Read on Twitter
1/ Fintech communities have the chance to create both an incredibly valuable company and a company that creates outsized value for consumers in search of financial security and upward mobility.
A thread… (my first, a proper welcome to VC twitter)
A thread… (my first, a proper welcome to VC twitter)
2/ Companies with digital communities doubled down their focus on community in 2020 and were rewarded. For example, two well-known fitness communities, Peloton and Strava, gained millions of new users through word-of-mouth and, subsequently, exploded in value.
3/ From a business perspective, these communities combined lower customer acquisition costs (through organic growth) with high user lifetime value (through increased engagement via network effects).
4/ Yet, just as importantly, they help users reach a common goal (exercising more
) and valuable future outcome (getting fit
).
) and valuable future outcome (getting fit).
5/ When individuals are striving for financial security, a common goal and valuable future outcome for the majority of citizens, communities can be incredibly powerful. Strong communities have been proven to lead to less poverty and greater upward mobility.
6/ Will this work if people don’t like sharing their finances? I say yes. First, people are already talking finances online. From Reddit to influencers such as Madam Money or Money Mustache, digital communities are already educating consumers about their finances in modern ways.
7/ It also has already worked in the payments sector. WeChat in China, Bonga in Africa (a social network platform on top of MPesa), and Venmo in the U.S. are examples of social and finance blending.
The next wave will be in investing and banking.
The next wave will be in investing and banking.
8/ In investing, upstarts Public and Commonstock have already caught a wave of investor excitement. My hope is that they are able to encourage education before action, index buying over individual stock buying, and sharpe ratios over profit in a way that Robinhood has failed to.
9/ I’m most exciting about the opportunity in banking. Startups, such as Yotta Savings and Invest Sou Sou, are building communities integrated with banking products that are both relevant to the mass market and encourage better banking habits.
10/ My hope is that a company can capitalize on community as a moat, embrace social nudges and innovative banking models, maximize modern customer acquisition strategies through influencers, and, ultimately, bridge the gap to financial security.
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