Greg Isenberg (@gregisenberg) has spent years practicing the art and and studying the science behind building hit viral products. Today he's using his skills to build a communities design firm called Late Checkout, based on his theory that the best products come from unbundling parts of much larger communities and social networks. In this episode, Greg and I discuss the work that goes into building viral products, how to use niches to gain an advantage as an indie hacker, and why the massive growth of large platforms like Twitter and Reddit has created a short window of time for great business ideas.
What’s up everybody? This is Courtland from IndieHackers.com, and you are listening to the Indie Hackers podcast. On this show, I talk to the founders of profitable internet businesses and I try to get a sense of what it’s like to be in their shoes.
How did they get to where they are today? How do they make decisions both at their companies and in their personal lives, and what, exactly, makes their businesses tick? And the goal here, as always, is so that the rest of us can learn from their examples and go on to build our own profitable internet businesses.
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Today, I sat down to talk to Greg Isenberg. Greg is the head of product at WeWork and he’s also one of the most talented, experienced founders I know when it comes to designing social apps, consumer-facing apps and specifically apps for communities. So in this conversation, Greg and I informally chatted about what he knows, what he’s learned, and some of the cool things that he’s built today. Enjoy.
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Let’s talk about youprobablyneedahaircut.com. It’s very much enabled by the pandemic that we’re living through. It’s arguably the most popular viral project that I've seen come out of COVID. It’s been everywhere. It’s been all over the news and it’s a cool idea. What is You Probably Need a Haircut?
It’s simple. Basically, I needed a haircut and my girlfriend wanted to give me a haircut because my hair was really long. I was like, “You’re a data scientist. You know nothing about cutting hair. Absolutely not.”
I was just like, “Hey, why don’t you get on the phone with my stylist, JaBarie, who’s in Brooklyn and he could teach you how to do it?” Hence, the birth of You Probably Need a Haircut. Basically the way it works is you go to the website when you need a new haircut and you book type of haircut, men’s, women’s.
You get paired with vetted great stylists who coach you through the process of cutting your own hair or your partner or friend cutting your hair. It really took off. It was on the Today Show. It was on ABC. It was on Fox. It was on NPR. Millions of people visited the website. By the time this airs, probably thousands of haircuts, and I learned a lot from this project.
I talk to people who start these viral apps that do amazing in the media. They grow through word of mouth. Very rarely is it the case that people do this on accident. I think the average layperson’s like, “Oh, yeah. I wish I would get lucky one day with a cool app that blows up.”
But when I talk to people like you, it turns out that you have a long history in making consumer-facing apps. You put a lot of thought into what will spread, what people will use, what people will talk about. Did that play a role with You Probably Need a Haircut or was it just a hundred percent “I need this website for myself so I'm going to make it. Who knows if it’s going to be successful?”
When I had the idea and I had the name, which is a really under-appreciated part of the whole process, a good name to make things go viral is super key. Once youprobablyneedahaircut.com was available it was like, “It’s done.” I told my girlfriend, “This will go viral.”
Viral hits are where art and science meet. There’s a way to manufacture it. There’s a bunch of luck associated with it, but I think that’s the art in a lot of ways, and science is the framework for thinking about how to launch viral projects. But if you know how to do it, it’s quite cool.
Let’s break that down. You’ve got the art. You’ve got the science. The art of this, I think, is in part the name and the design and the fact it’s this real-world thing, getting a haircut, but you brought it into this digital works of startups and websites where we’re all at home.
Just weird to see those two things brought together in a way that makes perfect sense. Why wouldn’t you want to be connected to somebody that can help you do this? But what do you see is the art of You Probably Need a Haircut, and what do you see is the science of what helped it grow into this big, viral hit?
The art was the positioning, the design. We had an influencer, more than an influencer. He has a TV show and he has hundreds of thousands of followers on Instagram. He did our video. You come to the website and he talks about how badly he needs a haircut.
The art is, what is the image that you can put in people's minds? That’s the art. Then the science is how do you systematically get it in front of everyone’s face, so it imprints in their minds? I think there is a formula to it.
You’re seeing it with not just things like You Probably Need a Haircut, but I think a great example is The Mischief Team. They’re a product studio that creates hit after hit. One of their first ones was the Jesus Walks shoes. I don't know if you saw that one. I don't know if they were Air Force Ones or whatever, but some Nike shoe, and they put quote/unquote “Jesus water” in the sole. They sold millions of dollars. These are the things. The question is, how do you create an app or a website that gets people talking? We’re now learning in 2020 that you can do it with a certain degree of success.
How much of that do you think is the idea versus the execution? You hear an idea like that and it’s like, “Oh, that’s so clever.” You get some holy water. You put it in the bottom of a shoe. You match up people who need a haircut with barbers. That’s such a great idea.
I think it’s easy to think that that’s a hundred percent of it. But if you have that idea, it’s still easily possible to make that and then it doesn’t go anywhere. How much do you think it’s the execution after that? How do you model what gets somebody to tell somebody else about your product and share it?
I think the getting there is how do you get the right media to talk about you. So there are two things. How do you get media to talk about you, and then how do you get customers to talk about you?
I just got off a phone call with a vice president of Phillips Electronics. They have razors. He was lowkey, using You Probably Need a Haircut as a customer, but we didn’t have his Phillips email. We had no idea. He had the best experience, and he was like, “This is amazing.” He started telling his friends and he started telling people at Phillips. And lo and behold, now we’re working together with Phillips.
I think what you need to do, ultimately, is when you have a great idea and it’s something like You Probably Need a Haircut, the question you have to ask yourself is “How am I going to get this?” You saw You Probably Need a Haircut in a few different media outlets. How do you systematically get that?
There are ways. For example, I cold reached out via Twitter DM a catchy way to a bunch of journalists that I didn’t know. You have to put in the work. I’m not going to be too good for that. As a creator, you have to.
Yeah, I was looking at your Twitter, just scanning for things you had said recently. I clicked over to your tweets and replies tab. I see one of the things that you’ve been doing is pinging people on Twitter who are talking about needing a haircut. It’s a common topic of conversation now when everyone’s at home. Like, “Hey, my beard’s so long. My hair’s so long.” And it’s like, “Hey, you should check this out.”
You’re putting in a ton of work on Twitter. You’re putting in a ton of work with journalists. You’re creating partnerships. You’re putting in a lot of manual labor that I think no one sees. It’s all behind the scenes.
That’s the kind of stuff that I'm fascinated by, because even though there is luck involved, that’s stuff that you can control. That’s what makes it less likely to depend on luck and more likely to depend on the efforts that you’re putting in.
I think on the marketing side, we’re in tech. People will often talk about “How do you create the technology? How do you create the design? How do you create the product?”
We don’t talk enough about marketing R&D, marketing research and development. For me, all I want to do is figure out what is one channel that I know is going to be really, really good. One, two, three channels, really.
I might put in an hour a day for seven days on Twitter, or two hours a day or five hours a day pinging a bunch of people, measuring that. And if it works, then I'm like, “Okay. Great. Now I can go find someone in UpWork to go automate this,” and all of a sudden I have a marketing channel. But you have to put in the work or else you’re never going to know.
What is your skill set? Most of the people I talk to who are product people or who are engineers, they don’t want to put in that marketing work. It’s not interesting to them. It’s not fun to them.
They want to do all the stuff you’re talking about, design the product, etc., so they don’t create that hour or two slots in their calendar. They’d rather do this other stuff that they’re good at, that they’re comfortable with. What’s your skill set? How do you find the motivation to do this kind of drudge work in the beginning?
I think my skill set is I like to build beautiful communities, and then I like to get people into those communities as quick as possible. Design plus marketing, and I love that intersection. That, for me, is the most interesting part.
Why am I motivated by it? Because there’s nothing more fun than waking up and seeing that your app is on the Today Show or NPR. For me, that’s exciting, and it allows me to get my message out in the world.
For example, our stylists are people of color, and that was important to us. One of the things we thought would be cool is our lead stylists and creative director, JaBarie Anderson. He’s this amazing, flamboyantly gay, outspoken black guy who’s amazing. He lives in Williamsburg.
He gets paired sometimes with someone who’s in a town with 12 people on some farm, this white person, he was telling me a story about this, who’s never even seen a black person in real life. He might not even have met a gay person. He’s never met someone from Williamsburg.
What I think is cool is creating the connections between people. Right now, COVID time, there hasn’t been a better time in my recent memory, at least since I've been alive, to build products that create that connective tissue.
I saw Marc Andreesen. Someone sent me a quote that he said the other day, which is, “Every bad idea in the dot-com bubble is a good idea now,” something like that. I think that’s absolutely true.
I think one of the cool shifts that we’re seeing and hope we see more of is moving from a one-to-many model of all of our communication online to a one-on-one model.
You Probably Need a Haircut is a good example of that. It’s not like one stylist or barber puts out a video for everybody to learn from impersonally. You're getting this very personal, one-on-one mentorship experience that’s going to be better than any YouTube video or article you could watch or read.
I think the power of the internet makes that easy to do and efficient. I think when you look at most of what we’ve seen online, it’s always been the opposite. “How can I scale more? How can I reach more people as one person?”
I like the idea of platforms bringing people together one-on-one. I hope that’s more the future of the gig economy, where maybe educators are more one-on-one. We have more mentors and teachers who are not teaching classes but who are just teaching a student one-on-one, and stylists and other things like this. Do you have any other ideas in this vein, and is that something that you think about? How do you think about community evolving in the future?
You’ve probably read that post by Andrew Parker, 2011, 2012, about the unbundling of Craigslist. It’s a fascinating post where he talks about all the opportunities. StubHub would be tickets, and the unbundling of Craigslist there. Airbnb, same thing. It’s a better version of listings, apartment listings on Craigslist.
The value from all those unbundlings of those companies is way greater than the value of Craigslist. It’s fascinating, and I think what’s been happening over the last few years, quietly, is this unbundling of Reddit.
I think it started with Discord, which is a multibillion-dollar company that built itself off of the subreddit of League of Legends, popular esports game. It eventually made its way to CS: GO and DotA and all these other vertical networks within Reddit and built this bespoke communication tool for those subreddits.
Eventually it went horizontal and expanded beyond gaming and reached multibillion-dollar status. I think what you’re seeing is that people are systematically looking at, what are the needs of particular communities, and how can I build a utility for them or how can I build something that brings them together via some social technology?
I think what you’re going to see over the next few years is multibillion-dollar companies that are going to be created in those spaces. The best part about it is a lot of times you don’t even need venture capital to start these businesses. Your focus is so small that you're able to show product-market fit. As long as you continue going and there’s some revenue model, you can expand from there.
I think this bundling/unbundling idea is really interesting. Jim Barksdale, who I believe was Marc Andreesen’s business partner back at Netscape has this quote about how the only two ways to make money are either bundling things together or unbundling.
If you’re an indie hacker, you prefer the unbundling where you do what you’re saying. You go to one of these giant networks or websites or communities like Reddit or Twitter or Craigslist. You figure out, “Okay. What community already exists there that I can already tap into?” which is way easier than building your own audience from scratch.
These places have already aggregated tons of people, divided them up by interest groups, put them into one little channel, one subreddit that quite frankly isn’t that well-suited to those people. It’s not that custom for those people.
It’s generic, which is why if you can unbundle it like you said, the value of that unbundling is more than the value of that subreddit. It’s more than the value of that one area on Craigslist, because you can build custom features and cater to the needs of the people who are part of that community.
I know we’re speaking vague and high level, but the specifics of what happens is you end up building something that’s better, like you said, Discord. Discord’s going to be way better than any gaming subreddit, because it’s a tool. It’s built from the ground up to appeal to those people.
And the best part about it those people end up worshipping that product and that service, because they’re used to a one size fits all product. All of a sudden, they feel like home. This is home. I think that’s a powerful feeling that you can give to people, and I think it’s a worthwhile endeavor for people to create products that do that to people.
Why do you think this is less resource-intensive than the traditional venture-funded business. Why do you think this is a model that people who don’t raise money can follow?
I think the first reason is that a lot of time it isn’t a technology innovation more than a positioning and marketing innovation. Discord, yes at scale it’s hard to keep millions of concurrent people. And this isn’t a discredit to the Discord’s technology team. I'm sure they’re fantastic.
But I think the innovation was understanding what people wanted in that community. At the very core, basically Discord is a chat room, IRC. I've been using that since the 90’s or even before. What the innovation was, was a positioning and market and execution innovation more than anything.
So there are a lot of opportunities for founders and creators to go out there. Take products that are off the shelf and skin it for different communities and see what sticks. So I think that’s the biggest reason why you don’t need venture for that.
There’s almost a whole playbook that you could follow if you want to try this out. Indie Hackers itself is a splinter off a bigger community, Hacker News. I noticed this is activity that’s going on inside Hacker News, where once every month or two people get together to talk about these projects they’re building.
There’s so much enthusiasm around this, and the people in the community deserve their own dedicated community, their own dedicated place that caters directly to them. From there it’s a matter of, okay, how do you do that? You research. You look at all the evidence. What are they talking about there? What do they care about?
You make sure you know what makes them unique compared to other people. You work backwards from there to figure out what kinds of features you want to build that are specific to them. Make sure you're branding is on point, the naming like you said earlier should be aligned with that group, etc.
What’s cool about is you're doing this without having to validate a whole ton. The fact that this community exists is already validated for you. They’re already doing what they want to do in a particular place, and you can go research it. You're not having to ask people questions and hope they tell you the truth. You just look, and the proof is in the pudding based on how people are already behaving.
If there is a subreddit about a topic, if there is a Facebook group about a topic, if there is a Slack community about a topic, there is a business.
How do you find out what business will make money though? There are a lot of communities where people want to talk, and they want to chat, and they’ll hang out and be buddy-buddy. But what do you sell to these people? How do you make any money off them at all if you build another place that’s better for them to talk?
I mean, it’s simple but focus on communities that are with people with money. Focus on communities that have a need to either learn or earn. People will pay for learning or earning or getting paid or getting laid is another way of people putting it.
A few examples that come top of mind, it’s like subreddit/r/wallstreetbets is one of the most active communities, where people talk about day trading and the market. Obviously, those people would potentially pay for a service that would perhaps give them insider tips - well not insider trading but tips and tricks, that sort of thing.
That’s one example that comes top of mind. But another one that comes top of mind, I guess this is also finance related, but there’s this movement. I heard about it through Shaan Puri. I don't know if you know Shaan. But he has a great podcast, too.
My First Million.
My First Million, yes. I was on and I was listening to it. He talked about this subreddit called FatFIRE. I forget what FIRE stands for. I think it’s something like -
Financially independent -
Retire early? Yeah. FatFIRE is you want independence and you want to retire early, but you also want to fall out a little bit. It talks about that. I went to go check it out. It’s an active come and they’re using Reddit. You have to think that there’s an opportunity there. So you have to think about, what is the product, etc.
So I think, going back to your question, how do you build for a particular community? I think you have to prioritize the ones that have disposable income, ones that have intention. The intention of learning or earning is ideal.
When you’re building it, having not just in the back of your mind but in the front of your mind how to monetize it from day one. You always want the option for venture capital. You don’t want to be dependent it for it to launch your business.
I love thinking this way, because if you’ve built enough businesses online, if you start enough projects, you realize there are a limited number of reasons why they fail.
They fail because you don’t have product-market fit, no one cares about what you’re building, or because you can’t find a good distribution channel where you can reliably get people in the door, or because people won’t pay for it so they’ll use it and it’s free but you're on the hook for a lot of money for your server costs and you’re not generating any revenue.
So there are two schools of thought for how you come up with an idea. Maybe the first thing you do is you say, “I've got this great idea for a project,” or “Wouldn’t it be cool if this thing happened,” which is great. A lot of creative ideas can come out of that.
But then as early as possible, if you can start thinking about those challenges first, like distribution first. “How am I going to get this in people's hands. Is there a community or channel that I understand that’s going to work?” You know, business model. “Do these people make money? Do they spend money? Can I make any money from them?”
All these things are things you can ask on day one. You don’t have to spend eight months building something before you realize that you’re serving people who aren’t going to pay you any money. So I think it’s a great way to think, but unfortunately, it’s also a way of thinking that most people don’t come across until they’re far into their career building and trying things out.
I agree, but I do think there is this movement happening right now of bootstrap entrepreneurs. Andrew Wilkinson of Tiny Capital has done a lot of that by building and thinking about how to create and buy businesses that are very bootstrapped and thinking about this from day one. My last company, Islands, we raised over $2 million on an idea, venture. So I think it’s a different approach to building a business.
Yeah. Give me the story behind Islands. I know what the product does, but I don’t know how you came up with the idea and the story behind how you ended up at WeWork where you’re currently the Head of Product.
Islands started at the end of 2015 with the simple concept, group chat is the new social network. Our concept was that we created a deck around group chat as the new social network and it’s going to verticalize. I've been on this vertical network train for a while.
You’ll have a place to talk with your finance people and your gamer people and your workplace people, and that really happened. We said, “Give us money and we’re going to figure out which vertical to start in.”
After we built the primitives of group chat and all the technology to get started, we realized that we wanted to start with college campuses. Because at the time, and still to this day, GroupMe, which is owned by Skype which is owned by Microsoft is still a thing. People still use it. It’s crazy.
After all, Facebook also started as a social network for college campuses. So it made sense and we went after it. We iterated for 18, 24 months. We started getting good traction. Every school we launched at we’d get between 5% and 25% penetration. Retention was good. Every user would invite at least two people, so we had virality, too.
We got to this point where we wanted to go big and raise a lot of money. It was a lesson for me because I went to some of the world’s best investors while I was building this product. I said, “What is it going to take for you to give me $10 million, $15 million, 25 million in a Series A?”
They told me specifically, “These are the metrics you need to hit.” When I came back to them and I said, “Okay, I'm here. Not only did I hit these metrics, we’ve exceeded these metrics.” The market had changed. In 2018, 2019, it was the cold years of social. It was the worst venture funding environment for social apps, almost 15 years. The lowest amount was in that time frame.
So it didn’t make a difference what your metrics were. The market was not positive. I potentially could have raised a bit of money, but I'm a go big or go home type of guy. So we ended up picking a bunch of folks, different partners, and WeWork made the most sense, because it was a vertical network for professionals. How do you use Islands to power that, was the concept.
It’s crazy because your market as a founder in that situation is two-sided. You’ve got your users and the people who love Islands who are talking and sharing it. And then you’ve got investors who are your source of money who aren’t really your customers, but you need them to survive and to do what you really want to do.
Ultimately, you don’t have control over the investor landscape and whatever seems to be fashionable or trendy among investors, which goes back to your point earlier that you don’t necessarily want to put yourself in a position where you have to raise money. Ideally, if you can be self-sufficient, then when investors say no but you still have this amazing business going on, you can keep it going. You don’t have to quit.
That’s right. With Islands, because it was a social app, because we focused on college campuses, we knew that we needed to build the audience first before monetizing, and the only way to do that was to raise venture.
So yeah, as much as we felt we were working for ourselves and as much as we felt good about what we were doing, and as much as we felt awesome because metrics were good, it didn’t make a difference. If we weren’t on vogue or it wasn’t a cool thing for venture people, it was tough to raise.
We wanted to raise, also, from good people. We had the opportunity to potentially raise from less good investors, and we were like, “Why?” So the lesson for me there was, try to own your destiny as much as you possibly can.
Tell me about this phase where you spent 18 to 24 months figuring out how to get Islands working and how to get retention up and get virality up, because I'm sure that was a lot of trial and error and you learned a lot of lessons coming out of that. It’s not easy to create a viral social app.
I did something that was wild, that was written about a bit, which was I went and pretty much lived on college campuses in 2017.
And how old were you in 2017?
Too old to be on the college campus?
Too old. Way too old. Maybe good enough for a post-doc. I was 28, I guess, 28-ish. So I am Canadian, and I went to McGill, which is in Montreal, a university here. I dropped out.
The university college experience is very different in the U.S. versus anywhere else in the world. My understanding of how college worked was by watching U.S. movies, Van Wilder, and stuff like that. And rule number one if you’re building a startup is know the customer and try to understand them and speak to them and build with them. I believe that wholeheartedly.
So I went. Our head of growth was ex-Yik Yak and that was based in the South. So we started out in the South. I went to Tuscaloosa, Alabama. It was my first time in the South. I spent months in Tuscaloosa and Mississippi and going from school to school, which is a whole other experience. It was through that process where we went from having an app that was just another group chatting app to having an app that resonated with people.
Now you were going to frat parties, going to class?
What does it look like to immerse yourself in a world of college students?
Anywhere from Bid Day, checking out what Bid Day is, which is for fraternities and sororities for those who don’t know, to going to checking out fraternity parties. Cause the Greek system, especially in the South, is such a core part of the identity and how the school works that the team and I wanted to understand it and get the product in the hands of these folks. So all of that, dropping in classes, getting people to pitch the app, going to chapter meetings for fraternities and pitching it, everything.
It sounds like it would be so easy to eventually lose yourself and start living like a college student and not learn anything. I mean you learn about different college kids, but you don’t learn any that helps you improve your app. What are some concrete things that came out of that? What did you decide to do for Islands that you probably wouldn’t have done if you hadn’t been living as a college student?
The biggest thing I think was, there’s this narrative that if you have a social app and you want to launch it at college, you go to fraternities and sororities. Facebook was started like that. Initially it was in the Jewish fraternity, AEπ. Tinder and Bumble in the dating space also started in the fraternity and sorority system, in the Greek life system. We did our research from Silicon Valley. That was what people told us to do.
When we launched it from SF and we weren’t getting the results we needed, that’s when I decided to go to the South in Alabama. When I started to investigate and be a detective about why do people even do this Greek life thing and try to understand it, I quickly realized that Greek life is the complete wrong market for us, because what Greek life gives to the students is this built-in social network that you can access. So it’s like, “Where is the party?” It’s guys and girls that you can flirt with and meet with and stuff like that.
So we realized that we had built this app that we said connected the disconnected. So we connected disconnected people, but who are the most connected people on campuses? The fraternity and sorority people.
So we realized and quickly pivoted to the other 80% of the people who are not in the Greek life system, who needed a built-in social network to open up an app and be like, “Where is the party,” or, “I want to connect.”
That’s when we started focusing on the more disconnected people, like LGBT in the South. That’s still a thing. Those people want a place to talk. Muslims in Mississippi, stuff like that. That’s when it started working.
It’s interesting because it’s like a fraternity or a sorority at a school is a miniature community within this greater school community. You niched down super hard, but it’s almost like you can niche too far, where everybody in those communities has all their needs met and they don’t need your app. It doesn’t really matter.
Anyway, that’s all a long time ago. You’re now working on a communities design firm called Late Checkout. I'm sure a lot of the stuff you learned building these other community and social-focused apps has translated into what you’re doing now. What is Late Checkout? What does it mean to have a communities design firm, and why did you start it?
I cofounded Late Checkout because, like I was saying in the beginning, I realized all this white space in terms of opportunity with vertical networks. I believe that community unlocks potential, and I believe that there’s a certain playbook for unlocking that potential.
So the idea is, we self-funded this business. What we’ve been systematically doing is finding interesting communities that we think are cool and building products or networks for those communities and owning it.
We do that, and we also have a small agency business that sustains and helps grow the core product studio. In that business we work with companies called TikTok and help them think about some of these problems as well.
Why I'm excited about it is because it’s like we were talking about. For me, there’s nothing more interesting than how do you provide a platform for people to come together? There’s nothing more interesting than creating bespoke experiences versus what I would think of a Walmart of the internet. I want to build the cool indie coffee shop. I don’t want to build the Starbucks. And I think that’s okay.
You tweeted recently that “The past is the mass market. Today is mass niches with narrower audiences. Yet there’s even more love. There’s even more loyalty.” When I hear that it’s funny because I feel most of Silicon Valley, venture capitalists especially, are betting against that. They’re betting on the Walmarts of the internet.
They’re betting that if some new trend or way of communicating happens online, there’s going to be one big platform that they can invest in that’s going to gobble all of it up, and there’s not going to be room for any individual bespoke communities, because everybody’s going to glom onto the network effects of the next Facebook or the next YouTube or whatever the big new thing is.
Why don’t you think that’s going to happen? Where is your point of disagreement with the wider VC community that tells you that the future looks like us building more bespoke and individualized communities?
We could have this conversation in two years and we might realize that, you know what, we can only build a bunch of businesses that do $1 million to $100 million a year each and there’s a cap, which to me, I'm okay with because we have self-funded it. We own a hundred percent of these businesses.
But I think what we’re going to realize is that sometimes the biggest businesses look like the smallest businesses. I mean, think about Uber. Uber was a black car, on demand business on mobile in mobile’s early days in San Francisco. That market wasn’t that expensive. That market wasn’t that big.
I mean, even Travis and Garrett, the cofounders, they weren’t even running the company. They got Ryan Graves to run it. He was an intern. If it was such a big opportunity, why didn’t they run it? I don't know the details, but I think what we’re going to learn is that over the next few years, these quote/unquote niche businesses are going to start looking like damn big businesses.
I think one of the best recent examples of that is Discord. Discord is becoming the center of gaming. What looked like a League of Legends tool not long ago has now become extremely big. Who is going to be best positioned for the future, I think, will be people with deep, deep, deep insights, that are able to systematically expand horizontally quick enough while maintaining the closeness to the customer, so to speak, by speaking to them a lot. That’s my bet.
There’s this cool oscillation between bundling and unbundling, where you’re a small indie hacker or founder. You look at some huge bundled resource like Reddit. You unbundle one part of it. You start to grow. You get your tiny foothold. Everyone thinks you’re small and you don’t matter, and you start growing.
You use that foothold to get more and more market share, a bigger and bigger audience, and eventually you're huge. But then you’re a bunch of bundled products and communities together and somebody wants to unbundle you.
It seems like it’s this never-ending wheel, where there’s bundling and unbundling, bundling, and unbundling. Do you think there’s any way to stop that? If you build a community into something that's huge, got all these different groups you’ve brought together, can you protect that thing that you’ve built?
It’s extremely difficult. I think how the Facebooks of the world deal with that is that they acquire these companies. I think it’s inevitable that every vertical network becomes a horizontal network at scale, which is depressing to me as the purist of vertical networks.
But I think that's okay. I think it leaves a ton of opportunity for startups building technology because there’s always going to be opportunity, and if you leave with anything from this talk is that we are in an era of unbundling right now, massive era of unbundling, because of how big the major platforms have gotten over the last few years.
It’s created a ton of opportunity and white space to chip away at it in a bunch of different ways. These periods don’t last super long. We’re talking about a few years of opportunity. I know that might sound like a lot because it’s in years, but to think of an idea, to research an idea, to build it out, to get it to work, to build a team, it takes time. So now’s the time.
Yeah. I think one of the cool things about being in this era, I mean if you think about how startups work in general, you’ve got this idea of moats and defending your business. I think less and less it’s the case that technology is a moat.
At the end of the day, no matter what you build, technologically there’s some other group of smart programmers, developers and engineers who are going to be able to build that thing. Even if you have a head start, they’ll probably catch up to you or they’ll get to 90% of what you’ve gotten and that’s enough.
But the real moats are usually distribution based, building your audience, building your own community that you can distribute something on and then you can build all sorts of products and push them to people through these distribution channels that you own and that nobody else owns.
What's cool about that if you’re not somebody who’s raising money from investors is that it’s hard to assail that. If you build your community, underwater basket weavers who all love each other and talk to each other, is there going to be a bigger company who can come along and take that from you? Probably not.
So if you’re an indie hacker and you’re trying to build something, and you don’t feel like raising money and you don’t feel doing something where you’re going to need all these resources, and you want to be able to defend your moat and build a business where you can capture the value from that and keep running it, then I think there’s no better way than to target a small niche community. Hopefully you can grow it to a healthy size without being unbundled by someone else coming along behind you.
Or if you get to the point that you’re being unbundled, it’s a badge of honor. Good for you. You’ve made it.
You’ve lived long enough to see yourself become the villain.
Well listen, Greg. This has been an interesting talk. I'm excited to see what comes out of Late Checkout. Are any of the communities that you're building public? Have you spoken about them in public? Can you share anything that you’re building with us?
We’ve got stuff out in test mode, and until we - no. The answer is no, not yet.
Alright. Well when they are, you’ll have to come back on and share with us some of the communities that you're building. I always ask people on the show, what’s your advice for listeners?
People listening in are trying to come up with ideas. They’re trying to figure out what they should build, not just to build some cool stuff but also to support their lives so they can make enough money to quit their jobs, maybe join the FatFIRE community. What’s your advice to people out there listening who don’t have an idea yet, who are trying to figure out what to work on?
Before an idea, just think about yourself. Think about who you are and think about all the things that make you who you are and what you love to talk about. If you’re at a party and someone brings up a topic, let’s say it’s League of Legends and it’s like, “I'm so happy he brought that up. I love talking about it. It’s my favorite thing,” and you can’t stop talking about it, that’s a sign that you are a nerd in that space.
In this world of not mass but niches, you have a competitive advantage. I know it’s weird to say, but you have a competitive advantage over Facebook. You have a competitive advantage over the big players.
So start with that and then come up with the idea around that and think about what you’d like to create that would make your life easier and more interesting, and that you’d pay for. I think if you do that, you’ll be surprised to see that there’s a lot of opportunity left in this world.
Dig deep and think about in what way you are a nerd. Greg Isenberg, thanks so much for coming on the show. Can you let listeners know where they can go to find out more about what you're up to with Late Checkout?
Sure. The best places are my Substack, which is latecheckout.substack.com. I send out thoughts around vertical networks. It’s been fun. Or you can find me on Twitter where I tweet thoughts. It’s my name, @gregisenberg. Or to check out more about Late Checkout, it’s at the website, withlatecheckout.com.
All right, Greg. Thanks a lot.
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