The Next $1B Consumer Startup: A Vertical Social Network with Unscalable Strategies

The Next $1B Consumer Startup: A Vertical Social Network with Unscalable Strategies

In today's digital landscape, where swiping and liking static content has become tiresome, there is a growing demand for more curated and meaningful connections. Users are seeking digital experiences that align with their online and offline interests. This presents an ideal opportunity for the emergence of billion-dollar consumer companies: vertical social networks.

Vertical-focused platforms have the potential to thrive by allowing users to share content that cannot be posted elsewhere. Even if a certain type of content can be found on other platforms, a vertical social network can excel by providing the best tools and features for that specific content. This is evident in platforms like LinkedIn, Clubhouse, and Quora, which have carved out their niches by offering unique ways for users to enhance their status within their existing networks.

Furthermore, the opportunity to build a following, both personally and professionally, is a strong incentive for users to join new networks. Being part of a network that holds important data related to their profiles and interactions within the community encourages frequent engagement and makes it harder for users to churn. This concept of a "System of Record" plays a crucial role in the success of vertical social networks.

Additionally, the emergence of new devices often expands the amount of time and ways in which we can be "present" on social products. These new devices, along with step changes in functionality, create opportunities for new networks to thrive. For example, AR filters played a significant role in Snap's success, allowing the platform to expand beyond its initial user base of high school students. New devices open up new opportunities for innovative content and user experiences.

The concept of "unbundling" also presents an exciting opportunity for vertical social networks. While platforms like YouTube serve all types of content, there is a significant market for building products with killer features tailored to specific categories. By focusing on a specific vertical, these networks can cater to the unique needs and interests of users within that niche, providing a more tailored and engaging experience.

Now let's shift our focus to an unconventional but effective startup strategy: "Doing Things that Don't Scale." Many successful startups owe their initial growth to unscalable actions taken by their founders. One of the most common unscalable tasks founders have to do is recruit users manually. The founders of nearly all startups have to go out and get users because waiting for users to come to them is not a viable option.

There are two main reasons why founders resist manual user recruitment. Firstly, there is a combination of shyness and laziness that often hinders founders from taking this approach. Secondly, the absolute numbers of users recruited manually may seem insignificant at first. However, founders often underestimate the power of compound growth. Starting with a small number of manually acquired users and gradually transitioning to less manual methods can lead to exponential growth.

It's important to recognize that most startups are initially fragile, contrary to what many inexperienced founders and investors may believe. The key to success lies in not dismissing your startup prematurely. Instead of asking if your company will take over the world, focus on the question of how big it could become if the founders do the right things. Building something to solve your own problems can be an effective strategy as it allows you to find your peers easily.

Creating an insanely great product is not the only requirement for success. It's equally important to focus on delivering an insanely great experience to your users. Even with an early, incomplete, or buggy product, you can provide users with an exceptional experience through attentiveness and responsiveness. Engaging directly with your earliest users and actively seeking their feedback can provide invaluable insights for improving your product and driving growth.

Finding a subset of the market in which you can quickly gain a critical mass of users is a strategy worth considering. By identifying a specific target audience that has a pressing need for your product, you can establish a solid foundation for growth. This initial market can serve as a launching pad for expanding your user base and attracting a wider audience.

While it may be tempting to rely on a big launch or a major partner to acquire users, this approach often falls short. Founders who expect these external factors to drive user acquisition are disregarding the importance of effort and dedication. Launches and partnerships can certainly complement your growth strategy, but they should not be the sole focus. It's the extraordinary effort and commitment put into acquiring users one at a time that truly propels a startup forward.

In conclusion, the next $1B consumer startup is likely to be a vertical social network that caters to users' desire for curated and meaningful connections based on their interests. By offering unique content, enhancing status within existing networks, and leveraging new devices and functionalities, vertical social networks can thrive in today's digital landscape. Combine these opportunities with unscalable strategies such as manual user recruitment and delivering an exceptional user experience, and you have a recipe for success. Remember, it's not just about building a great product; it's about creating an extraordinary experience and putting in the necessary effort to acquire and retain users.

Actionable Advice:

1. Identify a specific vertical or niche that aligns with your interests and offers unique content opportunities. Focus on providing the best tools and features for that specific category.
2. Take the "Do Things that Don't Scale" approach seriously. Be proactive in manually recruiting users and engaging directly with them to gather feedback and improve your product.
3. Prioritize delivering an exceptional user experience, even with an early or incomplete product. Show attentiveness and responsiveness to user needs and feedback to create a loyal user base.

Remember, success in the startup world is not just about scalability and big launches. It's about understanding your users, offering something of value, and putting in the necessary effort to drive growth.