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Takeaways #7
Highlights from 3-5 of the best podcasts in the startup ecosystem every week; from the Blume Ventures Podcast Club.
1. a16z: The Present Future of Audio: Talk, Music, Video, Interactivity
About the Podcast
This is a good listen for any one is building a consumer tech app in the voice / audio space. Gustav Soderstrom, who has been with Spotify in product & tech roles for a near decade and now oversees R&D, joins Connie Chan, General Partner at a16z and Sonal Choksi, a16z’s content czarina to discuss innovation in audio including podcasting, music as well as new interaction models emerging in the audio space, including what audio apps can learn from disruptive apps like TikTok. This is a fun breezy listen as well with some interesting takeaways for audio startup founders.
Takeaways
Broad agreement that there hasn’t been as much disruptive change in the audio landscape though content creation has exploded. Limited monetization models for creators, listening is still one way (not interactive) etc. All also agree that it seems like we are on the cusp of massive change. There is a cheatsheet now available to audio startups from what they have seen in other formats and media industries play out. Clearly greater interactivity, better focus on monetisation and creator tools will all likely be part of audio in the coming years.
What can audio startups learn from TikTok? Gustav Soderstrom of Spotify describes 2 big learnings for consumer audio tech startups. 1)TikTok enables creators to remix commodity music w unique video to create distinct content. Audio startups could explore this. 2) Tiktok is a medium built for the algorithm serving one item up front to be evaluated versus say a scrolling feed. One challenge with adopting this format for music is that songs take a bit longer to be evaluated unlike Tiktok videos which an be dismissed in a few seconds. An interesting development though as a result of TikTok is that more and more songs start fast as consumers are making up their minds on the songs faster and faster. Gustav calls it the TikTok effect.
Connie says that going beyond interactive audio, we can look at one additional area that western audio companies can copy from China, and that is to focus on your super fans or your super listeners. In Chinese audio or podcasting apps, you can be part of a paid fan club should you chose, and then you get a whole host of interesting features including bonus content, a unique sound when you enter the audio room and so on that you can unlock when you become this superapp. Beyond just monetization features these are also signals that flow back to creators.
UI and Spotify. Gustav: We found that your podcast listening can be predicted from your music listening and musical tastes - they used this knowledge to coldstart their podcast app. Keeping both podcast and music in 1 app has meant a lot of interesting UI challenges. In podcast, skipping is 15 secs, but in music it is the entire song. They had to do a fair bit of work in the background to make this work smoothly. Your UI has to be much more dynamic in a super app says Gustav.
One interesting aspect which emerges is making the UI of navigating between different audio snippets (songs or podcasts) easier. The listener won’t mind having to skip through 5 songs if the 6th song she lands on is spectacular. Gustav refers to Chris Dixon’s comment about how UI and ML have to integrate - if your ML recommendation engine is perfect, then you need to show only 1 item, but if the hit rate is 1/10 then you have to show 10 items the screen. You have to adapt the UI to fit your machine learning level.
How Spotify employs an algotorial (algorithm + ediorial) strategy in product development. Per Gustav, humans don’t scale well whereas algorithms scale well. Now humans are good at creativity. Imagine an idea for a playlist such as ‘songs to sing in the car’. No algorithm can come with that. A human can. So after a human comes up with this idea, and then puts together a list ta few thousand songs. After the human creates these list of 1000+ songs she can hand it to the data science / ML team who can then use machine intelligence to add another 10-15k songs and scale it to 100-200m users. The idea, data sample and data wireframes have to be created by a human editor and then the machine takes over.
Algorithms look in to the rearview mirror and take a straight line view into the future. Good product development is based on a contrarian hypothesis which an algorithm cannot do. ML is not going to come up with a contrarian hypothesis. In your product development portfolio, you want to have some ideas which are quite contrarian and have a high chance of failure and a bunch which are obvious and much likely to succeed. The exact mix of this depends on the company.
Prioritising product development: One product prioritisation and development mechanism that worked for them take the kanban board and product development prioritisation all the way to the C-suite. There are 5-7 items there on the product development board, which the company needs to do and Daniel (Ek, the CEO) owns this. Gustav says that one agreed rule is that 2 things can’t have the same priority.
Podcasts was the #1 company priority for two whole years. Everyone in the company knew it. If you don’t have this clear priority laid out, you push these decisions out to managers and it creates conflict in the org. Daniel can’t have an idea in such a large company of what is going to clash with what resources. But what this this meant was that when decisions had to be taken at a company level on what resources to allocate if there was a clash then people knew what the priority for the company was.
About the Podcast
Siddhartha Ahluwalia is in conversation with Rahul Chowdhri, the Managing Partner of Stellaris Venture Partners. Prior to Stellaris, Rahul was a Partner at Helion Venture Partners and has notable names like Microsoft and BCG in his career. Through his time in the VC world, he has invested in companies like MamaEarth and Shop101 via Stellaris, and BigBasket and Livspace via Helion. Channeling his plethora of experience, in this episode Rahul deconstructs various strategies for D2C brands, including moats, scaling up and monetization, borrowing examples from his investment theses around some of his most successful investments.
Takeaways
D2C brands should focus on being "digital first" - Online brands have a higher chance of success than traditional brick-and-mortar retailers due to the following reasons:
High gross margins - Selling online creates the opportunity to have favorable margin structures, allowing e-tailers to make money on every order.
Distribution is democratized - E-tailers do not need to work with distributors to place their products in multiple retail outlets and hope that consumers pick it up. Instead, by being online, shelf life is infinite.
Brand building - E-tailers can leverage influencers and other channels online to build their brand quickly.
Value proposition is faster - Since consumers give the brand feedback directly online as they use the product via ratings and reviews, brands can evolve product offerings much faster to suit customers' needs and create a stronger value proposition.
Building a moat before the brand is a household name - A moat is a competitive advantage that a company has over its peers. Once a brand is renowned enough, the brand name serves as a sustainable moat. However, to get to the point where the brand itself is a moat, the company should focus on the following moats:
Functional differentiation vs emotional differentiation - While a brand should provide functional differentiation when its products are newly launched, i.e. provide a solution that is better than existing ones in the market, those functionalities can typically be copied easily. Selling a good product is just the first step but should be thought of as a benchmark rather than a moat. Thus, brands should focus on selling their 'story' rather than just their products to evoke emotions within consumers that they then associate with the brand.
Pre-empting the market - A brand should try to stay ahead of its competitors when it comes to identifying future trends so that they can launch products at the right time. This functions as a cycle because even when a competitor duplicates the product, the brand is already iterating its next product.
Marketing should be brand-oriented - Tying back to emotional differentiation, brands should focus on brand-oriented digital marketing rather than transaction-oriented, to build their brand awareness, recognition and loyalty rather than just stimulate one-time purchases. This requires using the right influencers that align with the brand's values.
If you're entering a crowded space, offer a service - With products, its easier for certain players to dominate the market. However, when a service is being provided, then the possibility for multiple players to co-exist is much more likely because of different experiences. While products can also be experienced differently by different users, it easier for competitors to copy product elements as composed to service elements since services have a lot of intangible aspects to them. This allows for multiple winners and multiple ways to divide the pie. In EdTech for example, despite massive players like Byju's, Unacademy and Toppr, there is still a lot of scope left in the market because services allow for a lot of different types of activities that can be created. Thus, when entering a crowded space, a brand is more likely to succeed as a service-provider than by selling a product.
When building for a global market, study the reputation of Indian brands in that sector - As companies retail online, it is easier for them to cater to a global audience. For D2C brands, it is especially important to create global, scalable products as that can help them survive and thrive in a competitive landscape. While consumers are becoming increasingly amenable to global offerings, founders should evaluate the reputation of Indian products within different sectors, see which is the most promising and then aim to solve the problem with that lens. For example, when it comes to sectors within STEM, Indians are highly respected globally and brands in those sectors should definitely aim to sell to a global audience.
3. Indian Silicon Valley: Decoding Market Research w/YourDOST's Richa Singh
About the Podcast
In this episode of the Indian Silicon Valley podcast, Jivraj Singh Sachar chats with Richa Singh, CEO and Co-Founder of YourDOST on Decoding Market Research.
YourDOST is an emotional wellness platform in India that has served 20+ lakh customers, and has 900+ professionals including counsellors, career coaches, psychologists, psychiatrists on their platform. It is a completely tech driven platform which is now profitable. Richa talks about her journey of starting YourDost, understanding key elements of market research, importance of taking feedback from real users, developing an MVP, and having a personal and deep sense of WHY.
A great listen for entrepreneurs who are just beginning out!
Takeaways
Deep personal motivation to begin YourDost: Richa's personal instances of having a close bright friend go through depression during her Kota Days and a friend passing away by suicide due to bad grades were personal triggers for her to do something differently about the problem. During her various job journeys in India and the US, she realised that almost everyone around her went through mental health problems either at work or in their personal lives. It was a problem she deeply cared about. Multiple times in the episode, Richa points to the fact that a personal why is important to begin solving a problem and only a deep sense of attachment to the problem will help entrepreneurs tread the 8-10 year journey.
Market Research
Testing Initial Hypothesis: Richa started the company six years after graduating from college and with no experience of psychology whatsoever. She did not know what counselors, psychologists, psychiatrist were but connected with the feeling of seeking support and also the feeling of stigma of seeking support which she puts it as 'main pagal thodi hun ki mujhe therapy/support leni chahiye'. This feeling motivated her to question people around her and 90% of them expressed the feeling of wanting support and someone to talk to. To further strengthen her hypothesis, she reached out to unknown people on the internet via forms on Facebook groups and the results reconfirmed her initial beliefs that majority of the people would like to seek help.
Secondary Research: While doing primary research, she also collected data from journals, McKinsey and BCG articles which supported the fact that India is a huge market for mental health services. A few shocking numbers — 1 in every 4 around the world go through some form of mental unrest, India ranks highest in terms of depression and second in anxiety. She believes doing triangulating secondary research with primary data can help understand the market better.
Staying close to the stakeholders: It is important while doing market research to understand the demand and supply side of the system by talking to them and taking in their feedback. She goes on to add that while doing this, it is critical to understand the problem of the users rather than saying 'hum yeh bana rahe hai' (we are building this). Further questions like how much will people pay for it and how big the market will be should be secondary to the question of will people see value out of it? While building YourDost, they spoke to 100+ counsellors, psychologists and volunteered their time to build a product alongside them and do a proof of concept.
Market Research pre and post launch of the product: She says there is no ideal time to study the market before launching, but one must not wait for too long to perfect their product. Even if one launches their app after working on it for 6-12 months they will not get a million customers so it is better to launch an imperfect version and get real time feedback from users to improve it. Regarding, post launch market research she believes it is important to have eyes on the road while on the driver's seat which essentially boils down to keeping a track of the market (sentiment, customer data) in real time even after the product is launched.
Learnings from her career: A founder's journey is usually considered lonely where they are always under pressure from investors, team members and family. She compares this high external pressure to a pressure cooker that can burst anytime and having a great support system in terms of friends, family, coaches acts like the whistle. In the jounrey of entrepreneurship, one should hold onto emotional well being and self care to continue for the long run.
4. Venture Stories: Greg Isenberg on the World of Opportunity in Consumer Social
About the Podcast
Greg Isenberg founded Islands, a company that spearheaded the development of modern group chat and discovery starting with college campuses. Islands was acquired by WeWork in 2019, where Greg then served as the Head of Product Strategy till June 2020. Now he's co-founded Late Checkout, a product design studio and agency that designs, creates and acquires internet communities. He is also a venture partner at Indicator ventures an early-stage focused venture fund.
The podcast deals with ideas for consumer social products, the potential of dating apps and Greg's tips for founders in the social space.
Takeaways
Reasons for opportunities in the social/communities space:
Companies like FB, LinkedIN, Reddit and Udemy have become massive and their products are bloated. This creates and opportunity to build offerings like 'LinkedIN for x'. For example Goat (Greatest Of All Time), a platform for sneaker heads to buy/sale collector shoes. The founders identified this is niche community, solved for a few key pain points like verification and pricing and now are a unicorn.
For long, vertical community critics have called it not venture fundable because of the size of the niche audience like Green Tea lovers or cashiers. But No Code and Low Code development have reduced the cost of development and you can charge earlier which means that venture funding may not be required. Entrepreneurs can start targeting smaller number of users. Example - Crunchyroll, an internet community for Manga and anime fans, was acquired for a rumoured $1.5B by Sony.
Opportunities in the social space
A Discord for sports fans to talk 'sh*t to one another', analyze games together and channel their passion
Unbundling sport online communities
Most entertaining sports commentators could have followings on audio first apps like clubhouse which would then democratise radio.
Problem with clubhouse like platforms is that you will have influencers doing the talking and most people only listening. Since people want an opportunity to quickly get feedback on what they've said, integrating that is crucial.
When discussing matches people tend to talk to their community about key moments in the match. A product that identifies these moments and then supports discussions around them could be possible.
Wealth
Receipts are a data source that can be used to create an identity. They can be used as instruments to signal 'I care about these restaurants or charity'. A platform like Patreon is a transaction site, but it doesn't provide an identity and the next wave of social platforms will need to integrate this identity creating functionality.
Purchases that users make should be viewable to others in their community. There could be a platform for friends to be able to virtually view my purchases in 3D and then make the same purchase, like a combination of Fortnite+Venmo feed. Akin to how offline shopping happens when you see something interesting at a friend's home.
Stocks are becoming a rage now and people may want to put up their portfolios online to facilitate discussions around them. Other may choose to even follow some portfolios like public.com
Audio first
There is a spectrum of increasing resolution which can be used classify modes of communication according to the level of intimacy they provide. Text would be the most impersonal and the other end would be meeting in person which would be just preceded by video call.
Audio is perfectly in the middle of this spectrum and voice notes could be the goldilocks when you aren't ready for a video chat yet
Integrating serendipity
Refers Sean Parker's social app Airtime which connected you with random people based on your information from FB
People want to hang out and have spontaneous meetings with others
Current apps are sketchy because they don't replicate the experience of walking into your favourite café or cocktail bar and interacting with someone you think is interesting
Greg's advise for founders in the social space
Incentivizing people/ Motivating of people to share
Quantify fandom
People want to have exalted status like 'Mayorship' in foursquare, so people will want to be able to say that 'I'm the biggest fan of xyz sports team' or the bragging right to say 'I was the first to discover xyz'. People want to build identity in this way and they'll also want to promote their finding, be it an artist, sports team or anything else.
Social apps should be a treasure hunt of sorts with people looking to earn these badges
Look at all consumer products funded by Sequoia, Greylock and others from 2005-2018. Talk to those founders take their learnings because a lot of their ideas may be feasible now. Like Justin Kan's Whale, which allowed users to ask questions and then get video answers from other users and experts.
Target new audiences/communities since it's easier to build products for new communities than old ones. An example of a new community would be Doordash users/delivery people or fans of a new game that's about to come out.
Leveraging Audio
Pick an audience, think of audio and how to connect the two
There's a wildly popular twitch channel for ASMR (Autonomous Sensory Meridian Response)
Videos of sounds that help you de-stress. It's the opposite of when you hear nails on a chalkboard. Has offbeat videos like people gently whispering, tapping a wooden comb and slicing a watermelon.
People want to learn, get paid, laid, and entertained!
Tips on turning an audience into a community
Important to understand the difference between audience and true community
Once you have an idea, for example Green tea lovers, first create an audience. One way to do this could be creating a meme page.
Then start moving them towards the product you're behind
Likens a community to a house party
When you enter a great house party there are not too many people nor too few, the atmosphere is perfect and your favourite song is playing. As the night progresses you start enjoying yourself more and you don't feel like leaving
Creating a community needs intense research even if you're part of the community since you need to distill this community's ideal house party into your product
The host needs to call people who will attract other people to the party and that needs effort from the host's side. Ex - you want someone to promote the party but you will have give them the content to forward/post of social media. Erik Torenberg had asked someone to post something on product hunt and gave him the content to do so.
If you want to throw a house party for dancing you need to set a precedent of people dancing. You could do that by inviting people who are fond of dancing to start dancing first. Then when user # 50 walks in they see people dancing and believe they need to do the same. Ex - Erik wanted people to write blog posts on product hunt and sent them emails with blog templates and drafts with their numbers. People were happy to comply and this set the trend for others to follow.
Tactical steps to find an audience and turning it into a community
Find communities from reddit using websites like redditlist.com or redditmetrics.com
Find subreddits that are growing in the last 24 hours or week, pick a vertical and join that community
Research that community, search for the 'all time best' posts and see what type of conversations are engaging people
Decide if you want to build a product which could be (1) utility - something that this community needs on ideally a day to day basis. (2) social network/marketplace - something 8-10X better than FB otherwise it will not fly.
Create a Minimum Viable Audience by using exclusivity to recruit people from these groups. Get the 1st 100-500 people by following them on twitter and reaching out to them.
5. SaaS Boomi: A masterclass in bootstrapping, learning and staying happy with Kumar Vembu
About the Podcast
In the podcast, Kumar Vembu discusses his entrepreneurial journey, his motivations and passions, some of his failures, key learnings and hiring principles. It concludes with an investment advise for the founders. The podcast is ideal for tech founders or aspiring entrepreneurs
Takeaways
Importance of being open-minded: As an entrepreneur, it's extremely important to keep an open mind towards the product, market dynamics, and changing customer needs to avoid stagnation. One way to solve this is by empowering your team to be independent and think like entrepreneurs.
Developed country practices in product management, development, and sales don't work in the Indian ecosystem: At the time of increasing prices or announcing end-of-life for a product to launch a new product, getting customers to adopt the change can be a challenging task. Indian customers have a tendency to adopt change at their own pace, and any steps to fast-track this behavior change can backfire. If you don't want to spend money on enabling faster customer behavior change, your plan has to be aligned to the slow pace at which customer behavior will change.
Lessons from India journey: He picked up retail business because the software services for retail at the time were fairly unorganized, with regional players servicing 3-4 districts. The thought was to build an advanced product and leverage his expertise to scale nationwide. The motivation behind the idea was to empower local retailers to be able to compete with international competition once FDI in retail was permitted. He learned that in India, in spite of heavy competition in retail (the number of retail stores in India are more than the U.S.A and China combined), people manage to make good money and had strong customer relationships. He was inspired by the hard work and commitment of retailers in India.
Moments of failure and ways to manage them: While he believes that entrepreneurship is a rollercoaster ride and an entrepreneur fails every day, the 2 most important ways of avoiding problems are by making sure that people don't misunderstand you and vice versa and, learning to say "no". Kumar Vembu would always make sure that he is clearly understood and he understands people clearly to make sure they take the right decision rather than being misled. That way you are always ready to discuss or work on problems because you have only one version of the truth. Further, entrepreneurs, being overly optimistic, have a tendency to say "yes" to everything during product development and might drive the company towards unsustainability. Saying "no" is the most critical ingredient for creating focus which will lead to the success of the product.
Important of quality: Around 2010, GoFrugal hit a point where the entire sales team left the company and became channel partners for a competitor. This was triggered because Kumar Vembu decided to double the prices of his products to be more viable financially, and the sales team wasn't confident about the price. To his surprise, the revenues did not take a hit, because he was able to get a lot of new customers through referrals and his older customers were willing to pay the price because of the quality and depth that the product offered. In India, the focus for the mass market is always on the price, and lesser on quality which in his opinion is not true. In 2017, GoFrugal withdrew its call support feature and introduced a chatbot + self-service for support. They made a lot of simplifications in the software to ensure that the product was self-serviceable, and produced nearly 1000 videos on self-service. Voice support has been a paid add-on and less than 5% of customers brought voice support. They were able to reduce 70% of the support requirements. It was a risky decision that could have taken the company down, however, the key to success here was product excellence
How to spot the best talent: Kumar Vembu draws from his personal experience of recruiting for the Airforce, where he had to undergo a psychometric assessment, an individual physical test, a group physical test, followed by a group discussion and panel interview. He believes that psychological safety and a culture of helpfulness are key to hiring. It's important to understand whether the person has the right value system, the right attitude, and is helpful towards others. The ability to listen to people and recognize their opinions rather than always pushing their point is also an important attribute. Further, he believes that people outperform when they feel you can trust them, and it's important to show that. He refers to a podcast by Margaret Heffernan about super chickens spoiling the team and mentions that he wouldn't hire super chickens for his team
Investment v.s. bootstrapping, advice for founders: According to him, the more important questions for a founder before investment are about the product, product-market fit, growth plan, and goals. Founder should avail external funding only when either money is a key requirement for the growth of the business, or the founder wants to de-risk and potentially exit. Another reason for investment could be to have management advice and interventions from external parties, however, it comes with its cons as the founder may lose freedom and flexibility and will have to manage external expectations.
On a closing note, Kumar Vembu mentions that an entrepreneur has new experiences every day, and if that's not the case then they need to open their minds and be better aligned with the market. Clarity of purpose is extremely important. For him, it was first to make in India, and then partnering with smaller retailers by giving them the technology to compete with international competition. The threat to small retailers from FDI has started becoming real only now and to him, it feels like they had been practicing for 15 years and ready to play the match now.