Welcome to the 82nd edition of Heartcore Consumer Insights. Curated with 🖤 every week by the Heartcore Team.
If you missed the past newsletters, you can catch up here. Now, let’s dive in!
In early 2018, while at YC, the OpenSea co-founders decided to pivot and go all-in on building “a marketplace for the metaverse”. Given the paucity of NFTs created at that time, that didn’t look like a particularly exciting proposition. But the pair valued the novelty: "When you’re starting a project you’re looking for something that hasn't been done before. This hadn’t been done before."
At almost the exact same time as they made their pivot, another team had decided to build a solution in the space. And in many respects, they seemed like the better bet. Composed of four ex-Zynga employees, Rare Bits seemed to have the talent to capitalize on this new space. On the same day in February 2018, OpenSea and Rare Bits launched on Product Hunt:
Richard Chen summarized the consensus at the time: "Rare Bits was a much more polished team on paper – they were ex-Zynga and raised a lot more money than OpenSea from traditional VCs. However, the OpenSea team was more lean and scrappy. Devin and Alex did a great job living in Discords to discover new NFT projects and out hustled Rare Bits." By 2019, Rare Bits had seemingly closed shop.
When questioned about the platform’s grand vision, Finzer (CEO) demurs, stating that the focus is to “try to improve the core marketplace.” He is almost pathological in his humility. He is also extremely focused. One former employee referred to him as “one of the most focused founders in the entire crypto space."
Since its founding in 2017, the NFT marketplace has grown to become the undisputed leader in the space with a share that exceeds 97%, and volume 12x that of its closest rival. OpenSea alone is on track to surpass $20 billion in volume for 2021. In the blink of an eye, NFTs have matured from a nettlesome triviality to a strolling behemoth.
Whatever one’s position is on the space, these numbers illustrate that NFTs are far more than a trifling interest and that OpenSea is more than just a peddler of esoterica.
"In mid-2012, I entered the branch of one of Brazil’s largest banks to open my first bank account. As I approached the first bulletproof door that was flanked by armed security guards, I sensed this was not going to be easy. During the following four months, I spent long hours in queues, calling the call center, and returning to the bank branch with an increasing number of documents, until finally a bank account that would charge hundreds of reais per year in fees was approved in my name. As I tried to reconcile this experience with the immense profitability of Brazilian banks and the low penetration of banking in the country, I realized that this was possibly the entrepreneurship challenge I had been looking for…"
Nubank’s founding story shares many similarities with Tinkoff in Russia. Neither founder had a background in either banking or tech. And they each confronted a wall of skepticism when they laid out their plans. Vélez mentions: “I spent a lot of time talking to the experts, to the CEOs, to the consultants. The overall sense – their conclusion – was that it was impossible.”
Nu proved it wasn’t impossible, filing its prospectus ahead of a listing on the NYSE.
Vélez is a big proponent of the customer view. “There are a number of different things that we’re doing differently. But I would say the number one is having a culture that is obsessed with customers and doing the right thing for the customers, from doing the right decisions to giving the right customer service, to building products that are really actually good for them. I would say that's number one.”
Nu’s first product was a credit card in 2014. The company had raised $15M from Sequoia and Kaszek but was loath to spend it on marketing. Rather, a powerful customer referral program was built and helped keep customer acquisition costs very low. The company claims to have acquired 80-90% of its customers organically. In the first nine months of 2021, CACs were $5 per customer.
Nu works hard to make sure customers do stick around. In the first nine months of this year, it lost a (very low) average of 0.06% of its customers per month. In addition, it estimates that around half of those active customers who have been with the bank for more than a year use Nu as their primary bank.
Bringing it all together, Nu estimates that the value of a customer is equivalent to over 30x their acquisition cost. On the basis of the current customer acquisition cost, that makes each customer worth around $150 to Nu.
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🇪🇺 Notable European early-stage Consumer rounds :
🇺🇸 Notable US early-stage Consumer rounds :
🔭 Notable later stage Consumer rounds :
🍭 Notable Consumer Exits
Heartcore Consumer Insights is a weekly newsletter covering notable consumer rounds and exits and top content in the B2C space.