I made it out to the Launch festival in SF last week. The conference is laid out via three main stages but I found the SCALE stage to be the most helpful, focusing on tactical talks from VCs and entrepreneurs that provided actual guidance and methods to pursue scaling, acquiring customers, thinking through product/market fit, raising capital and everything in between. One of the talks in that stage, delivered by Sue Khim from Brilliant.org, was particularly intriguing as we internally at Cue Ball tend to build up our investment theses in a similar fashion. I wanted to draw out the parallel and also delve into some of the areas we have come to pursue and believe in.
Sue’s presentation focused on crafting product strategy and she suggests companies, when trying to define what new features to pursue on their product roadmap, to first define a specific “trigger” for the product. A “trigger” is an event or occurrence post which a user looks to utilize a product. For example: When I am bored *trigger*, I use Facebook, Netflix, Twitch *product*. Or when I need to get somewhere *trigger*, I use Uber *product*. When I need to run *trigger*, I use RunKeeper *product*. A trigger should help the company hone in on what it wants to achieve out of the “features” it is looking to develop over time to craft a product roadmap, and then evaluate if the product is being used when that specific trigger happens. If not, a company should refine its product strategy accordingly.
This is great advice. It is just a different way of saying a company needs to grasp what the anthropological forces driving human behavior are that drives interest in a product. In collation, to be a good investor how one absolutely requires insight into human psychology because, to quote Howard Marks, “even though investment theory assumes investors objectivity and rationality, these qualities rarely prevail and emotion and “human nature” often take over instead. (As a side note, I highly recommend everyone read this memo Marks delivered to his LPs, drawing an analogy between investing and the world of sports — thanks HA for this).
So, what are some example “triggers” we are bullish on?
1. When it comes to content, “algorithmic” curation will probably be more effective than “social” curation. Social curators are platforms like Facebook, Reddits, Twitter, where you self-select what you view, see, use. This is ideal for engaging with a community and staying up to date with content that friends recommend. BUT while crowdsourced recommendations are good for everyone, they are great for no one. Personalization does not necessarily equate relevancy, as the choice of your crowd might not be the right crowd’s wisdom you are best apt for. Case in point — users that visit a news media site via Facebook spend about 50% less time on the site than users who visit it directly. Algorithmic curation somewhat takes away that problem; for example 75% of viewer activity on the Netflix platform is based on Netflix’s proprietary recommendation technology and I am sure I don’t need to belabor the love people share for Spotify’s Discover playlist. It’s not surprising we are always so excited to come across algorithmically curated platforms.
2. People want to communicate at “work” the way they communicate at “home”. Writing an email takes time, and unless you are a top MD, a one-liner with improper syntax is typically considered unacceptable. Texting and online communication platforms like Slack completely challenges that you need a formal medium like email to complete tasks (currently Slack users spend 2.25 hours each weekday in active use, or as much time as the average knowledge worker spends on emails). We think this phenomenon will trickle down to text messaging in the near-term.
3. Consumers are increasingly choosing “purpose-driven” products, to feel good to do good. 73% of millennials believe businesses should offer a point of view through their products as a means of self-expression, allowing them to supplement their own public identity. To put this into context, the word “SoulCycle” is mentioned on average every 35 seconds on the internet. We continue to believe that purpose > product > profits.
So, for each of the above, we can think of the triggers as:
1. When people want to consume relevant information and media, they use algorithmically curated platforms
2. When people want to connect at work, they use personally adopted communication channels
3. When consumers want to buy something, they care to see the good it does to the individual or to the world
Trying to dissect human behavior intelligently can definitely be tricky, but the most successful of companies have done it so beautifully, you can’t but marvel at its power.
“The present defines the future” — Lailah Gifty Akita
[Thanks to the CB investment team for their thoughts and general discourse at the office].