals from your audience. If they are already trying to create a community around your brand or topic, it's a strong indication that a community is needed. By understanding the underlying motivations of your audience, you can create a community that fulfills their needs and desires.

2) Focus on quality, not quantity. It's better to have a small community of active and engaged members rather than a large community with minimal activity. Curate your community to ensure that it consists of individuals who are genuinely interested in the topic and are willing to contribute positively.

3) Invest in onboarding. Joining a community can be overwhelming, especially if there is no clear guidance on how to introduce oneself and get involved. Designing a thoughtful onboarding process is crucial to ensuring that new members feel welcomed and supported from the start.

To engage and retain members in an online community, it is essential to consistently add value and create "magical" moments that illustrate the community's worth. Understanding the specific reasons why people are drawn to your community and finding the best channels to deliver this value will contribute to its long-term success.

In conclusion, the next billion-dollar consumer startup is likely to be a vertical social network that caters to the growing demand for curated and meaningful connections. By providing unique content-sharing opportunities, offering the best tools for enhancing users' status, leveraging new devices, and focusing on specific niches, these networks can carve out their place in the digital landscape. Additionally, building better online communities requires understanding the motivations of the audience, curating for quality rather than quantity, investing in onboarding processes, and consistently adding value. By implementing these strategies, we can create thriving communities that foster meaningful connections and engagement.