
20VC: The Dubsmash Memo: Scaling to 43M Users in 10 Days, Why TikTok Was a Competitor Like Never Seen Before, Good vs Great Consumer Products and What Every Consumer Product Needs & The Future of Consumer Social with Suchit Dash
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The PitchTue Sep 12 2023
Dubsmash Journey:
- Dubsmash scaled to 43 million users in just 10 days
- They received funding from some of the best in the business
- Battled TikTok, an opponent like never seen before
Suchit Dash's Background:
- VP of Core Product Experience at Reddit
- Responsible for surfaces that millions of users interact with daily
- Cofounder of Dubsmash, a short video platform acquired by Reddit in 2020
Founding of Dubsmash & V1:
- Dubsmash was a lip-syncing app that allowed users to record videos and send them to friends
- The secret to scaling V1 was its simplicity and ability to create viral content
- The team faced challenges with retention numbers early on but learned valuable lessons
Data: Retention, Cohorts, and The Smiley Face:
- Specific data used to understand product-market fit included retention rates and user cohorts
- Good retention was around 30% after 30 days, while great retention exceeded that percentage
- Observing net new user cohorts helped identify trends and analyze user behavior
- The "smiley face" referred to the return of users who had previously stopped using the app
Battling TikTok:
- TikTok's success was attributed to their aggressive spending on ad targeting through platforms like Facebook and Snapchat
- TikTok leveraged existing networks and influencers to quickly acquire users
- Lessons learned included understanding competitor strategies and finding ways to differentiate from better-funded incumbents
The Decision to Sell: Being Acquired by Reddit:
- Suchit decided to sell Dubsmash because they realized they didn't have enough resources or team culture to compete with TikTok effectively
- Failed acquisition attempts led them to consider partnering with another company instead of raising more money or competing directly with TikTok
Mindset as an Entrepreneur:
- Focus on key problems and finding product-market fit
- Maintain intellectual honesty and realistic expectations
- Have stamina to persevere through challenges and setbacks
Mindset as an Acquired Founder:
- Embrace collaboration and work with other teams in a larger company setting
- Effective communication is crucial for alignment and success within the organization
Future of Video and Monetization:
- Video formats can be challenging for monetization due to limited ad space compared to text-based platforms
- Each platform needs to find its own unique approach to video monetization based on user behavior and preferences
Challenges with Video Monetization:
- Video formats can be challenging for monetization due to limited ad space and potential user resistance to ads interrupting their viewing experience.
- Platforms need to strike a balance between delivering engaging content and incorporating ads in a non-intrusive way.
- Finding innovative ways to integrate branded content or sponsored videos can provide opportunities for monetization without disrupting the user experience.
The Value of User Communities:
- Dubsmash found success by tapping into specific user communities, such as dancers and creators, who were motivated by building their own followings and earning cash.
- Building strong communities around shared interests can create loyal users who actively engage with the platform and contribute valuable content.
Importance of Intellectual Honesty:
- Being intellectually honest about product-market fit is crucial for making informed decisions and pivoting when necessary.
- Recognizing when a product isn't resonating with users allows founders to focus on finding solutions or consider alternative paths, such as partnerships or acquisitions.
Lessons from Competitor Battles:
- Facing competition from well-funded incumbents like TikTok requires strategic thinking, differentiation, and understanding competitor strategies.
- It's important for founders to stay focused on their unique value proposition and find ways to stand out in the market.
The Role of Transparency in M&A Processes:
- Transparency during an acquisition process can help build trust with potential acquirers but should be balanced with maintaining confidentiality until deals are finalized.
- Communicating openly with investors about the decision to sell can help manage expectations and gain support throughout the process.
Different Mindsets as an Entrepreneur vs. Executive:
- As an entrepreneur, focus, intellectual honesty, stamina, and adaptability are key mindsets for navigating challenges and driving growth.
- As an executive at a larger company, collaboration, effective communication, alignment-building, and adapting to different organizational dynamics become critical skills.
The Future of Social Video Platforms:
- The success of platforms like TikTok highlights the value of connecting users around shared interests rather than solely relying on social graphs.
- Building communities based on specific content types or interests can create engaging and valuable experiences for users.
Reddit's Purpose and Feed Paradigms:
- Reddit is known for its ability to connect people through conversation, entertainment, and information.
- The goal is to elevate conversations and make them more central in feed products.
- Current feed products bury conversations with a single icon, which needs to be rethought.
- Rethinking feed paradigms is necessary to align with what motivates customers.
Best Product Decision:
- Pivoting the entire company of Dubsmash towards the Stance challenge platform was the best product decision.
- It was daring, bold, and scary but proved to be the right move.
- Delaying the pivot would have resulted in running out of cash.
Listening to Users:
- Framework: Listen to what users love, monitor their actions, acknowledge what they hate, and take ownership if needed.
Facebook as a Copy Machine:
- Facebook is not just a copy machine for consumer social.
- They are an execution machine that occasionally comes up with original ideas.
TikTok's Strength:
- TikTok's biggest strength today is its disregard for privacy and conventional rules.
Choosing an Investor:
- Nihal Mehta from ENIAC would be chosen as an investor for the next company.
- He stuck with Dubsmash through thick and thin and was always a champion.
Books:
- "Execution: The Disciplines of Getting Things Done" by Larry Bossidy and Ram Charan
- "Start with No" by Jim Camp (negotiations)
- "Wanting" by Luke Burgis (mimetic theory)
Audio Piece:
- Hans Zimmer soundtrack