Author: Li Jin, co-founder of Variant Fund, compiled by: Golden Finance xiaozou
The rise of large social platforms such as Facebook, Instagram and TikTok has caused new entrants to compete directly with them It's getting more and more difficult.
According to the network effect theory, any innovation that a startup can create can be quickly imitated by the existing network and distributed to its own large user base. This is evident when you often see emerging consumer social apps that have been in development for several years and whose product innovations have become widespread among existing social giants. As a result, startups have turned their attention to more private formats, where their smaller user bases give them a competitive advantage over established companies.
Meanwhile, the success of consumer apps has become more ephemeral, as rapidly updating news cycles and algorithms continue to reshape users’ attention. New consumer apps may only outperform for a few weeks or months before being quickly replaced by new entrants. In a sense, consumer products are now like entertainment, with users often wanting to try the latest thing and then inexorably moving on to other products. I've been investing in consumer app startups since 2016, and during that time, my phone screen has been stacked with social apps like BeReal, Poparazzi, Fam, and Dispo. These were all very popular at one time but are now mostly forgotten.
When an app based on a smaller use case gains traction and begins to expand, it can actually erode its core value proposition of intimacy, creating an opportunity for new entrants to take its place. Additionally, the novelty of new, small-circle social experiences quickly wears off until the app can be iterated and scaled, making it difficult to compete with existing companies that have more diverse options for social interaction.
Given this, I think another path to success in consumer applications is to move beyond the old model of building a “kitchen sink” social giant. A less obvious but potentially more interesting approach is to create a series of smaller, short-lived hits. The goal is not to build a product that one day scales to 1 billion users, but to launch a series of apps that go viral and capture people's attention quickly.
This concept reflects the venture capital firm model: build and launch successive products, sharing operational resources such as user acquisition and personnel. Take the casual game company model as an example, such as Zynga, Supercell and other companies. Developers have released a large number of games that share core gameplay elements, but have introduced incremental innovations for differentiated experiences. In the gaming space, quickly following similar apps and cross-promoting between them is crucial to retaining user attention and maximizing revenue.
1. Cryptocurrency tokens can speed up this process
The venture capital firm model may not immediately think of cryptocurrencies, but the use of tokens can help combine different experiences in different contexts. Divert users’ attention between app experiments.
Take NFT projects as an example. They use continuous airdrops or experiences to guide users to use new products and generate revenue. For example, Bored Ape Yacht Club's initial 10,000 NFT collection was followed by Otherside's metaverse, and then Dookey Dash, a never-ending racing game and skill-based NFT minting experience . This sorting—and the attention projects gain and retain from token holders—demonstrates the potential of leveraging tokens to address cold-start challenges. Behind this shift in attention is genuine interest from the user base, who want to see the ecosystem expand and the speculative opportunities that new projects bring, all driven by cryptocurrencies.
Unlike the traditional game company model, where developers must bootstrap their own user base, tokens also enable greater interoperability among different developers, allowing founders to build around other A token creates real utility and attracts users from other applications. Vampire attacks are a typical example, in which developers use token incentives (via on-chain data) for competing users to attract users to transfer. Often, blockchain’s open source data can provide a foundation for projects to leverage tokens in creative ways to direct attention, for example, Frame airdrops tokens to all users who pay royalties for NFTs to attract interest in emerging NFT-centric L2 interest, Jenkins the Valet builds and expands on the existing IP ecosystem, and more.
A more structured VC-style model can be applied to several emerging categories:
Crypto mobile developers are increasingly deploying their apps as PWAs ( Progressive web apps), simple apps that run on the mobile web, allowing developers to bypass encryption restrictions on mobile app stores. Although PWA is easier to build and deploy, the installation and discovery process is cumbersome for users. Tokens help users transfer between different PWAs and enable developers to take advantage of rapidly evolving crypto trends. Instead of acquiring users from scratch for each PWA, developers can launch a series of PWAs that use a shared token to achieve uniformity.
This approach also helps better capitalize on the interest surrounding popular financial assets. For example, when the BONK meme coin started to gain momentum in December 2023, the core team also launched BonkBot, a Telegram trading bot that quickly grew to 70% of the token’s trading volume. As memecoins (which themselves are a form of financial entertainment) proliferate, teams can continue to harvest and extend this through new applications around the asset, such as Telegram bots, gaming experiences, social apps, and more. focus on.
2. What are the benefits of building multiple app experiments?
For entrepreneurs, the benefit of following the VC model is that you have more options than betting on an idea from the beginning. Creating a series of apps while still having the option of developing a large consumer app: If one of those bets pans out, the founders are free to operate. Among other things, this structure allows for greater autonomy and creativity. Because the goal is not to build a huge project with mass appeal, each idea can be a little more offbeat, a little more interesting, a little more niche.
To successfully execute this strategy, founders should keep the following points in mind. First of all, we need to be cautious when it comes to venture capital and realize that success may come from the popularity of one or several applications rather than taking a single social giant public. Generating cash flow and becoming a self-sustaining business remains an option with this model, especially in the crypto space where it is possible to achieve substantial profitability even with a smaller user base. (Friend.tech, for example, generated $53 million in total fees from 839,000 traders alone.) It’s also important to attract and retain users through various forms of airdrops — not just token airdrops, but content and community—to maximize user retention in every app experiment. Finally, in this model, rapid execution and iteration are critical, with short attention spans and short attention spans associated with the constant use of new applications that both engage and entertain existing users. Of course, there are more complex considerations, such as how much time to invest in each idea and how long each experiment needs to be sustained, but the answers are situation-specific and driven by app momentum, business considerations, and long-term strategy. factors determine.
In a space currently dominated by large, established companies, another viable path for consumer app builders is to embrace fleeting attention, develop short-term niche use cases, and deploy code through cryptography. coins to achieve cross-promotion and growth.
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