Hi there,
Welcome to the 74th 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!
The Hype Subsidy – Why Early Hype is Dangerous in Consumer Social - Sarah Tavel (Benchmark)
In marketplaces with a working network effect (Uber, Airbnb), the value to the participants in the marketplace increases as the network grows.
The first step is to get the flywheel spinning. A common technique founders use to do so is to subsidize the transaction.
When applied well, the subsidy lets a marketplace kickstart transactions and grow faster than it otherwise would.
In Consumer Social, hype (the aura that something is more inevitable than it actually is) functions similarly to an economic subsidy in a marketplace. In the reality distortion field of hype, consumers lean in and invest in a platform with their time and engagement ahead of when they otherwise might have (similar to Uber subsidizing rides and "artificially" engineering demand).
Yet, unlike economic subsidies, the hype subsidy is not in your control, and this comes with three critical risks:
Hype applied too early in a network’s evolution can doom it because it makes it extraordinarily difficult in the beginning to know how consumers will engage once the hype subsidy is removed. You risk optimizing for the wrong things.
When a flood of new users sign-up for a product, all the cracks become obvious. The expected experience drops below the actual experience. The people who got pulled forward by hype leave. It’s possible to build the network back up, but it’s a lot harder and can be very dangerous.
Hype catalyzes incumbents to react to you vs be surprised by you. Would Twitter have moved as quickly and aggressively with Spaces were it not for the perceived threat of Clubhouse?
Like subsidies, hype can be an effective weapon. If your product is ready for it and your flywheel is spinning, it can turbocharge that flywheel.
If on the other hand, you are newly launched or creating a new format that still requires constant tweaking, it can be lethal.
Infinity Revenue, Infinity Possibilities - Axie Infinity - Packy McCormick (NotBoring)
Axie Infinity is a Pokémon-like game built on Ethereum in which people buy digital pets, called Axies, as NFTs, and breed, battle, and trade them. It’s cute. It’s unassuming. This is what it looks like:
Axie’s cuteness obfuscates an absurdly fast-growing business. In April, Axie did about $670k in revenue. In May, it did $3M. In June, $12.2M. In July, it’s doing $153M.
But while those numbers are mouth-watering, they’re actually not the fastest ever in gaming. The rare gaming mega-hit gets really big, really fast. Many fade away just as quickly.
Axie is doing that kind of growth as a game built on the blockchain while pioneering a new model at the intersection of work and play: Play-to-Earn.
Most Free-to-Play games (PokemonGo, Fortnite, Roblox) give players the full game for free and make money by selling virtual in-game items like skins.
Axie operates a new model. Rather than selling game items, they focus on growing the player-to-player economy and take small fees to monetize. Axies are created by players using in-game resources (SLP & AXS) and sold to new/other players.
Game resources and items are tokenized, meaning they can be sold to anyone, anywhere on open peer-to-peer markets.
Scores of people in the Philippines and Vietnam have quit their jobs and make a better living playing Axie for hours every day. Some people who were previously making $5 per day now make >$20.
Customers as Owners
Fundamentals of CMO innovation
Consumer behavior that will become normal over the next 3-5 years
NFT market numbers
Facebook will pay $1 billion to creators through 2022
Nextdoor Investor Presentation
Fintech/Digital wallets valuations
Amazon & the last-mile challenge
Ultrafast Delivery: The $28B Market to Build the On-Demand Bodega
Glossier backstory
🇪🇺 Notable European early-stage Consumer rounds :
Oliva, a Spain-based on-demand professional-led mental healthcare for employees, raises $2.2M with Moonfire - link
Scapin’, a Sweden-based virtual space platform, raises $3.5M with Creandum & Heartcore 🖤 - link
Her1, a Berlin-based female wellness startup, raises €5.5M with Five Seasons/Rheingau/IBB - link
Sproutl, a UK-based marketplace of gardening products and plants, raises £6.5M with Index/Ada Ventures - link
Roadsurfer, a Germany-based camper rental company, raises €28M with HV & Heartcore 🖤 - link
🇺🇸 Notable US early-stage Consumer rounds :
Breakr, an Austin-based start-up that connects up and coming musicians with social media influencers, raises $4.2M with Slow - link
Queenly, an S.F-based marketplace for women’s formalwear, raises $6.3M with a16z - link
Spinn, an L.A-based hardware-enabled coffee marketplace, raises $20M with Spark/Amazon/Bar 9 - link
Virtually Human Studio, makers of a virtual horse racing platform, raises $20M with TCG/a16z - link
Block Renovation, an N.Y.C-based platform that simplifies home renovations, raises $40M with Giant Ventures/NEA - link
Little Spoon, an N.Y.C-based children's meal subscription service, raises $44M with Valor Equity Partners/Kairos - link
🔭 Notable later stage Consumer rounds :
Titan, an N.Y.C-based active investment management platform for retail investors, raises $58M with a16z - link
Quit Genius, an N.Y.C-based digital clinic for nicotine, alcohol, and opioid addictions, raises $64M with Atomico/Kinnevik - link
Pangaea Holdings, an L.A-based e-commerce company focused on men’s personal care, raises $68M with Eurazeo/Unilever - link
Nobell Foods, an N.Y.C-based maker of plant-based cheeses, raises $75M with a16z/Breakthrough Energy - link
Embark Veterinary, a Boston-based dog genetics company, raises $75M with SoftBank/F-Prime - link
Sundae, an S.F-based real estate marketplace focused on distressed properties, raises $80M with Fifth Wall/General Global Capital - link
Ethos, an S.F-based life insurance platform, raises $100M with SoftBank - link
OpenSea, an S.F-based NFT marketplace, raises $100M with a16z/Coatue - link
JOKR, an N.Y.C-based grocery delivery company, raises $170M with GGV/Balderton/Tiger - link
Tilting Point, an N.Y.C-based free-to-play game publisher, raises $235M with General Atlantic - link
Nature's Fynd, a Chicago-based vegan protein startup, raises $350M with SoftBank/Blackstone - link
Carbon Health, an S.F-based leading healthcare provider, raises $350M with Blackstone - link
🍭 Notable Consumer Exits
Rent The Runway files for IPO. Rent the Runway is an N.Y.C-based clothing rental company - link
Kin goes public via SPAC. Kin is a direct-to-consumer home insurance company - link
Byju acquires Epic for $500M. Epic is an educational digital reading platform for kids in schools - link
🖤 Heartcore
We’re super happy to welcome Scapin’ to the Heartcore family. Founded by Kry co-founder and ex-CTO Joachim Hedenius and ex-iZettle CPO Leo Nilsson, Scapin lies at the intersection of social, gaming, and digital assets, providing a virtual social platform.
Do you want to know how lab-grown foie gras tastes like? Our portfolio company Gourmey had its very first press tasting event, with Bloomberg! Take a look here!
Heartcore Consumer Insights is a weekly newsletter covering notable consumer rounds and exits and top content in the B2C space.
