New consumer Internet patterns
Historically, every large product on the consumer Internet has nailed an end-to-end consumer experience from the very beginning. I think the future will continue to have such winners (most likely in communication tools, at least). But there’s a new, non-obvious approach to serving consumers that I think will emerge: a focus on gaining a deep advantage by serving a layer of an ecosystem today and earning the privilege to build a consumer brand later.
1. Stripe & Affirm
Stripe is an example of a company that has an unintentional cross-over opportunity to serve consumers. The company was built on serving an infrastructure need that small startups had. Some of those startups are now big startups. Stripe also won larger scale enterprise partners. As Stripe continues to scale there’s a possibility that they could build a consumer brand by earning visibility in their partner payment flows. If I see Stripe in the checkout flow of a brand I trust, I may have more confidence giving my credit card information to a lesser-known online business that also uses Stripe to accept payments. If Stripe captures consumer trust in their brand, there’s no limit to how big they could be. Someday we could all be using online credit cards or payment identities managed by Stripe. They could end up building a huge consumer brand by starting with a non-consumer use case.
Affirm lives primarily in the checkout flow of various commerce experiences today. By serving the needs of their commerce partners they become a trusted financial services credit product for end consumers. The trust, relationships, and data earn them crossover opportunities. If they some day choose to do so they might look something like a new type of consumer bank.
2. Slack
Slack was built to solve a small team business collaboration use-case, but it was done with the fit, finish, and polish usually reserved for consumer Internet tools. But the tool is so beautifully horizontal that it works very well for family and even adds value to 1-on-1 private messaging use cases. It doesn’t seem likely that Slack as a company will focus on expanding support for consumer use cases soon since they are doing very well building a business by serving small-team and enterprise needs, but they have certainly earned some option value here.
3. Startups X, Y, and Z
Recently, I’ve noticed other small companies and services that are picking off layers of a value chain and that are purposely not focused on acquiring consumer demand directly. Rather they are focused on making suppliers and businesses more efficient and higher quality and owning proprietary access and information about the operations of their respective verticals. If a technology platform can dispatch, filter, qualify, and vet supply it can serve and align supply better than anyone else. I think this creates real opportunities to later build an amazing consumer brand around their proprietary knowledge and service. Specific places I’ve recently seen this show up are in the following: 1) local services marketplaces, 2) insurance industry data services, and 3) real estate tech.
The underpinnings of this perfect storm have been brewing for years and the details of such are worthy of their own post. In short, the scale of public cloud services and APIs mean small teams can accomplish a lot, but to be successful these teams often build expertise and scale in far more specialized layers of the stack than was the case in earlier iterations of the Internet.
I know this orthogonal approach to building a consumer Internet company is likely controversial. It’s easy to dismiss since we haven’t seen this pattern win yet. But I believe it’s a unique and new possibility in the world.
Thanks to Avichal Garg, Jen Yip, Raymond Tonsing, Mitchell Lee, Mike Chu and Hunter Horsley for spitballing, feedback, and editing on this idea.
