Predictions for 2022 & beyond: the rise of Web 2 and Web 3 community-led growth startups in 3 hot areas

Source: LaaS

Recently, I published a post on a community-driven approach: product-led growth. And today I want to continue on the community-driven train and tell you about my predictions for 2022 and beyond.

TL;DR For starters, 2022 & beyond will start and end with community. You’ll hear more about community-led growth and community-driven companies rising to unicorn and decacorn status. And some of these companies will be in the future of:

  • “businessized” humans
  • cashless
  • underestimated markets

Yup. Web 2 and Web 3 startups that businessize people, make the world cashless, and are in underestimated markets will become all the rage and you better bet that I’m hunting for future unicorns in these spaces and investing in them. And on that note, if you are one of these Web 2 or Web 3 soonicorns, hit me up here.

Community-led growth (CLG)

You’ve heard about go-to-market, right? If you haven’t, go-to-market strategies describe how you will distribute/sell your product or service. So, community-led growth is a type of go-to-market. It’s a go-to-community strategy that centers on, you guessed it, selling by leveraging the community.

But let’s make something clear: community-led growth should not be confused with marketing. Community-led growth companies focus on creating a safe space for their community to come together, share value, create relationships, and best use their products/services to solve a problem or help achieve a goal.

The timing of and outsized returns gained through CLG are great. In terms of timing, COVID escalated loneliness and the desire of humans to join communities. Talent is scarcer thanks to the Great Resignation and yet CLG cos can more easily find talent in their communities. CAC is higher than ever and cos are looking to decrease it; the most cost-efficient way is via community. Unicorns are being born due to community. Examples include: MongoDB, Airbnb, Peloton, Glossier, Lyft, Atlassian, Reddit, Gong, Webflow & more.

And yeah, CLG is a bottoms-up approach. Whereas traditionally companies have used a top-down approach in which they talked to their customers, companies leveraging community-led growth go out of their way to talk with and create a space for their customers to come together in community. And while it does take investment, the community acts as a multiplier for company growth.

Community creates a multiplier effect. Why does community-led growth multiply? Because when a community establishes a deeper personal connection between a company and customer, you can expect a multiplier effect across the board.

  • 💪🏽 retention: customers stick around for longer
  • 💰 LTV: customers buy more
  • 📈 sales leads: customer organic word-of-mouth grows the sales pipeline
  • 😊 membership: customers come for the product/service and stay for the community
  • 💸 margins: because community lowers CAC, margins are higher
  • 🏰 sticky moat: it’s hard to replicate community and because of this, community creates a moat
  • 💁🏽‍♀️ ease to recruit talent: it’s easy to find people who get and love your company in community

Note: companies leveraging community-led growth may leverage community in different ways at different stages of their companies. They can include: communities centered around product, practice, play, etc. Read more about these examples in a16z’s go-to-community post.

Alright. Let’s dive a couple layers deeper into CLG Web 2 and Web 3 startups that businessize people, make the world cashless, and are in underestimated markets.

The future is businessized humans

Jay Z said it best: I’m not a businessman, I’m a business, man. The businessization of individuals is the future.

It will be the norm for people to have a portfolio of companies and employment, thanks to market shifts in employment (The Great Resignation, COVID catalyzed), lack of life satisfaction in status quo work environments, and the need to generate revenue to stay afloat and make ends meet.

Data

  • 50% of us will need to reskill by 2025, according to WEF
  • 99% of people would choose remote work if given the choice, according to Buffer
  • 22% of adults report they are unable to pay their bills in full and on time in a typical month, and 30% would not be able to cover an unexpected $2K expense, according to the Personal Finance Index

Unicorns: Cameo, Notion, Airtable, Canva

Portfolio examples: Famosos, Break, Gumroad, Pallet, Carrd, EngineEars, Luma

Personal insight/interest: I straddle two worlds: the haves and the have nots. My family came from nothing and I’ve always had to side-hustle to make ends meet. The gig economy gave a way for us all to have side-hustles more easily (e.g., Uber, Lyft), COVID gave rise to the overemployed, and cheap no-code/low-code tech is enabling many of us to create our own side-hustles and run them online easily. We will see a rise in people with portfolios of work that will include both traditional/fractional employment and business creation/management. I’m one of the early adopters of businessizing myself, as someone who is monetizing through consulting, speaking, writing, investing, courses, events, working as an employed operator, etc. This gives me insider insight and a heightened ability to spot winning companies in the space.

The future is cashless

We want to do things online and fast. The future is cashless.

We will go from a cash to a cashless society globally in our lifetime. It will be a norm for populations that hid money under the mattress to adopt fintech/ecommerce tools, thanks to ubiquitous and cost-effective tech/internet access.

Data

  • Retail ecommerce sales worldwide surged 25.7% in 2020, to $4.213 trillion, and are expected to climb a further 16.8% this year, to $4.921 trillion, according to eMarketer
  • 4.4B people out of 7.9B love to be on and participate in the online world. That’s projected to increase.
  • 1.4 billion ppl don’t have a bank account + 1.3 billion of them are women, according to WEF
  • Country sample info: in Mexico only 15% of people have credit cards (but 70% have internet access); El Salvador & Panama have adopted Bitcoin
  • 154 out of 195 countries are using crypto, according to the Chainalysis

Unicorns: Transferwise, Coinbase, Nubank, Bitcoin

Portfolio examples: Baraka, Jefa, Zeta, Canopy, Carted, Cabal, Alt, Syndicate

Personal insight/interest: There are two macro drivers that will drive a cashless future. One is in the Web 2.0 world, where we bank the unbanked and provide access to paperless money transactions/management. The other is in the Web 3.0 world, where we use crypto as a complement to fiat currency and as a leapfrog to economic challenges many markets face, such as LATAM. My experience with a cashless Web 2.0 world starts with growing up with a mom that never had a bank account and hid her money under the mattress. I personally don’t like or carry physical currency. My insight with Web 3.0 comes from tracking blockchain/crypto for my MBA ICO data science report, as a crypto/NFT owner, as a token creator, and as a syndicate investor in startups Alt and Syndicate.

The future of VC is investing in underestimated markets

Nubank IPO

The future of investing is in emerging markets. We have underestimated founders and investors all over the world. We also have underestimated markets. And there’s money to make in them. I’m starting with the one my parents left to go to the US: LATAM.

Due to LATAM being underestimated, there are future unicorns at valuations that are a fraction of what they are in the US.

Data

  • LATAM represents 600M people and $6T of GDP; in other words, LATAM’s population is 2x that of the US
  • LATAM’s internet penetration is at 70% (China/India at 59/50%); mobile internet penetration is at 67% (China/India at 56%/50%) and expected to grow 15% by 2025, and engagement rates are averaging >9 hours per day of internet usage (for the rest of the world it is 6.5 hours)
  • LATAM is primed to be the next global tech hotspot because tech innovation is benefitting peripheral markets
  • There’s an $85B retail ecommerce opportunity today and it will reach $116.2B in 2023.
  • There’s an over-emphasis on US startups and while VCs are focused on saturated markets, it’s the best time to join the growing number of investors in LATAM and find alpha in this emerging market
  • There’s an underestimation of the market that can lead to well-priced deals that will lead to outsized returns.
  • For more, read this blog post on the market & opportunity LATAM represents.

Unicorns: Progressive investors will make alpha returns. LATAM has gone from having 2 to 34 unicorns in 4 years.

Port co examples: Jefa, Shappi, Famosos

Personal insight/interest: I am a digital-nomad Mexican-American Spanish-speaking investor currently living in LATAM. I am building an on-the-ground understanding of the market, building partnerships with LATAM investors, and meeting founders in-person.

Author Lolita Taub is a stealth mode GP and Scout at Lightspeed Venture Partners, where she invests in community-driven companies. With 15 years working within the Silicon Valley ecosystem, she has accomplished $70M+ in sales and made 70+ investments as an angel investor and VC at Backstage Capital and The Community Fund. Lolita is also a Co-Founder of the Startup-Investor Matching Tool, the GP-LP Matching Tool, and LaaS. Forbes and Inc Magazine have featured her as a woman promoting investment in underestimated founders and funders. She has a BA from the University of Southern California and an MBA from the IE Business School. Most importantly, she is a dog mom to the cutest Dachshund mix, Choco.

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Still looking for more resources or support? Follow me on Twitter @lolitataub and visit LaaS, a bot that provides community, resources, and tools for early-stage underestimated founders, funders and friends.

About investing in community-driven cos + supporting our underestimated founder/investor fam. @lolitataub

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Lolita Taub

Lolita Taub

About investing in community-driven cos + supporting our underestimated founder/investor fam. @lolitataub

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