Investing in consumer platforms is tough. There’s no way I could have predicted that lipsync videos on Musical.ly would scale up and turn into TikTok. Or that Secret would become a bullying-ground and die. Or that Pinterest would work. Or that Clubhouse would fail to gain traction. Consumer preferences are just fickle, and hard to pinpoint.
Instead, I look for the constants in consumer sentiment and behavior to inform my investing. Here’s an example, made crystal clear in the 2024 election: people care about their wallets. I believe platforms that help people save money will have enduring value, even if they don’t take off as fast as something social.
I’ve funded several of these direct consumer value plays including Jerry (cutting costs on auto insurance) and Martie (turning excess grocery inventory into deep discounts for consumers). People spend the most on housing, food, transportation, healthcare, and insurance. Saving even a small percentage on these recurring large-ticket items makes a big impact on someone’s livelihood.
Interestingly, neither of these companies captures the majority of their value from the consumer. Jerry generates revenue from carriers their marketplace gives business to. Martie earns large profit margins from buying inventory at liquidation prices. It’s helpful to have another participant like this—a “third leg of the stool”—who’s incentivized to accelerate your platform’s growth. Often they have deep pockets, so they don’t mind “being monetized” as much as consumers might. And their participation creates a moat that software alone can’t overcome.
I think it’s one of the few constants in consumer internet investing: software that saves people money will get adoption and virality. And I expect to see more growth here, as with AI, it’s easier than ever to automatically find these cash opportunities—scanning health insurance claims for errors, looking for rebates on past purchases, etc.