By Joe Sweeny
On the podcast I keep running into startups that haven’t put a cent into sales or marketing but are growing so fast the founders can’t keep up.
It’s a good problem to have and one I think we’d all like to share. So I wanted to break down the one feature all of their products have in common: Multiplayer.
Multiplayer products are virality machines. Like a Zoom call or a Calendly link, using them means sharing them.
One of the most interesting ones I’ve had on the pod, Dune Analytics, allows users to build on top of each other’s creations.
Dune is a dashboard tool for blockchain and some of its power users have built entire businesses as analysts by sharing their Dune dashboards on social. Which has created a hyper efficient growth loop for Dune that’s constantly driving in more attention and new users.
Brilliantly, the only time Dune charges for the product is for privacy. You can use 100% of the functionality for free, but you have to share it with everyone else. If you want to keep it to yourself – and not create value for the entire Dune community – you have to pay for it.
Dune CEO Fredrik Haga is one of the bests guests I’ve had on the podcast. He built Dune during the 2017-2020 crypto winter and is one of the most practical, down to earth crypto founders I’ve met. Check it out.
Product Led Growth
The idea of multiplayer products dovetails with the concept of Product Led Growth (PLG), the concept that a product should sell itself.
Amir Ashkenazi the CEO of Switchboard defined it perfectly on the podcast:
When I think about an idea for a company, I always think about customer acquisition is one of the problems that the idea needs to solve.
People often focus on finding a solution for a problem, which is really important, but that doesn’t make an idea a great idea. To be great, the idea also need to solve customer acquisition.
Amir is building a powerful new collaboration that lets you video chat with your team and work across any app all in a single browser.
He just raised $14M form Sequioa and Dylan Fields, the CEO of Figma. It’s a classic product led growth company and if it works, it could have the same viral growth dynamics as Zoom.
Finance Goes Multiplayer
The magic of PLG companies is clearest when you compare them to traditional growth e. Finance is a perfect example.
For years, partners at Andreessen Horowitz have been talking about the holy grail of fintech – a fintech company that combines social media and finance. Today, we’re finally starting to see some of those come to life.
Single Player Finance: So Many Billboards
Imagine I start a new bank. Would you switch?
Even if I have a great product, and you really like me, the answer is probably not. No one wants to go through the hassle of switching their banking. Which is why I recently had a fintech CEO tell me: “If you can get someone’s paycheck direct deposit, you have a customer for life.”
To overcome those high switching costs, consumer fintechs and traditional banks rely heavily on marketing. Chime spent ~$48M on TV marketing alone in 2020. The founder of Brex talks about buying every billboard in San Francisco to launch out of Y Combinator. In New York the subway is plastered with Titan fintech ads right now.
Ads work. Chime has scaled from 8 million customers to 12 million customers since 2019, and switching costs are working for them now. But there are more efficient ways to grow.
Welcome Player Two: Create, Share, Get Paid
Composer is a new consumer stock trading app that’s growing like wildfire, on $0 in ad spend. They allow anyone to create algorithmic trading strategies, like you’d find at a quantitative hedge fund. They democratizing powerful trading tools.
But what makes them special – and what’s fueling growth – is the social component. Like Dune you can see anyone’s creations on Composer. Any trading strategy and its performance. Then you can follow people you like and try out their strategies.
Even wilder, you’ll soon be able to charge a percentage for other people to use your strategy. Like a micro hedge fund.
The problem with banks is no one raves about their bank account and no one invites their friends to bank with them. It’s not social and switching costs are high, so customer acquisition costs are high. But people do invite their friends to check out their trading strategies on Composer and people will want to build businesses as Composer asset managers. That’s why social fintech is the ‘holy grail’.
At its core, Composer is a creator platform and a social network.
Fun Fact: The idea for Composer came out of Reddit and Wall Street Bets. Cofounder Ananda Aisola told me on the pod:
And we had so much conviction because we’d go into some of these subreddits and we saw the weekly rate of growth across sub-Reddit channels, where people are talking about these more exciting, interesting things when it comes to their investments.
Today, users sharing their trading strategies on Reddit is a major growth engine for them.
The PLG Playbook
To close, here are four of the most important pieces of the PLG playbook.
Easy to Start – In gaming developers talk about ‘Time to Fun’, how long it takes from start until when someone is having fun playing your game. Faraway is incredible at this. For product designers, it’s time to value.
Ask: How long does it take for someone to start enjoying your product? The shorter the better.
Snapchat has a famously good design where the app opens to the camera. That encourages users to snap a picture and start using the product instantly. No set up. No instructions. Time to Fun is ~0 seconds.
Free – You go with a free product to maximize growth, at the cost of revenue. If it’s a great product with low churn maximizing the number of people who can use it is ideal. Also, if you have to put in a credit card or talk to a sales team to get started, then it’s not very easy to start. (See Above)
Multiplayer – Virality baked into the product. If it’s a tool add capabilities for multiple team members to work on it at the same time. Build an excellent single player version that gets better with a whole team.
B2B → B2C2B – Companies like Zoom and Slack and Notion all have self-serve, bottoms up sales motions, but they’re ultimately B2B. The product is adopted by one person in a company and gradually expand across an entire org.
You take a lower ACV (average contract value) upfront but your CAC (customer acquisition costs) is drastically lower too. It’s a land and expand model that maximizes organic growth at the cost of contract size.
Traction? Since these products are free and you don’t have revenue as a guide, the best way to tell if they’re working is usage. If customers are investing time in your product, moving parts of their workflow into your product, and coming back day after day – you’ve got a hit.