Welcome to the 76th 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!
It was March 2012. Brian Armstrong posted a self-described “hail mary” on the tech discussion forum Hacker News. YC was interested in his startup, but he didn’t want to go at it alone.
Armstrong’s last-minute gambit actually failed. He did go through YC - but as a solo founder. Armstrong didn’t find his co-founder Fred Ehrsam until months after graduating and closing a seed round. He did end up meeting Fred on a message board, but it wasn't Hacker News - it was on Reddit!
When YC Demo Day rolled around, Coinbase had several thousand users and had processed $65K in transactions in the first five weeks. The company's user base was growing at an impressive 20% daily.
How did Armstrong do it? Three lessons from Coinbase's debut 👇
1) Read the room - and ride the wave. Spring 2012 was a fortuitous time for a new crypto platform. The second-largest exchange, Trade Hill, announced in February that it was shutting down. Other major exchanges had all experienced serious thefts. Coinbase, in comparison, had immediate credibility - the company was helmed by a former fraud prevention exec from Airbnb and backed by YC. Armstrong got the product out quickly - barely 3 months passed between his Hacker News post and the launch. The product was raw but this fast launch allowed Coinbase to capitalize on the flood of users leaving other platforms.
2) Focus on finding “your people": instead of launching with a TechCrunch feature or a tweetstorm, Armstrong posted announcements on Tumblr, Hacker News, and Reddit - places where his target customer spent a lot of time! Reddit was a particularly important acquisition source, as the early crypto community congregated here. In a post on r/Bitcoin, Armstrong offered 0.10 BTC to users who emailed in feedback on the site. The team also recruited early users by going directly to their inboxes with an offer they couldn’t refuse.
3) Get your users to do your marketing for you. How did Coinbase grow from its first hundred users to the first thousand? Coinbase’s first few cohorts received a referral link to give friends 0.10 BTC for signing up. For each friend that verified an account, the referrer also received 0.10 BTC. While small, it encouraged Bitcoin enthusiasts to get the word out about Coinbase. Claiming this BTC required that a user add their phone number, email address, and set up a Coinbase profile. Once they saw how easy Coinbase was to use, it was unlikely that they would immediately churn and send their Bitcoin elsewhere, particularly if that required setting up yet another profile.
The result? By the time YC Demo Day rolled around, Coinbase was already well on its way. Paul Graham’s reaction to Brian's summer 2012 practice pitch says it all: "Holy shit, is this the first time I've seen your presentation? That was really good."
Historically, the more commoditized a product was the more you could count on customers to behave rationally.
Consumers are increasingly making buying decisions and favoring certain companies on dimensions other than functionality and price.
“Beyond The Rational” thinking has always existed, but what’s worth internalizing is that its prominence is growing rapidly.
They’re not making bad decisions. They’re making decisions based on higher-order needs.
Higher-Order Need #1: Values. Values are increasingly becoming part of people’s public identities rather than hidden at the family or community level. And consumers are increasingly using their buying power to express their views. If a company’s values don’t align with the values of a consumer, it’s becoming increasingly common for the consumer to take their money elsewhere.
Higher-Order Need #2: Community. It’s a truism that human beings are social animals. We instinctually want to belong to a community and find like-minded people to interact with. The vast majority of companies haven’t been able to create a sense of community for their customers. But some have and they’ve become powerful, almost unstoppable forces. Apple, Peloton, Robinhood are all examples. “How do you know someone has a Peloton? Easy…they’ll tell you.”
Higher-Order Need #3: Exclusivity and Status. We live in a big world that makes it easy for people to feel like interchangeable parts in life’s machine. So it shouldn’t come as a surprise that human beings have a deep psychological need to feel special. Some of today’s best companies focus on exclusivity and status. It’s not a surprise that NFTs and crypto punks have taken off. Social media has amplified the desire for exclusivity and status because it allows consumers to share within their friend groups and communities.
The sad truth is that most companies are doomed to live in the past and aren’t going to make the transition into this new world. The companies of tomorrow are going to increasingly win if they can design their products to cater to “beyond the rational” decision-makers.
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Telehealth: A quarter-trillion-dollar post-COVID-19 reality?
Unlocking “Disruptive Power” For Your Marketplace
“Fantasy Hollywood” - Crypto and Community-Owned Characters
Why the next big consumer platforms are social games
"Us VS. Them" marketing tactics for CPG
🇪🇺 Notable European early-stage Consumer rounds :
🇺🇸 Notable US early-stage Consumer rounds :
🔭 Notable later stage Consumer rounds :
Heartcore Consumer Insights is a weekly newsletter covering notable consumer rounds and exits and top content in the B2C space.