It used to be that the heroes of the consumer internet were founders who built companies with massive user bases. By massive, I mean, truly massive. Today, Instagram, Youtube, Whatsapp, Google and Facebook each have more than one billion monthly active users.
We all know that consumer playbook: build a viral product, grow at all costs, make your product free and addicting, monetize off of advertising, rinse and repeat.
While these founders deserve enormous respect for taking us through the first few innings of the consumer internet, what I’ll call the mass market internet, a couple of big changes are happening that make me excited about a growing counter trend: The niche consumer internet.
Why now?
Large internet platforms don’t feel human anymore. Instead, Instagram and Tiktok feeds feel increasingly overrun by influencers, content marketing and brand promotion. In 10 years, I expect AI to make these spaces more addictive, more commercial, and more divisive, not less.
Advertising business models are reaching a breaking point. Many large internet companies reliant solely on advertising revenue require more eyeballs to make money. As these services become more addictive and time consuming, they risk alienating a subset of their user base, so are now trying to have it all by introducing ad-free subscription services.
Building on the internet is cheaper and easier than ever. It's never been easier or cheaper to build anything in software. This is a great thing for businesses targeting niches because it means software can serve ever smaller markets more efficiently than before.
Mature internet users remember the good old days. Millennials and boomers use the internet almost as much as gen z, and crucially have early memories of a more human internet with communities, group chats, blogs and IMs that weren’t polluted with addictive algorithms, but that were instead places you could truly connect with other human beings whose sole objective wasn’t just to sell you something.
Consumers are starting to pay for things online. The rise of out of pocket spend via subscription business models means consumers can finance companies they care about from day one, giving them more options versus raising traditional venture capital.
Internet addiction is becoming a real issue. Everyone I know is trying to spend less time online. At first it was a niche (no pun intended), but since covid, it's all I can talk about with my family, my friends, even former co-workers who work in tech and VC. Don’t get addicted, try to set limits etc.
New Internet heroes: Matthew Buchanan, Letterboxd
For now, let's define a niche internet business, as an internet service with less than ~50M monthly active users (MAU), generating revenue beyond just advertising.
In an effort to promote the stories of these businesses, I’m delighted to share that my next post will feature a 1-1 interview with Matthew Buchanan, CEO of Letterboxd, a social film discovery app.
Matthew bootstrapped Letterboxd without any outside capital to over 10 million users before the company was recently acquired for $50M.
Matthew is a new type of internet hero. If there are any particular questions you’d like me to ask Matthew in my upcoming interview, please leave a comment below!
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i'm also bootstrapping a niche consumer app, in a very similar vein as Letterboxd. I agree with what you've said here & in previous posts, but there's one big piece i feel you're missing: it's *so* hard to sustain your life while bootstrapping. Assuming you're not independently wealthy, bootstrapped founders typically have to survive for years for their app/product to take off until we can pay ourselves a living wage. I'd really love to know a couple things about the Letterboxd journey in that regard:
1- what milestones/levers allowed them to be able to pay themselves from letterboxd? (users subscribed, number of years spent building, ads/other revenue streams implemented, some combo of all?) I realize this won't be some magic fix that all startups can do, i'm just curious about their specific journey :)
2- how did they manage to pay the bills in the meantime?
3- any advice for the founders in this early stage? it's so hard!
can't wait to read the interview! Keep up the great work!