Consumer Apps Physics 101

(2023.12)

Biggest and Fastest Scale

• 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.
• Consumer apps are the most artistic corner of the tech world. Like movies and music, the subtle details matter. Consumer social app is kind of the ultimate creative pursuit, at least in tech.

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.

Craft

• Consumer 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.
• 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 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.

“Social Liquidity”

Strong liquidity quality — word of mouth growth from passionate users who consistently came back to the product fed a flywheel that “simultaneously better served the individual desires of the customer and also contributed to higher inventory turns, fewer write-downs, higher capital efficiency and higher ROIC.” - Bill Gurley (Benchmark)