FriendTech’s Path to 1 Million Users: A Product Manager’s Blueprint
Friend.tech exploded on the scene in August 2023 and has quickly grown to 20K daily active users generating $1M in fees every day — more than Uniswap, Bitcoin, or OpenSea.
So, what is friend.tech? Friend.tech is a social app that allows its users to buy Twitter influencers’ “keys” granting them access to private chatrooms. Keys go up in value as more people purchase them, so buying an influencer’s “keys” is similar to buying their personal brand’s stock.
Crypto apps where users can speculate on influencers have been done before (exp. Bitclout), but friend.tech’s novel approach and ingenious go-to-market strategy have launched it into a realm of success thus far untouched by previous projects. I will break down some of the ingredients to friend.tech’s success.
First, friend.tech is mobile-first. Most social media activity occurs on phones so friend.tech positioned themself on the hardware platform where the users were.
Second, friend.tech does not require users to have an existing wallet or create a wallet. Once users connected their Twitter accounts and were onboarded, a wallet was auto-generated for them in-app. Users even received a small amount of ETH as a result of bots who traded new users’ keys and earned them a small royalty.
An in-app wallet where the user does not have control of the private key is completely against the crypto ethos of self-sovereignty, but importantly it makes the user onboarding experience much simpler.
Third, friend.tech focuses on crypto Twitter influencers rather than mainstream celebrities. This is advantageous because crypto Twitter influencers are more likely to use the app and promote it. From a game theoretical perspective, influencers hold their own keys so they are incentivized to increase the value of their keys either through promotion, delivering value, or even purchasing their own keys to drive up price.
Friend.tech has made speculative behavior the focus of the user interface, featuring watchlists, portfolio tracking, and trading activity prominently in the app.
Friend.tech compounded on this early success by announcing an upcoming airdrop. Friend.tech uses a point system to determine the distribution of its airdrop rewards and users quickly found out that the point system disproportionately rewards holders. This in conjunction with their sky-high 10% transaction fees has kept capital on the platform.
However, friend.tech’s focus on speculation and high transaction fees are a double-edged sword. If the primary use case of friend.tech is speculation, but users lose 10% on every trade to platform fees, then the app requires constant new capital inflows to increase key prices and fuel speculation. I wouldn’t say that friend.tech is a “ponzi” since users are receiving utility in the form of chatrooms, but it certainly has “ponzi-ish” economics.
Friend.tech has done an impressive job of bootstrapping its growth, but it will need to deliver more value to both key holders and content creators to reach wider market adoption. In this article, I will be taking a look at friend.tech from a product manager’s lens, focusing on how to improve friend.tech’s user experience and position it for widespread adoption.
Users
Usage and Retention
In order to improve the product, it’s important to first understand the users and how they interact with the app. Let’s start with grounding ourselves in the numbers. 378K people have created accounts on friend.tech. Some of these users are surely bots and airdrop hunters, but for the sake of simplicity let’s treat all accounts with connected Twitter profiles as real “users”.
I would like to be able to look at usage and analyze metrics like Daily Active Users (DAUs) and user retention, but only transaction data is available on the blockchain so I can only see trading activity. Trading and speculation is a core user experience on friend.tech though so it is still useful metric to observe.
In the data above, we can see that of the 378K accounts that have been created on friend.tech, only 10K-20K trade daily and of those 10K-20K that trade daily, only 5K-12K are returning users. The metric counts account creation as a user’s first instance of a trade, so in reality friend.tech has 5K-12K people conducting trades daily or 1.3%-3.1% of total users.
Audience
We should also segment these users. Who are they? I pored through the top 75 friend.tech accounts by market cap (equal to the value of each key * number of keys) and could not find a single non-crypto-related Twitter account.
I know there was a period when OnlyFans and Patreon creators experimented with friend.tech but looking at the data it is clear that crypto users are still the target audience and core group of users.
Distribution
I segmented users based on their trading activity, using the value of ETH fees paid to segment into the following cohorts:
- Whales: Spent greater than 3 ETH in trading fees
- Dolphins: Spent between 1–3 ETH in trading fees
- Fish: Spent between 0.1–1 ETH in trading fees
- Shrimp: Spent between 0.01–0.1 ETH in trading fees
- Algae: Spent less than 0.01 ETH in trading fees
As you can see in the chart, friend.tech follows a power-law distribution where most of the revenue comes from a few power users. In this case, 9% of users make up 99% of friend.tech’s fees.
This extreme distribution could be explained in a few ways: 1.) Many of these accounts are airdrop farming bots and trade only low-value accounts and therefore rack up little fees or 2.) Many users who create accounts never conduct a single trade.
Traders are just one side of the equation. Next, I segmented the creators on the app which I will call “subjects”.
The cohorts of “Subjects” or Creators on the platform are segmented:
- Mega: Subject Market Cap greater than 10 ETH
- Large: Subject Market Cap between 1 ETH — 10 ETH
- Medium: Subject Market Cap between 0.1 ETH — 1 ETH
- Small: Subject Market Cap between 0.01 ETH — 0.1ETH
- Tiny: Subject Market Cap less than 0.01 ETH
The distribution of “subjects” is similar to the distribution of users — almost all subjects have very low market caps. I also graphed the volume of ETH traded for the keys of each cohort to gain insight into which subject cohort is traded when trading activity takes place. The chart shows a power-law distribution with 81% of ETH trading volume involving keys of Mega or Large accounts.
Mathematically, it makes sense that the majority of trading volume in ETH occurs with high market cap accounts as trading Large or Mega account keys will have high ETH values. In order to further segment trading behavior I charted the percent of total volume by keys rather than ETH. You can think of this as the number of trades rather than the value of trades conducted with the keys of each subject cohort.
When observing volume denominated in shares rather than ETH, the relationship is inversed. The larger the account, the fewer keys are traded.
We can also use this data to eliminate the possibility that many user sign-ups are bots. Remember, 91% of users never spent greater than 0.01 ETH in fees. That means 91% of users have never traded greater than 0.1 ETH. If this was due to a large number of bots trading tiny accounts, we would expect to see a larger percentage of share volume in the “tiny” subject cohort. Since we do not, we can assume that many users who sign up for friend.tech never conduct a single trade.
Takeaways
So, let’s summarize what we know.
- 378K total users have signed up for friend.tech
- 5K — 12K users trade every day. This has been relatively consistent after some early growth in August
- Almost all users come from the crypto community
- 99% of fees come from 9% of users aka power users
- 81% of friend.tech trading by ETH involves accounts with greater than 1 ETH in market cap
- 91% of users have never traded more than 0.1 ETH — many of which have likely conducted very few or no trades
Friend.tech has attracted a core group of extremely active and profitable users — both on the trading and content creation side. However, the number of users is low, there is little growth, and almost all the existing users come from crypto.
As I said in the introduction, friend.tech’s model requires new users and new capital inflows. Friend.tech isn’t attracting non-crypto users and since we are in a bear market, the total TAM of users will quickly become (or already is) saturated.
Improvements
In order to attract non-crypto users, friend.tech will need to focus on three key areas: enhancing utility for keyholders, increasing opportunity for discovery for non-keyholders, and implementing UI fixes.
Enhancing Utility for Keyholders
A good place to start is by looking at the biggest payment-gated creator platforms: OnlyFans and Patreon. On OnlyFans and Patreon, creators can post videos, pictures, blogs, livestream, and provide access to premium discords, and substacks. This is all in addition to the ability to open direct message channels. Friend.tech is woefully behind creator and consumer features armed with only a chat capable of text and photo sharing.
Features like video sharing and longer-form blogs are table stakes and friend.tech should definitely develop them. Also, while the chat feature is charming and brought the app to its impressive position today, it is not the best way to share or consume content. Compare Patreon and friend.tech’s content consumption feed.
Versus…
The chat adequately satisfies the experience of chatting to Subjects or key holders, but with no filtering, previews, or pinning it does not function well as a way to share content.
Friend.tech’s content-sharing experience needs to be improved, but that is not to say they should directly compete with OnlyFans and Patreon. In fact, they cannot — friend.tech keys are simply too expensive. OnlyFans and Patreon access start at $1/month (or free for some accounts) with most premium features being unlocked at around $5-$10/month. Friend.tech keys start off cheap, but the bonding curve is steep so by the time a creator’s 100th key is purchased it costs 0.62 ETH or $969 (as of October 10th, 2023).
Contrast this to OnlyFans and Patreon which are demand inelastic, meaning no matter how many subscriptions are purchased the price stays the same.
So, friend.tech needs to provide not just similar but more value than Patreon and OnlyFans. I believe that friend.tech has the potential to deliver greater value by leaning into their key differentiator: ownership.
If you remember the NFT hype phase of 2021–2022, there was a lot of discussion around “club” or “loyalty” NFTs. For example, if Taylor Swift released a Super Fan NFT and holders received early access to ticket sales, exclusive merch, and royalties then Taylor Swift would have another way to monetize her music and following. This concept hasn’t taken off (yet) but I think friend.tech is the perfect platform to launch such experiences.
One of the frictions in launching a Super Fan NFT (let’s call it a Loyalty NFT) is learning to code, deploying the contract, and distributing it in a fair way. That is a lot to ask for a crypto native, so why ask Taylor Swift or Justin Bieber to do it? I would argue that current keys already serve as de-facto Loyalty NFTs for crypto celebrities like Cobie, Hsaka, and CL, and they’ve been wildly successful — Cobie’s market cap is $800K, Hsaka’s market cap is $1.4M, and CL’s market cap is $1.2M
Friend.tech also provides creators or celebs who launch keys with a marketplace. If someone falls out of love with Taylor Swift they can swap their keys for Drake’s. The fact that there is a marketplace where celebs are valued means that buyers can now make purchase decisions by looking at the relative value of other keys. In a vacuum, it would be hard to value a Taylor Swift Loyalty NFT, but if Doja Cat’s friend.tech market cap is $5M then Taylor Swift’s should be at least $5M if not higher.
Friend.tech is also positioned to fix the distribution problem for celebs/creators. Imagine a celeb who releases a Loyalty NFT collection. They’ve made all these promises to their fans and raked in all this money. Now they need to figure out how to distribute content and rewards to these NFT holders — another source of friction. On friend.tech, the distribution is already solved for you. All your loyal keyholders are in one place.
The key to unlocking this experience is giving creators ownership over their audience. Because it is blockchain application, friend.tech can give creators the ability to verify and own the list of holders of their NFTs so they can craft custom experiences for them through the friend.tech app.
Ownership can also be leveraged in another way. Let’s say you are Nike and you want to drop an exclusive pair of Jordan 1’s, but you only want true basketball fans to have them. You could require 3-months of ownership of a basketball pro key to qualify for the drop.
The feature of speculating and sharing in a celebrity’s profits makes friend.tech stand out amongst other creator platforms. However, I believe publicly verifiable ownership, which enables unique and adaptable experiences compared to other platforms, will carve out an enduring market available only to friend.tech and SoFi apps like it.
Discovery Experiences for Non-keyholders
Currently, the discovery experience for non-keyholders is limited to viewing an account’s price and whether it is a top, trending, or new account.
There is no free content available anywhere on the app. On top of that, there is no ability to preview content. When you are buying someone’s keys you are buying blind. This problem is compounded by the fact that anyone who signs up for an account automatically has their keys listed.
Imagine a scenario where Elon Musk signs up for friend.tech just so he can be a lurker. His keys would likely be bid up even though he has no intention to post content on friend.tech. Or imagine an opposite scenario where someone is posting excellent content on friend.tech but since there is no discovery or virality in the app his keys never appreciate in price.
Twitter, Patreon, and OnlyFans have already built solutions to these problems.
Discovery improves the consumer experience, encourages trading, and helps solve the negative user experience of buying someone’s keys and paying 10% in fees only to find they don’t post quality content or any content at all.
Shifting UI from Trading Focused to Content Focused
As previously mentioned, friend.tech’s UI is focused on trading. The Home tab, Watchlist tab, and Explore tab all provide price or transaction data — only the Chats tab has any content.
I think the following improvements will enhance the content consumption experience, discovery, and trading signal.
The Home Tab should display all content posted by creators whose keys you hold. You should be able to like, favorite, and bookmark content.
Instead of a watchlist, there could be a Trade tab. Here, I think the landing page should look something similar to Robinhood. In the Trade tab, users can track their portfolio value as well as price changes for any Subjects they follow.
When a user clicks on any profile, relevant information and charts should come up like significant holders, recent trades, prices, and charts. Currently, all this information lives offline at places like frentech.octav, but it would be much more powerful if it was in the app. I think Flip.xyz UI is a good a good example of how to organize and display this information.
The Explore tab should recommend accounts based on the current accounts a user owns, much like the Instagram Explore page. This is also a good place to have free content posted.
Gimmes and Easy fixes
Gimmes are features/improvements that I view as necessary or obvious to scale friend.tech, regardless of what strategy they pursue.
- Improve Security
Security is a concern for crypto apps in general, but friend.tech specifically has issues with SIM swapping. Traditional celebs will not risk their reputations guiding fans to a crypto app where they are likely to get exploited
2. Combat MEV and Bots purchasing accounts right after onboarding
MEV bots and sniper bots are prevalent on friend.tech. Currently, if a big account signs up for friend.tech their keys are immediately purchased before any true fans or even the account itself has time to purchase their keys. No brand or celeb will want to onboard if bots are a large portion of their buyers and crowd out their true fans
3. Provide Alternative Account Funding Methods
Currently, the only way to fund your friend.tech account is to deposit on-chain. For most people, this is too complicated. Friend.tech should allow users to fund their accounts either through traditional bank deposits (potentially converted to USDC then deposited to their in-app wallet) or through credit card purchases. Familiarity builds trust and a smoother customer experience and most people are familiar with funding through their bank account.
4. Improve Responsiveness
The app’s responsiveness is bad. Pages, chats, actions all take too long to load and sometimes simply fail. I’m sure the team is already actively working on improving their product as it is in Beta, but it needs to be said
I’ll move on to easy fixes. These are smaller features, changes, or issues that I’ve encountered while on the app that would improve user experience.
- Pinning Messages — similar to telegram, creators should have the ability to pin important messages
- Search — Keyholders should be able to search within the chat as well as filter by images, links, and files similar to Facebook Messenger’s search function
- When you input your authentication code in the deposit ETH page, every digit entered switches the keyboard back to the alphabet so you have to switch back to numerical each time
- The deposit ETH page has no way to get “back” to the home screen of the app. You need to close the entire app and reopen it to get to a previous page
Conclusion
I commend the friend.tech team for building a product that the community didn’t even know it wanted and single-handedly pushing SocialFi into the spotlight. There is a clear product-market fit for friend.tech, but in analyzing their users it's clear that there is little growth and almost all users come from the crypto community. The good news is that friend.tech’s power users are extremely profitable and active, generating more than 99% of fees.
Friend.tech’s focus on these power users and speculation has brought early success, but they will need to provide more utility than just financial gain to create a lasting ecosystem. To increase utility, friend.tech needs to improve its baseline product, bringing its features up to par with competitors like Patreon and OnlyFans.
In addition, friend.tech needs to differentiate given their high key prices. Here, I think friend.tech can leverage permissionless and verifiable ownership in conjunction with its thriving marketplace to become the platform to launch Loyalty NFTs.
No non-payments crypto app has reached the mainstream and proven the thesis that experiences built on permissionless blockchains are superior. If friend.tech were to become that first app, they would be breaking new ground. I don’t know what the future holds, but I believe if friend.tech puts the user and utility first, they stand a fighting chance.
