Turning A Feature Into A Company
The first thing I ask myself when investing in a seed stage company is, “ This idea, is it a feature/product, or is it a company?”. The distinction between the two, especially when it concerns technology companies, is what determines the level of success a seed stage project has from both a product-market-fit perspective, and a competitive one.
To illustrate this distinction, let us use the case of Facebook ($FB) and Affirm ($AFRM). When you look under the hood, Facebook is a messaging app. Regardless of the kind of content (videos, photos, comments), the value proposition of Facebook is one of aggregating networks/communities to share content (user-generated), and receive impressions/engagement. Think of this as a 21st century form of conversation and communication. The same abstraction applies to Twitter as well.
Platforms such as Youtube(and other internet sites)however, incorporate a messaging app component (comment section), as merely a feature, they have not built the company around it like Facebook and Twitter have. In both of these companies, what appears to be a mere feature/product from an outside perspective, has turned into multi-billion dollar companies. *This is the ideal example of how a product/feature can turn into a successful company*. What makes these success stories is the “lock-in” network effects.
The exact opposite example would be Affirm. The “buy now, pay later” business that Affirm pioneered is becoming a stark example of a company turning into a product/feature. The ability to pay for a product in installments (with no hidden fees) is becoming prevalent in the market, with companies such as Apple & Square recently acquiring/building their own option for consumers on their platform. Many more will follow suit.
So what does this mean for Affirm (a company which I am an investor in)? In my opinion, this means a once promising company, has now turned into a commodity like service, facing stiff competition. This is the result of a feature/product masquerading as a company, when in reality….it is just a feature.
When starting a new company (or investing in one), it is important to understand this distinction. Building a product/feature or building a company has its own merits. One is ideal for an M&A transaction (if lucky), or extending a current business to new segments/offerings. The other is ideal for building a sustainable business which can thwart competition and have its own “lock-in” effects.
Trailit- A Story OF Mobilizing Networks , Turning A Feature Into a Company
Investors, builders, governments & society at large are understanding the importance and magnitude of networks (and network effects). The success of social media, brands, crypto, even stocks today, are all driven by network effects. The 21st century driven by technology and globalization is the century of networks. Internet technology has enabled the mobility and aggregation of networks on vast scales, while globalization has narrowed the gap between cultures, allowing for vastly large communities to be formed around central shared beliefs and goals.
Although we think of platforms such as Facebook, Youtube & Twitter as decentralized in their community base, they are still centralized on an aggregation level. All the global consumers have to go onto their platform to join/be a part of the network. If they want to interact with content and people, they have to be a part of/go to the platform.
What if there was a way to to have a decentralized community base, and a decentralized aggregation means via a meta-layer?
Giving The Comment Section Wings
To go back to the earlier conversation about product/features vs. a company, let us examine one of the most popular platform features that has the potential to create a successful company. The comment section.
In essence, the comment section is merely a medium for expressing reactions to content. However, given the popularity in the comments sections of platforms such as Youtube (as seen by every “I came here just for the comments” responses), *the comments are becoming the content themselves, and I believe this product/feature (comment section) can be turned into an important company.*
Turning a comment section feature into a company/business involves achieving two goals:
- Network Effects (must have users generating/interacting with content & sites)
- Portability (giving the comment section “wings”, so it is not tied to any one platform/website, but operates at the meta layer, allowing above the surface annotation to any site, only visible when using the Trailit Plugin)
Here is a very high level diagram of how this company would work (from a product standpoint)
In essence, the marriage between the comment/content section with the network of users would create the company itself. The portability of the network & comment section is the inherent value proposition of this business, and enforce the strength of one another.
“Crypto twitter” and “ reddit’s wall street bets” are networks of millions of individuals around the world, who are very engaging, entertaining and important in shaping subsets of cultures. However, the drawback of these two networks is that they are tied to the platforms twitter and reddit, respectively. However, these individuals that are part of the communities are very distinguishable, and can often be spotted in an online crowd, based on their perspectives, memes, jokes and actions.
Another example of a powerful network is that of BarStool Sports. Barstool Sports was founded as a sports community/company, however, last year during the pandemic, millions of Barstool community members invaded RobinHood and crypto, all led by the founder Dave Portnoy. The community was responsible for moving markets, with assets such as bitcoin, safemoon, tech stocks “going to the moon”. Their impact can be measured beyond just social media engagement metrics, their impact was on the scale of billions of dollars.
However, these valuable communities are not mobile, although you may notice some of them on off-platform sites when common slangs, hashtags, emojis and memes are used.
Trailit (as the version described above) would enable the mobility of networks across sites and domains, spreading the reach and impacts of these communities. The goal would not be to only enable the proliferation of “meme stock” networks across the internet, but enable the proliferation and growth of ANY community.
- *By having ONE platform (Trailit plugin), you can interact with a community on any site. This is contrary to most sites with published content/social media, where you have to individually create an account (and get verified) to comment/post content on EACH site! This is a cumbersome extra step(s) which causes friction, and hinders engagement.
- With Trailit, you create ONE account, and get to access/generate community engagement on ANY site via the meta-layer plugin!
As illustrated in the diagram above, one such community that would immensely benefit from Trailit would be the scientific/academic community. Currently, this highly impactful network is driven by a peer-review process, where comments/feedback/critiques are done in private behind close doors. In addition to this, the very dense and often incomprehensible research articles are closed end. In other words, in order to learn more about the research or view the scientific network’s perspective on a work, YOU HAVE TO INDIVIDUALLY email or call the authors/scientists/community members. It goes without saying, being “ghosted” is more common than one would think. The community consensus mechanism of establishing truth is vital to the society of science/research, so naturally, having a walled moat of communication hinders value & progress. Additionally, adding in a pseudonym feature for accounts enables highly qualified individuals to share HONEST, and valuable feedback. The growing political landscape of science (which should be evidence based, not political) has made it nearly impossible to be a contrarian without facing backlash (often career ending), even if one is speaking the truth!
Without making this article too long/dense, I will save the use-cases for e-commerce and news for another time (although the value proposition is quite self-explanatory), along with potential business/revenue models and how this fits into a Web 3.0 model.
This article was just a rough draft, scratching the surface of what Trailit can be. Although there are many complexities which will need to be elucidated and worked out, the mission is simple : mobilize networks & ideas from where they are, to where they can be.
The following is my approach to building this company, communicated in a way I do with the companies I make venture investments in.
I truly believe Trailiat as it currently stands, has come across an immensely powerful product, which if focused in a very targeted manner (as outlined above), can turn into an important and successful company.
Given this belief, I would rather take off my venture hat, and put on the building hardhat, to become an integral part of the team and what you are building.
-Abe, Associate — The NewField Fund
As a new investment fund focused on the disruptive technology of tomorrow, we hope to share our world-view and mental frameworks in which we derive our theses. We welcome change and progress, but also strive to understand truths that remain constant and are timeless.
Disclaimer: Nothing written in this research article, or any article by The NewField Fund should be considered as financial, legal, or investment advice of any kind. Investing in crypto is highly risky, do your own research. #DYOR