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!
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.
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
🇪🇺 Notable European early-stage Consumer rounds :
🇺🇸 Notable US early-stage Consumer rounds :
🔭 Notable later stage Consumer rounds :
🍭 Notable Consumer Exits
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.
Heartcore Consumer Insights is a weekly newsletter covering notable consumer rounds and exits and top content in the B2C space.