Finding Genius

by Kunal Mehta

  3. Entertainment: It might be obvious, since social is almost synonymous with “fun,” but social apps need to have some element of entertainment. This type of entertainment is often separate from the utility of an app (though they can be the same — ask any bride who has gotten sucked into an endless pinning frenzy of wedding inspiration on Pinterest.) It’s important for any social app to have some core element of entertainment, while also continually evolving what makes it novel and fun.

  4. Privacy and Control: This is perhaps more of an honorary mention. While privacy is not a characteristic that is required to be inherently social, I argue that it is becoming table stakes in today’s era for an app to become successful. This is in part due to the proliferation of social data and the backlash from Cambridge Analytica and Facebook. It’s also a generational shift as Gen Z increasingly cares about privacy and has grown up in an age of Snapchat where shared moments are meant to be just that — ephemeral moments in time.

  5. Status: As humans, we all seek status at our core (remember Klout?). And to reach the success and scale that entrepreneurs’ dreams and VCs’ careers are built upon, a social platform must deliver a mechanism for status to be amassed. This is a pillar that a social app does not necessarily need to have from the beginning. However, I argue that any successful social app will inevitably end up with a status element over time.

  The Shifting Footprints of Social

  Now the quality or strength across each of these pillars can vary wildly for each social platform. At the end of the day, each platform has its own unique footprint based on its performance within these pillars. These footprints will inevitably morph over time as the feature set changes, user behavior shifts, and the networks themselves evolve. Below are rough illustrations of a few social platforms as I see them as of 2019.

  Let’s look at Twitter as an example. When Twitter first launched in 2006, it was high on the entertainment and community/conversation pillars. The service was intended to be a fun way to update your friends on your status or what you were doing, no matter how frivolous. Even the name of the company reinforced this idea of frivolity — the dictionary defines the word “Twitter” as “a short burst of inconsequential information.” Twitter was both a form of entertainment (sending fun updates via SMS to the web) and a form of community (bringing groups of friends together to stay more connected on the others’ moods and activities.) The concepts of status, privacy or utility were not even on the radar. In fact, Twitter Co-Founder Ev Williams famously quipped about the app, “Who ever said things have to be useful?”

  Well, fast forward to 2019, and Twitter’s footprint across these five pillars has shifted significantly. It turns out that Twitter and its users found a way to make the service extremely useful. For many, Twitter is a first destination for news. It has been used effectively to sway public opinion and win elections. Businesses use it to communicate with customers (and customers use it to complain publicly and get refunds.) Twitter’s elements of status and conversation have also changed. Over time, a certain form of tweet has emerged as one that is worthy of attention or virality. You know it when you see it — pithy, funny, perhaps a bit cutting and sarcastic. It might read a bit like a fortune cookie. It likely has a meme attached as well. It is these types of tweets that get retweeted and amass new followers for a user. And those retweets and follower counts are what provide status on the platform. Given how public your tweets and follower count are, many feel pressure to chase these status metrics. But in doing so, conversation is squashed. If users must communicate in fortune cookie format to gain status, they are no longer authentically sharing and messaging with their group of friends as they once did. And on top of that, the tweets that get the most airtime are those fortune cookie quips from individuals who have already amassed significant followers. It becomes a vicious cycle where status is king and conversation is an unfortunate casualty.

  This is all to demonstrate that the pillars underlying social platforms are universal. They exist in all social apps at some level, yet the strength of each will inevitably shift over time. And as they shift, it opens up opportunities and entry points for new social platforms to emerge (more on this later.)

  The Social <> Status Tipping Point

  There is a common theory with most social media companies that there is a point for each service that a user must reach to unlock value in the service. For Facebook, it might be once you have three or more friends. Or in the early days of Instagram (pre-Explore tab), it might be once you’ve followed five active accounts so that your feed is regularly refreshed with new content. It’s at these points some of the pillars are made accessible — you can’t have conversation without friends. You can’t be entertained without content from others.

  The ease of clearing this early hurdle is a predictor of the virality and growth of an emerging service. However, there is a similar hurdle faced by mature social media platforms that acts in the opposite way. Once you reach a saturation point of your audience, you are actually dis-incentivized from posting more.

  Consider Facebook. As a teenager, once your parents and grandparents are your friends and can see what you post, how likely are you to share your actual thoughts (or photos from the party you snuck out to)? This is the same phenomenon that drove teens on Instagram to develop “Finstas” — or “Fake instagram” accounts. On these accounts, teens would sporadically post parent-approved content to uphold an image for their unknowing parents. They would then host the content that felt authentic to them with their friends on a completely separate account, hidden from their parents’ reach.

  Even I have felt the breaking point of Instagram lately. In celebrating a recent birthday, there were many friends I wasn’t able to invite. I found myself nervous that those in attendance would post photo evidence of the gathering, outing me to those who weren’t invited. It wouldn’t be a FOMO-inducing experience of the kind that Instagram thrives on, but rather one that would cause potentially uncomfortable social tensions. The ever presence of Instagram was making in real life (or “IRL”) experiences feel stressful, just because of the potential reach of the audience. Instagram recently released a feature where you can designate your “close friends” to help mitigate this issue. This is an indication that Instagram already recognizes the need to provide more control and smaller groups to encourage people to post more often.

  I believe Instagram and Facebook have hit that tipping point — the point where the accumulation of status tilts the scales such that these social media companies transform into status media companies. You can tell this has happened when your social group on a platform becomes too big or varied that you no longer want to post authentic content; or when your usage of the platform becomes solely about content that will get you status. The pure social elements have disappeared and status reigns king.

  Using the Social Pillars to Guide Investment Opportunities

  When it comes to finding the investment opportunities within social, it becomes a function of where the gaps lie between the existing landscape of social platforms and the shifting needs of each generation. More tactically speaking, when looking at the unique footprints of the existing social platforms of today: Which pillars are they delivering on? And for which demographics? And which pillars have the most white space?

  A budding social platform can arguably emerge with any one of these five pillars as its primary value proposition. However, given the network effects often so inherent in social platforms, reaching escape velocity out of the gate can often be the difference between long-term success and failure. Given that, the budding platforms that take advantage of the white space in the current social landscape will likely have the best chance of making an initial impact. Revisiting the footprints of today’s social platforms overlaid across the five pillars, we see that many of the platforms are delivering on status and utility. This makes sense given that many of these platforms are mature and have already hit that “status tipping point,” as well as found ways to become
a utility in everyday life, enabling stickiness and engagement. Thus, looking at the white spaces, we see that Community/Conversation, Entertainment, and Privacy/Control offer the most opportunity for a new social platform to gain traction. I’ll share a few case studies on the opportunities I see within these pillars.

  1. Community/Conversation: Slack as a Social App

  As platforms reach that tipping point and transition into status media, they also begin to lose those characteristics that allowed for authentic community and conversation. Thus, as social apps mature and move away from their early versions of community-based platforms to status media platforms, a white space opens up for new social platforms to provide community and conversation, thus restarting the natural cycle of social apps.

  Perhaps one unlikely app, given its enterprise roots, that provides a great template for a social platform leveraging conversation, is Slack. Teams and entire workplaces have flocked to the product as a replacement for email and chat apps. It makes communicating at work and gathering/sharing information faster and richer — so much so that 10 million office workers log into the app daily, actively using it for ~90 minutes during weekdays, and staying logged into the app for ~10 hours/day during the week.

  But let’s examine Slack purely as a social app. Slack, as a messaging platform, has conversation at its core. It also has a strong sense of community. All members are invited, and often are already connected through an existing IRL community (e.g. an entire start-up office, a recreational soccer league, a collection of individuals interested in retail and fashion.) By this nature, community exists based on affinity, interests, proximity, or a common goal. Within Slack, conversations are then organized in two ways: 1) in channels — a further subdivision into topic areas from the general community so that those who are interested or relevant to that topic can communicate with one another without spamming the broader group, thus increasing engagement and participation. And 2) direct messages — private messages that are 1:1 or in small sub-groups of the overall community, functioning similarly to any messaging app.

  Slack is not purely an app that indexes high on community/conversation. Utility is a clear strength given its numerous integrations with services like Twitter, Salesforce, and Dropbox, making communication and the sharing of information at work both faster and richer. Entertainment is certainly at play as well — if you’ve ever worked at a startup using Slack, you’ve been subject to (or have heavily participated in) the onslaught of gifs, memes, and polls that seem to take place at lightning speed. I’ve long wondered, for all the benefits and efficiency that Slack provides as a utility, how much of that is lost to the time suck that is random Buzzfeed articles posted for everyone in the office to see, debate about whether Dave should wear a onesie to the office or sing Eye of the Tiger if your team hits its quarterly sales goal, or meme wars about the fact that the Cheez-its were discontinued in the kitchen.

  For all of its strength on these three pillars, I would argue that Slack falls short on the privacy and status pillars. Given the fact that employers could be peering over your shoulder, users may be wary to share on the platform — but that is also just a nature of messaging within any enterprise. That said, Slack has done a great job of taking community and conversation as an entry point to build an effective, engaging social app, whether the market values it as that or not.

  This focus on community can be seen in the broader social ecosystem. Real life communities like The Wing have become a new form of social group. Facebook has been experimenting with Facebook Groups and finding new ways to help smaller interest groups together. We have entered an era some refer to as “the unbundling of Facebook” where individual apps or online groups are created specifically for affinity groups or interest areas — apps for runners, groups for immigrants in specific cities, or platforms for make-up lovers looking to share product and application tips. I expect that we will continue to see new apps, and new features within existing platforms, that foster tighter communities around shared interests or goals in the way that Slack has modeled.

  2. Utility: WhatsApp and the Suppression of Status

  While services like WhatsApp and Messenger share the conversational elements above that make Slack a great social platform, these messaging apps really shine when it comes to utility. Sure, they foster community amidst your friend group, provide entertainment with Bitmojis and inside jokes galore, and offer a certain level of privacy and control with the limited size of a community (and the end-to-end encryption in the case of WhatsApp.) Yet their primary purpose is to communicate information quickly and effectively. This is utility at its finest.

  In fact, the utility of these messaging apps is perhaps so strong that it actually limits the ability of status to be a dominant pillar. There are few ways within WhatsApp to acquire more social capital than the others in your group. You may be the wittiest or share the most helpful information, but there is no mechanism to earn a badge or likes for such behavior. And while not ephemeral in the same concept as a snap or a story, your messages often go by so quickly such that the funny gif you sent this morning is long forgotten by lunchtime. Thus, there is no manner in which to store an indicator of status within the app. Status is suppressed by the nature of the utility.

  As a result, WhatsApp (or any pure messaging tool for that matter) is perhaps the most authentic of social apps. It is real time and the one most closely tied to your real person and life. In fact, the idea of a “persona,” which is the foundation of many social platforms, doesn’t really exist within WhatsApp. The person you present on WhatsApp is the same person you are in real life. You message largely the same way that you speak. Compare that to someone’s Instagram feed or TikTok account, which is littered with expertly crafted styles and images. Oftentimes these styles even vary significantly across platform for the same person — a result of the fact that the crowds they are gathering status from differ on each platform and reward different styles or behaviors.

  So what does this tell us about the merit of utility when it comes to social apps? First and foremost it is that apps with strong utility from the outset are less likely to hit the status media tipping point early in their lifecycle. However, this does not mean that apps that index high on utility are immune from this tipping point. Just look at the steps WhatsApp and Facebook Messenger have taken to add a stories feature to their platforms — each is now at over 500 million daily active users (DAUs.) Stories have added a new layer of social that prizes entertainment and status through the crafting of personas. The question now is when these platforms will tip to status media. We will likely hit a point where the messaging groups become too large, or a mechanism to track status (views, likes, hearts) becomes so strong, or the type of content that is “valued” becomes too prescribed, that the scales ultimately tip. And at that point, WhatsApp will tip into the land of status media, opening up opportunity for the next wave of social messaging players.

  3. Entertainment: The Rise of TikTok

  TikTok, as of mid-2019, has had one of the most meteoric rises of a social app in years. TikTok is an app focused on Gen Z (41% of their users are between 16-24) that allows users to post fun, 15-second videos, usually set to music. Many of these videos are in the form of lip-syncing, as well as creative trending challenges, memes, and duets. In the first half of 2019, it was the third most downloaded app worldwide, after WhatsApp and Messenger, and boasts over 1.2 billion monthly active users (MAUs) and 500 billion daily active users (DAUs.) For context, Instagram has 1 billion MAUs, YouTube has 1.9 billion MAUs, and Facebook has 2 billion MAUs. The app formally launched only one year ago under the TikTok brand (though Bytedance, the parent company, had launched the Chinese version, Douyin, in 2016, and bought the US company, Musical.ly, in 2017 for $1 billion — combining the two entities to create TikTok.) And I should mention, this app is sticky. The average user is opening the app eight times per day, for a total of 52 minutes each day.

  So how did TikTok pull off such massive growth
in a crowded social landscape? They put entertainment and novelty front and center. Posting a 15-second clip of you lip-syncing to “Old Town Road” by Lil Nas X probably sounds like a waste of time to most. But the pure frivolity of such an act is what makes it so special — especially amidst a sea of social apps that increasingly feel onerous with influencers and brands jockeying to present the perfect millennial life.

  Another thing that TikTok got right was that it created a new platform to amass status for a generation that was seeking it. The average Gen Z kid was introduced to platforms like Instagram and Twitter once those platforms were fully mature and had already tipped into status media. Amassing their own following and status would be difficult for most — these platforms were saturated and rising above the fray was reserved for only a select few new entrants.

  TikTok, on the other hand, presented a brand new platform tailor made to give this generation a reasonable opportunity to achieve status. The TikTok algorithm for the user feed also intelligently supports this. Every user’s feed is curated “for them” — serving up content from any users who may be interesting to that individual. This means that it is easier for any one person to “go viral” as it is not based on the number of followers that person has, but rather on the quality of that content and how it might resonate with other users. Layer on the trending challenges and duets that are common on the platform and you end up with a creative platform that provides users first and foremost with entertainment, but also with a fair chance to achieve status.

  4. Privacy & Control: Brud, Identity, and Storytelling