Welcome to the 63rd 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!
As Coinbase went public last week via a direct listing on the Nasdaq, the company has taken pains to present a professional, buttoned-up image.
Indeed, its cautious approach to things like security and regulation is a big reason Coinbase has become the household name among crypto companies - but this image is also a far cry from Coinbase's early days when its mantra was to "run through brick walls."
Here are a few of the stories from the company's freewheeling early days:
Coinbase tricked Apple - and got kicked out of the App Store: in 2013, many regarded Bitcoin as too risky to touch. This included Apple, which refused to approve apps that allowed cryptocurrency trading. To get around this, Coinbase blocked users from accessing the app's trading feature, but only in a very specific geographic area: Apple's hometown of Cupertino. This meant that, as far as Apple's staff could see, Coinbase allowed no trading even as the rest of the country could buy and sell Bitcoin.
Coinbase got hacked early on: many people boast that Coinbase has never been hacked. But this isn't true. In 2013, hackers broke into one of its online wallets and started siphoning out Bitcoin. It later turned out that the hackers had compromised one of Coinbase's vendors, leading the company to launch an audit and introduce new security measures.
Coinbase's own bank cut it off: every startup needs a bank and, in the case of tech startups, they often turn to Silicon Valley Bank (SVB), which is willing to take on companies with unusual business models. That was the case with Coinbase as SVB gave it an account when no other bank would. But in 2014, a right-wing publication reported that countries could use Bitcoin to evade sanctions, leading SVB to give Coinbase six months to find another bank. The situation was a near calamity but Coinbase was able to find another bank in the nick of time.
CEO Brian Armstrong cut out Coinbase's original cofounder: according to Coinbase lore, the company was co-founded by Brian Armstrong and Fred Ehrsam. In truth, Armstrong had an earlier co-founder - a coder in the U.K. named Ben Reeves, who was supposed to join him to attend YC. But Armstrong locked Reeves out of Coinbase's accounts just days before the start of YC, telling him "Cofounding is like a marriage ... we don't work extremely well together."
Coinbase nearly cut 40% of its staff amid crypto winter: "Crypto winter" refers to any past (or future) sharp downturns in the crypto economy. One earlier winter, from late 2013 to early 2015, saw Bitcoin's price get pummeled by 80% and Coinbase's transaction base fall off a cliff. This led Armstrong and Ehrsam to come within a hair of executing an emergency plan to lay off 40% of the company's staff in late 2014 in order to preserve a two-year financial "runway" the company has always made a core part of its operations.
The metrics typically advertised by consumer startups are total users, daily active users (DAU), and monthly active users (MAU).
While these numbers might be good to share with the press, they are only vanity metrics because they don’t give any real insight into your growth rate or the quality of the users you’re bringing in.
Here are 3 metrics you should really be paying attention to if you’re trying to drive sustainable user growth:
1. Core Daily Actives: the problem with the DAU metric is the lack of concept of quality users. You will often see DAUs jump from a user acquisition campaign, but it is impossible to tell from the metric if those users are immediately dropping off or if they are sticking around. Core Daily Actives rises above this by only counting users that have been using your service on a regular basis. To get this metric, you calculate the number of users that used your service today who also used your service 5 or more times in the past 4 weeks. This metric is much more useful than DAUs because it focuses on the bottom line: growth of repeat users.
2. Cohort Activity Heatmap: this one shows how your user retention curve has changed over time. It can be a bit complex to read because so much data is crammed into a single graph, but it is very powerful once you know how to use it. This is how you interpret the graph: (a) the unit of the x-axis is days and each column corresponds to the group of users that joined on day X, (b) the width of a column on the x-axis represents the size of the cohort (the wider, the more users joined on that day), (c) the unit of the y-axis is also days and each row represents Y days after the cohort joined the service, (d) the color of each rectangle represents activity level (scale ranges from red for a high percentage to blue for a low percentage).
Conversion Funnel: a conversion funnel is simply splitting up a process into its constituent steps and tracking how many users make it through each step. This metric is widely used, but it is common to analyze the conversion funnel for a flow once or very infrequently. Really, the conversion funnel for important flows should be tracked on a daily basis for adverse changes because even a difference of a few percentage points can compound over time. This is an example of the conversion funnel for inviting users to a service. (a) how many users saw the invite prompt? (b) what percent of users clicked on the invite prompt? (c) how many invites were sent per user that clicked on the prompt? (d) what percent of invites were viewed? (e) what percent of invitees clicked on the link in the invite? (f) what percent of invitees that clicked on the link, joined the service? (g) how many new users joined the service as a result of the invite?
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🇪🇺 Notable European early-stage Consumer rounds :
Yhangry, a UK-based start-up providing a private chef platform where users can book a professional chef to come to cook for them at home, raises $1.5M with angels including Eileen Burbidge/Carmen Rico/Martin Mignot - link
🇺🇸 Notable US early-stage Consumer rounds :
🔭 Notable later stage Consumer rounds :
🍭 Notable Consumer Exits
Coinbase goes public via a direct listing. Coinbase is an S.F-based online platform that allows merchants, consumers, and traders to transact digital currency with backers including a16z/Initialized/Tiger/IVP – link
Heartcore Consumer Insights is a weekly newsletter, covering notable consumer rounds and exits, as well as top content in the B2C space.