👇 Heartcore Consumer Insights
Edition #86
Hi there,
Welcome to the 86th edition of Heartcore Consumer Insights. Curated with 🖤 every two weeks by the Heartcore Team.
If you missed the past newsletters, you can catch up here. Now, let’s dive in!
Customer acquisition cost and business quality - Nayut Sitachitt (Manager @ESA Global Value Fund)
One can understand the quality of a business by looking at where it spends money to acquire customers.
High-quality business' CAC has large non-marketing spend that builds true differentiation in conjunction with some ads/marketing spend. Amazon builds out logistics infrastructure ahead of demand. Costco builds goodwill among consumers by offering low prices on its high-quality selections through its membership.
All these are very expensive CAC investments. Yet, much of the CAC spend directly benefits the consumers instead of media/ad platforms. Because of that, consumers tend to feel that the product offered has a higher perceived value which, in turn, improves loyalty and increases LTV. The above CAC spend creates moats that other companies can't easily replicate.
Low-quality businesses spend their CAC mostly on ads instead of something that creates differentiation. Due to the lack of true differentiation, churn is higher, and LTV is generally weaker. Bad businesses can do very well for some time, but for many, their future depends on finding new customers at a faster rate than losing the current one. For example, Wish has abysmal retention rates, but they had a very good ad team that continued to find new customers for a long time.
Bezos once said, “advertising is the price you pay for having an unremarkable product or service.” This take might be slightly too partial but interesting to reflect on. Ad and marketing spend is a highly effective tool to bring added demand. Yet, good businesses resist spending heavily on ads and instead redirect the spending to things that create true differentiation points.
The Strategies to Grow an Infrequent Product - Vivek Kumar (VP Product at PropertyGuru Previously led products at TurboTax, PayPal, and Amazon)
Zoom may be part of our daily lives while TurboTax appears once a year. The downside of an infrequent product is that its value proposition begins to fade from a customer’s memory when there is a long hiatus between successive use of the product. Infrequent products are taxing to manage. The challenges posed by them range from lack of control over experience to retention of customers and commoditized offerings.
How can a company move its offering from high infrequency to low infrequency?
Strategy 1: move the product toward “timing known + easy to influence”: predicting when someone will switch their job or buy a property is extremely difficult. While LinkedIn is a job aggregator, it evolved from being a job app to a user-generated content platform. Establishing itself as the latter increases the frequency with which the users transact within a given timeframe (daily/weekly) by creating their own content.
Strategy 2: add adjacent use cases: most customers purchase a property once or twice in their lifetime. Therefore, their interaction frequency with property aggregators such as Zillow could potentially be very low. Zillow’s Zestimate (an automated valuation model that estimates the value of a property and notifies users of their property’s value on a regular basis) is a smart move in the direction of increasing frequency and recall.
Strategy 3: layer a habit product: If the current product is infrequent, search for frequent products to layer on. Consider airlines' marriage with credit card companies. Airline travel may be infrequent, but air miles are not. In this case, airlines earn the following benefits: (a) increased brand recall, (b) increased switching cost - since earning miles through a credit card makes a customer increasingly loyal to an airline when traveling.
How Your Brand Should Use NFTs
U.S. Consumer Confidence Slips
How StockX won over sneakerheads
Why building on the backs of another Consumer platform can be dangerous
Just starting out with TikTok ads? Try these strategies
A product manager’s guide to web3
Why influential creators matter more now than ever before
Upcoming trends in DeFi
How to develop a marketing message
🇪🇺 Notable European early-stage Consumer rounds
Presail, a Norway-based management platform for community-driven funding, raises $1.6M with Kraken/Skyfall/GFC - link
Bonnet, a UK-based subscription startup for all EV charging networks, raises $5.5M with Lightspeed - link
Finary, a France-based fintech that enables investors to track their investments automatically and instantly, raises $9M with Kima/Speedinvest - link
DeadHappy, a UK-based insurtech that provides pay-as-you-go life insurance services, raises $15M with Headline/Octopus - link
Shares, a France-based social investment platform that gives everyone access to the stock market, raises $40M with Singular/Valar - link
Zenjob, a Germany-based staffing marketplace that matches workers with temporary side jobs, raises $50M with Atlantic Labs/AXA - link
🇺🇸 Notable US early-stage Consumer rounds
Fast Break Labs, a US-based startup developing a blockchain-based fantasy basketball game, raises $6M with Pantera/Patron - link
Space Runners, a US-based company with the vision to unlock the "apparel" category in the NFT world, raises $10M with Accel/Pantera/Polychain - link
Daybreak Health, a US-based mental health solution designed for youth, raises $10M with Lightspeed - link
Rupa Health, a US-based telehealth solution focussed on “root cause medicine”, raises $20M with Bessemer - link
Backbone, a US-based startup developing an iPhone gaming controller, raises $40M with Index - link
Found, a US-based fintech that provides business banking services for self-employed people, raises $60M with Sequoia - link
🔭 Notable later stage Consumer rounds
Kin Insurance, a US-based insurtech that offers personalized home insurance solutions, raises $82M with August Capital/QED - link
Wildtype, a US-based company that develops cultured salmon from cells, raises $100M with L Catterton/Temasek/Spark - link
Thatgamecompany, a US-based video game studio developing emotional game worlds, raises $160M with Sequoia/TPG - link
Acorns, a US-based savings and investing app, raises $300M with BlackRock/Bain/Headline - link
Veev, a US-based prefab home builder, raises $400M with Fifth Wall/Zeev/Bond - link
Weee!, a US-based online grocery delivery platform that offers Hispanic and Asian foods, raises $425M with SoftBank - link
🍭 Notable Consumer Exits
Public.com acquires Otis for an undisclosed amount. Otis is a US-based marketplace that lets anyone invest in exclusive alternative assets - link
Ro acquires Dadi for $100M. Dadi is a US-based company that offers sperm storage, male fertility reports, and at-home collection kit - link
Heartcore Consumer Insights is a weekly newsletter covering notable consumer rounds and exits and top content in the B2C space.
