https://www.joincolossus.com/episodes
Podcast Introduction
Invest Like the Best was chosen as one of the top five podcasts rated by the Wall Street Journal. Its host Patrick O’Shaughnessy is the CEO of O’Shaughnessy Asset Management. The host speaks with investors, founders, and CEOs willing to share some of what they’ve learned in their lives. The podcast is now expanding its horizons to cover personalities from different fields like Politics, Journalism, and Media.
Guest Introduction
Turner Novak is a partner at Gelt VC. Patrick and Turner discuss the past, present, and future of consumer social companies. The network effects that support the likes of Tiktok make them unique beasts to analyze, and Turner’s writing has been admired in this realm for a long time.
Success Metrics of Consumer Social Companies
Turner points to the early growth phase of Facebook as the beginning of the Consumer Social era.
The most important aspect of a social company is the type and quality of growth. This leads to a sustainable competitive advantage, and Facebook is the best example.
The primary indicator of growth is the quality of content, and User Generated Content is the main kind. UGC is free as your own users post content. On achieving a certain critical mass with users and content, targeted ads can provide excellent margins.
Turner draws a comparison between Reddit and Facebook. Reddit is heavily popular by engagement metrics, but revenue generation through ads is still small. The reason is that unlike Facebook, Reddit does not who its users are and hence can’t target ads effectively. Facebook has built a strong user profile by asking users to tell about their hobbies and interests. This has allowed them to create user-generated ad profiles while interacting with the product.
The Gaps
It is vital to understand the evolution of social media to understand the monumental rise of Tiktok. Facebook, the most successful social company, was built around Desktop. Instagram, although used widely on mobile devices, its news feed was also designed for Desktop. Twitter is another built for Desktop app. For Average Joe, a social platform in this age needs to be mobile-first.
Turner credits Snapchat as the first mobile-first social network. With Snapchat, one could send a quick text or take a picture and send it in two seconds. The communication friction was considerably reduced. The launch of the “Stories” feature with full-screen videos and full playback made the experience fun. Turner explains that the full-page ad on a Stories feature is far more effective than an advertisement on the news feed of Facebook or Instagram. The latter adopted this full-page ad product in the form of Stories and have enjoyed success.