As I’ve written in some of my other articles,1 I believe building a consumer product (such as a B2C focused venture) is extremely difficult. To build a consumer product with an inherent viral loop, one must truly understand consumer psychology.
On the surface, the needs of any individual are easy to identify. Maslow developed his famous hierarchy of needs in 1943, which attempts to understand human motives based on universal predispositions.
Generally, building for safety needs or psychological needs aren’t unique differentiators. Dasani isn’t much different from Poland Spring. What makes specific products attain a viral growth loop are the top three levels of Maslow’s pyramid. One example is buying a Stanley or Owala cup over a random water bottle so you can fit in (belonging) and boost your perceived status (esteem).
Therefore, the needs a product has to capture are one of the following:
- To be part of something larger than themselves and matter in the world. (Self-actualization.)
- To be respected, listened to, or paid attention to. (Esteem and belonging.)
To build an objectively valuable product with the side effects of helping a customer achieve self-actualization or providing a sense of esteem and belonging is hard. Trends are impossible to predict. To begin with, what made HydroFlask initially popular? What made it lose to the Stanley Cup, then Owala?
A more relevant venture case study is Discord. Starting by targeting gamers, Discord built an easy-to-use, real-time voice and text communication platform for gamers. Through the expansion of features, such as in-text forums, expanded moderation, and better support for third-party integrations, Discord eventually catered to all sorts of communities, including anime, technology, education, investing, and cryptocurrency.
As of 2023, Discord has captured 200 million active monthly users, and more than 560 million accounts have registered on the platform. How and why did it beat other similar products, like Skype?
I argue that the success of Discord began accidentally. Through the expansion of features for gamers, Discord managed to create a communication platform that not only allowed users to join, and thus belong, in niche communities, but also to be part of groups that were something larger than themselves.
And for every successful Discord out there, there were hundreds of other ventures that did the same thing but failed. Maybe because of bad timing in the market. Maybe because of luck. But to depend heavily on luck to capture customer needs is difficult, and I would just rather not.
There’s also less value to be captured in a B2C market compared to a similar B2B market. Subjectively, there isn’t “a single thing that Slack does better than Discord. From an admin/moderator perspective, the level of control over user permissions and organization of channels that you have is so superior on Discord.”2 Yet, Slack sold for almost twice Discord’s current valuation ($28B vs $15B) simply because its identity is enterprise, had a small set of enterprise-oriented features, and was charging more aggressively as a result of that.
So, consumer psychology is hard. Stick with B2B instead!