Welcome to the 81st 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!
Viral growth is the ability for a product to tap into its network of users to bring in even more users.
In its simplest retelling, the viral factor is a single metric of how well the existing network of users in your product ends up inviting the next batch of users. A viral factor of 0.5 will get you to 2000 active users starting from 1000.
Viral factor can nudge you towards spammy thinking though. With enough work optimizing email invite subject lines, deliverability, and the various signup flows, the viral factor can be increased but can cause a lot of consumer fatigue. Consumers are now used to these tricks and have learned to skip prompts and ignore email invites.
Aggressive viral loops aren’t in fact the right way to think about viral growth.
Interesting underexploited aspects of viral growth:
Viral factor isn’t a single, static number. In reality, people can share and invite in sessions over time. So 100 users can invite 10 friends in the first week, then another 10 in the next, and so on. The more sessions you have with a user - meaning, higher engagement, and retention - the more you can build up the viral factor over time. The better the retention, the more “shots on goal” you get to ask the user to take the viral action
Sharing > invites. The advantage of a simple viral mechanism like invites is that you can generally apply it to every product. On the other hand, the problem is that consumers are tired of this mechanic. Same with “Give $10, get $10” which was novel 5 years ago, but no longer fresh. And less fresh means lower response rates. Instead, the best viral features are “native” to the product. Dropbox’s folder sharing functionality is both a really useful feature, completely consistent with the goal of the product, and also generates millions of organic, virally acquired customers for free. Same with Instagram, whose early content sharing features helped it grow without paid marketing.
The core lesson of all of this is that - for better or worse - you can’t force viral growth to happen. Virality is still a powerful force, but it has to happen through retention and natural sharing flows, not forced invites. The underlying math of viral factors is still relevant but needs to be adjusted to think of the metric as an ongoing number that builds up over time.
Building a community is incredibly hard! You can’t just drop your audience into a digital space and expect a healthy community to form.
How can you build an engaged and valuable community? Here are five keys:
Start with “why": people might be customers of your company, but do they really need a place to connect? Slack and Discord spaces are the new apps - there are only so many that any person can use at a time. The bar for joining a new one gets higher every day. How do you know if your audience needs a community? The best signal is when they start hacking it together without you.
Focus on quality, not quantity: many community leaders measure success by # of members. The most valuable communities are often curated groups of people who are engaged. A huge community with no activity isn’t fun for anyone and will lead to high churn. Find a way to suss out who will be a positive contributor to the community - and who just wants to promote their content.
Invest in onboarding: joining a community can be overwhelming. When you have meaningful conversations and see the value of the community on day one, you’re much more likely to return. Onboarding is also a valuable tool in preventing spammy behavior.
Get your members to buy in: if you spend your time or money on something, you must think it’s valuable - and you’re more likely to continue devoting resources to it in the future. This creates an escalating cycle of commitment. The best way to kick this off? Get your members to make an investment in your community, even if it’s small. A paywall or ownership tokens are one way to do this.
Find new ways to add value: the best communities find a way to transcend the platforms they’re built on. To engage and retain members, you need to both (1) add value on a daily basis, and (2) create “magical” moments that illustrate the value of the community and create an emotional connection. For most communities, this means going beyond Slack and Discord.
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🇪🇺 Notable European early-stage Consumer rounds :
🇺🇸 Notable US early-stage Consumer rounds :
🔭 Notable later stage Consumer rounds :
🍭 Notable Consumer Exits
Congratulations to our portfolio company Kaia Health for announcing an industry-first partnership with Luna to further extend access to high-quality care for MSK patients by delivering physical therapy to a patient’s doorstep.
Heartcore Consumer Insights is a weekly newsletter covering notable consumer rounds and exits and top content in the B2C space.