Moving Product newsletter #1 - The Quarantine User Loan
Welcome to Josh Constine's newsletter
Oh hey there, it’s me, Josh Constine. Today I’m launching the Moving Product newsletter, a weekly look at the most interesting startup & tech product ideas. You signed up sometime in the past year, but if you check it out and aren’t into it, feel free to unsubscribe.
Today I announced I’m leaving TechCrunch to join VC fund SignalFire as a principal and head of content. There I’ll be learning to invest while writing about strategies that can help startups form, iterate, and grow. I chose SignalFire because it’s a different model for venture capital, offering portfolio companies an in-house predictive recruitment engine and a network of invested advisors who are incentivized to help our founders because they share in the rewards. You can read my bittersweet farewell post on TechCrunch here, and a deeper dive into what makes SignalFire special here.
On to what this newsletter will usually be about: inspiring product ideas.
Quarantine “loans” concurrent users to apps
COVID-19 quarantines are re-writing our behavior patterns. That creates plenty of opportunities for new startups and products. Fintech, biotech, and video conferencing are all seeing booms. But I think synchronous apps that require lots of users engaging at the same time are going to see outsized benefit due to what I call the “quarantine user loan”.
Synchronous services either snowball up to sustainable levels of concurrent users aka liquidity, or they fail to assemble users at the same time and dwindle into ghost towns. Even if a synchronous product has huge potential, it can’t deliver value to anyone unless there are enough other people there.
Due to shelter-in-place orders, it’s an easier time than ever to get users on most synchronous apps (travel, IRL events etc excluded). But the opportunity is fleeting. These users aren’t a gift. They’re a temporary loan that will have to be repaid with a usage decline when social distancing orders relax. That means apps need to do everything they can to prove their worth and boost retention, knowing they won’t keep everyone once quarantines end. If they can stay above a sustainable concurrent user count after the loan is repaid, they’ll have a chance to snowball even bigger.
You can already see the quarantine user loan reawakening old apps like Houseparty group video chat, which saw 50 million signups in a month, and fueling new apps like Clubhouse voice chat rooms, that’s become the hit of Silicon Valley’s elite. The opportunity has pushed Facebook to rush out its Houseparty-esque video chat feature Rooms, and Google to finally improve Meet. It will also be huge for work-from-home enterprise products, especially virtual offices like Pragli and Tandem that need bottoms-up adoption to prove to CIOs that they’re worth buying for their teams.
Some quarantine behavior changes will become permanent. But many apps will need a ‘second act’ new feature timed for when shelter-in-place subsides. For example, Clubhouse could let users create their own private Clubs within the app where only admitted members can access private chat rooms. That could maintain the intimacy that makes the app special today, and keep users interested so Clubhouse can avoid paying back the loan in full.
The next form of celebrity and musician merchandise? Looking like them in video games. Beyond Travis Scott debuting his new song in Fortnite through a psychedelic, galaxy-exploring immersive concert 12 million people watched, the rapper and game company teamed up to sell Travis Scott skins for $15 to $20. While the revenue split is unclear, it's a massive win-win regardless. The game becomes more appealing to a celeb's fans while the star gets free viral promotion since each buyer literally becomes a walking, shooting billboard. Expect this to become part of the digital promotion blitz playbook and a bonus cash stream for games and avatar social networks.
Deep thoughts on fundraising
Hip City Reg aka Reggie James, founder of multiverse avatar social network Eternal described startup fundraising as a practice of bending without breaking:
I used to get spanked a lot as a kid. Mostly because I think the disrespect I showed to my parents was rooted in never yielding what I believed was true. Until the very last swat. In a way… this is what fundraising is. Getting smacked around while refining the details, yet unwilling to compromise on your vision of the world. How it is, how it ought to be.
Product Roundtable: Facebook Rooms
Facebook Mesenger Rooms is one of the new features that is relying on the quarantine user loan to prove its worth. It lets people create video chat rooms for up to 50 concurrent users, and then either invite friends, let Facebook promote their Room atop the News Feed to all their friends, or share a link to make it public.
My take is that this is one of Facebook’s smartest launches in years because its ubiquity, frequency of use, and social graph could let it promote each Room to the right people. That could bring spontaneous video chat to the mainstream, and let Facebook significantly boost usage time without relying on harmful and isolating endless feed scrolling.
I asked some of the smartest minds on social product for their thoughts. Here what they said:
Ben Rubin, ex-Houseparty CEO & founder of Slashtalk
Facebook is now full-on embracing the strategy of video *chat* as a platform. That’s the right strategy for the company now that a new generation is retreating to their bedrooms as the norm. Intimacy was what Facebook lacked/ is still lacking; it’s what gave Snap life and what makes Houseparty important now. Regardless of COVID there’s a general trend “inwards” as a reaction to the millennial status seeking of the outward.
Josh Elman, Greylock/Robinhood/IRL
Rooms are important for Facebook to try to stay at the center of our social experiences. They are going to give it some of the most precious real estate - above your Facebook feed and are (probably?) willing to trade off views of the endless News Feed. They need to keep people within Facebook instead of spending hours in Zoom or Houseparty with friends. Feels like it might be just in time to keep people, like Stories was. Especially if it comes to Instagram quickly.
Esther Crawford, CEO of Squad
Video chats have grown exponentially during Coronavirus and it’s not slowing down anytime soon. 2020 is the year hanging out over video became normal, for everyone. For so long social platforms have asked us all to perform our lives for each other — so it’s refreshing to see a shift toward helping people authentically connect with friends and family.
What to consume
Beyond new synchronous apps, I’ve been loving Australian indie pop singer Mallrat, who feels like some cross between The Postal Service & Ariana Grande. She writes songs like “Charlie” about loyal friendship and longing for the sun: “I just want coffee for breakfast / I just want warm cups of tea / I just might love you forever / I hope you warm up to me.”
Thanks for being part of the Moving Product community!
What do you think of the newsletter? What should I write about next? I’m planning to explore the lack of a great dedicated meme sharing app, and explore the opportunities to unbundle Facebook like what happened to Craigslist. Reply or hit me up at joshsc [at] gmail.com with feedback or ideas!
Nice write up
Congrats on the transition. Look forward to reading this. BTW - love signal fires thesis. ADV (my fund in UK) is data driven - I'm the algorithm guy :-)