Conference Presentation, Keynote
What's Next in Consumer Startups?
- Core Thesis: Successful consumer startups emerge at the intersection of three elements: a new technology hitting scale, a pre-existing fundamental human motivation, and a specific "growth insight" that solves the cold-start problem.
- Adoption Velocity Trends:
- Historical technology adoption (e.g., the telephone) took five decades to reach US household penetration because it required teaching new consumer behaviors from scratch.
- Modern technologies (mobile phones, TV, internet, Instagram, YouTube) adopt exponentially faster as they build upon established infrastructure and consumer habits.
- Biological consumer motivations remain constant (art, entertainment, social connection, travel), even as the technologies delivering them evolve.
- Historical Precedents for Growth Insights:
- Michelin Guide (1900s): Solved the "chicken-and-egg" problem of tire sales by creating content (a guide to restaurants and destinations) to incentivize driving, effectively pioneering content marketing.
- Chain Letters (1800s): The US Postal Service leveraged viral user acquisition through chain letters, where users were incentivized to invite friends via monetary rewards, driving massive volume before the practice was banned.
- Coupon Invention: Consumer Packaged Goods (CPG) companies used coupons to stimulate consumer demand, thereby convincing grocery stores to stock products and solving the marketplace cold-start problem.
- Modern Analogy: Instacart solved the cold-start problem by initially aggregating demand via direct purchases before formalizing partnerships with grocers.
- Emerging Growth Categories:
- Video-Native Products:
- Scale Evidence: "Despacito" reached 3 billion views in under a year, compared to "Gangnam Style's" five-year trajectory; esports events (e.g., League of Legends) draw over 100 million concurrent viewers, exceeding major traditional sports like Wimbledon.
- Strategy: Products that automatically generate shareable video content (e.g., short-form video apps) leverage organic viral growth rather than paid user acquisition.
- Specific Case: Sandbox VR utilizes location-based experiences where users generate and share video clips of their sessions, driving organic acquisition through social sharing.
- Offline-to-Online (O2O):
- Drivers: Widespread adoption of mapping APIs, GPS, and augmented reality enables physical experiences to trigger digital app engagement.
- Specific Cases:
- Pokémon GO: Uses physical exploration and large-scale real-world events to drive app downloads and engagement.
- Ride-Sharing (Uber/Lyft): Utilizes the high-visibility nature of cars and rides to create social proof and word-of-mouth marketing.
- Lime: Uses the visual appeal of physical shared mobility assets to spark immediate consumer curiosity and trial.
- Video-Native Products:
- High-Potential Platforms:
- Voice Assistants: Google Home and Amazon Echo, with tens of millions of units sold, present opportunities for voice-first apps.
- Smart TVs & Wearables: Represent fusion points of entertainment and computing, with billions of potential active users.
- Gaming & Virtual Worlds: The Nintendo Switch, Minecraft, and Roblox combine social networking with content creation at massive scale.
- Automotive: A shift is occurring from driving-centric interfaces to in-car entertainment and productivity environments.
- Enterprise Tools: Google Suite offers new platform opportunities via access to calendar and email data for small businesses.
- Investment Criteria: Andrew Chen is specifically targeting startups that identify a "slingshot" growth mechanism to bypass initial adoption hurdles, utilizing these new platforms to tap into timeless human desires.