Welcome to the 71st 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!
When learning to ride a motorcycle, you’re taught that where your eyes go, your bike goes. Look to your right and you’ll drift right. Look left, go left. There’s a lot of power in where you focus your attention.
That’s why nailing your North Star Metric (NSM) - the top-line metrics that all company priorities are aligned around - is so crucial.
The #1 question to start defining your NSM: which metric, if it were to increase today, would most accelerate my business flywheel?
Marketplaces and platforms: most common NSM: Consumption growth. Marketplaces and platforms make money from usage - the more consumption they drive (nights booked, rides taken, and orders placed) within their platforms, the faster they grow.
Paid-growth-driven businesses. NSM: Growth efficiency. Businesses like Blue Apron, Casper, and Hims all fixate on optimizing margins because they ship a physical product with many layers of costs. Meanwhile, companies that are purely digital and invest most of their budget into performance marketing, like Calm, tend to zero in on LTV/CAC.
UGC subscription-based products. NSM: Consumption. For products that are driven by content creation, like Twitch, it can be more effective to optimize consumption - say, five-minute plays. This is because the sharing and consumption of content are at the heart of their growth flywheel.
Ad-driven businesses. NSM: Engagement. Companies that monetize through web traffic such as Facebook, Pinterest, and Snap focus on engagement.
Consumer subscription products. NSM: Engagement or customer growth. Duolingo and Strava both focus on engagement because they have a large free-user base that eventually migrates to paid; thus, the more engaged their free users are, the more they know they’ll add paid customers. Alternatively, companies like Tinder and Spotify zero in on customer growth over engagement.
To nail your output metrics, calibrate the input metrics: once you have your NSM (an output), your next step is to break this metric down into its component parts and decide which metrics (the inputs) to invest in. Airbnb's NSM was “nights booked”. They thus listed out the input metrics that feed into this higher-level metric. If you increase the guest conversion rate, add more Airbnb homes, or boost the number of visitors to the site, you’ll increase the number of nights booked. With such granular and actionable input metrics, you can actually come up with concrete ideas and align teams around them as goals (e.g. “Add 10,000 new homes to the platform in Q1”). At the same time, the entire company still has a higher-level North Star, which each of these team efforts funnel into.
What one piece of advice would you give to a marketplace startup founder today?
Long-term thinking with near-term milestones. "Our most successful initiatives have all included a long-term roadmap with clear targets and objectives that we broke down into quarterly milestones that were measurable. This has allowed teams to have a strong north star that feels slightly out of reach, but also stay laser-focused on the near term targets." - Modsy CEO
Pay attention to how your customers are using your product in unexpected ways. "Facebook Marketplace was developed after noticing people using Facebook Groups to organize sales. Parents looking to both sell and purchase kids’ items were particularly active in these forums, and we thought we could make community commerce an easier experience." - VP Engineering, Facebook Marketplace
Small changes can have a big impact on a marketplace ecosystem. "Marketplaces are sensitive to changes in pricing, supply/demand balance, curation, etc. For every new feature you introduce, come up with 5 to 10 surprising downstream effects that might result, and put monitoring in place for those things." - Tradesy CEO
What’s an underrated trend in the current marketplace ecosystem?
Expert advice and curation. "I think the original marketplace model has valued “more is more” and left the consumer to wade through massive assortment and selection to determine what is good and what is garbage. Consumers want to turn to a marketplace where they can rely on the quality of the suppliers or products and where the marketplace itself adds a layer of curation." - Modsy CEO
Using data to drive personalized recommendations and conversions. "This model creates for a much better user experience and sustainable revenue backbone, compared to older marketplace businesses that charge for ad space based on eyeballs, but not action. This type of marketplace takes longer to build and perfect, but it also means deeper customer connections, better content, and ultimately a more valuable business." - Zola CEO
Consumers are tuned in to the dynamics of social justice and economics than ever before. "Voting with your wallet isn’t a new concept, but conscious consumerism has entered a new phase." - Eaze CEO
Shopping via live video is a compelling shopping format that’s been popular in Asia, but it’s still underdeveloped in Western markets. - VP Engineering, Facebook Marketplace
Money Without Borders: A Peek Inside Wise
Clothes That Don't Exist Are Worth Big Money in the Metaverse
Europe’s tech ecosystem growth trends report - GP Bullhound
796+ open-sourced growth tactics
Spotify’s launches Clubhouse competitor Greenroom
Dave's SPAC teardown
Decentralized Finance: What It Is, Why It Matters
McDonald's new marketing strategy
A Peak inside how YouTube tackled the 2008 to 2014 hypergrowth years
🇪🇺 Notable European early-stage Consumer rounds :
🇺🇸 Notable US early-stage Consumer rounds :
🔭 Notable later stage Consumer rounds :
🍭 Notable Consumer Exits
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Heartcore Consumer Insights is a weekly newsletter covering notable consumer rounds and exits and top content in the B2C space.