Golden Rules of Consumer Social Start-ups

Consumer social start-ups are some of the hardest start-ups to build. They require a fundamental insight and such high conviction in this insight that others would often shy away from trying to build one.

However, where most people shy away from represents an opportunity to entrepreneurs because it means less competition, they get to learn and uncover things most won’t.

However, often time and time again, consumer social tech start-ups fail because they don’t adhere to certain golden rules. Let’s dive into them. I’ve broken them down into 4 main rules and also share successes and a few failures and why they may not have made it.

Rule 1 - The app can help an individual find love/romance.

• Tinder: Revolutionized the dating scene with its swipe right/left mechanism.

• Bumble: Empowers women to make the first move, changing dating dynamics.

• Match.com: One of the pioneers in online dating, offering detailed profiles and matchmaking services.

• OkCupid: Uses a comprehensive questionnaire to match users based on compatibility.

• Hinge: Markets itself as the dating app "designed to be deleted," focusing on long-term connections.

Rule 2 - They need to make or save money.

• Robinhood: Demystified stock trading for the younger generation with commission-free trades.

• Mint: Offers a comprehensive view of personal finances, helping users budget and save.

• Shopify: Enables entrepreneurs to easily set up online stores and sell products.

• Acorns: Rounds up purchases to invest the spare change, making investing accessible.

• Etsy: Provides a platform for artisans and vintage sellers to reach a global market, monetizing their crafts.

Rule 3 - They help people escape reality.

• Netflix: Became the go-to streaming service for movies and TV shows, perfect for unwinding.

• Spotify: Offers personalized music and podcast streaming, catering to diverse tastes.

• Twitch: A live streaming platform where viewers can watch gamers and entertainers, creating a sense of community.

• YouTube: Hosts a vast range of content, from educational videos to entertainment, catering to every niche.

• Steam: A digital distribution platform for video games, offering a massive library for gamers to escape into.

Rule 4 (Weak) - They help people find their tribe.

This rule is an arguable rule. While we have seen enormous successes like Discord, Reddit, BeReal, we can see that they seem to really struggle with their business model. For example - Reddit is not profitable, BeReal is losing traction and Discord is still testing its business model.

• Reddit: A network of communities based on people's interests where users can find their tribe.

• Discord: Originally designed for gamers, it has become a hub for various communities to chat and hang out.

• Facebook Groups: Allows people to create and join groups around shared interests, providing a sense of belonging.

• LinkedIn Groups: Professional networking groups that connect individuals within the same industry or with similar interests.

• Nextdoor: Connects neighbors and fosters community engagement based on geographical location.

Rule 5 - Seek Information and Learn

• Khan Academy: Provides free online courses for learners worldwide.

• Coursera: Offers access to courses from universities and colleges, making higher education more accessible.

• Wikipedia: A free encyclopedia compiled by volunteers, covering an immense range of topics.

• Quora: A question-and-answer platform where users can ask questions and learn from experts.

• Duolingo: Makes learning new languages fun and accessible to everyone. They turned their first profitable quarter in the last month.

Exploring Failures

1. Juicero - Failed because it offered an overpriced juicer without providing a significant improvement in convenience or health benefits, lacking a compelling value proposition in terms of saving money or offering an escape.

2. Bebo - Struggled to maintain relevance and user engagement in the social networking space, eventually overshadowed by competitors that better facilitated community building and personal expression.

3. Pets.com - Collapsed due to a lack of a sustainable business model and failing to offer significant savings or convenience to pet owners, missing the mark on making or saving money for its customers.

4. Webvan - Failed because it expanded too quickly without securing a solid customer base or offering a cost-effective solution, not effectively saving time or money for its users in the competitive online grocery delivery market.

5. Secret - Shut down due to challenges in creating a positive community, as the app became associated with negative behaviors such as bullying and gossip, failing to build a sense of belonging or safe space for expression.