20VC The Dubsmash Memo Scaling to 43M Users in 10 Days, Why TikTok Was a Competitor Like Never Seen Before, Good vs Great Consumer Products and What Every Consumer Product Needs & The Future of Consumer Social with Suchit Dash

In a candid conversation with Harry Stebbings on "20 VC: The Memo," Sujit Dash, co-founder of Dubsmash and VP of Core Product Experience at Reddit, shares the tumultuous journey of Dubsmash, from its viral success and battle with TikTok to its acquisition by Reddit. Dash discusses the importance of product-market fit, user retention, and the company's bold pivot to a dance challenge platform, which significantly improved user engagement. He also touches upon the challenges of competing with TikTok's aggressive market-buying strategy and the decision to sell to Reddit. Dash emphasizes the need for intellectual honesty, focus, and stamina in entrepreneurship, as well as the role of collaboration and communication in his executive role at Reddit. The conversation also explores broader themes in consumer social, such as the evolution of video content, monetization strategies, and the potential over-reliance on social graphs in platform design.

• Good products find a place on users' home screens, but great products occupy users' minds even when not actively in use.
• Achieving this level of engagement is a significant challenge for product developers.

"Good products make it to your home screen. Great products make it into your mind. When you're not using the products, you're thinking about them. That is so hard to do."

The quote emphasizes the distinction between products that are merely handy versus those that deeply resonate with users and become a part of their thought process.

• Dubsmash scaled to 43 million users in just ten days.
• Received funding from top investors and competed with TikTok.
• Acquired by Reddit in 2020.
• Sujit Dash, a co-founder of Dubsmash, is now VP of core product experience at Reddit.

"This is the story of Dub Smash. To tell the story, I'm so excited to welcome dub Smash cofounder Sujit Dash."

The quote introduces the subject of the conversation, which is the story of Dubsmash, its rapid growth, and its eventual acquisition by Reddit.

• Sauna is an AI-powered platform for company knowledge sharing.
• Integrates with company apps and searches through files in milliseconds.
• Assists in creating and distributing learning materials across different languages.

"Sauna is an aipowered learning and knowledge sharing platform. Think of it like Chat GPT for all your company's knowledge."

This quote describes Sauna as a comprehensive AI tool designed to facilitate knowledge sharing within a company, akin to ChatGPT but for internal use.

• Ironclad transforms contracts into valuable data sources.
• Improves operational efficiency and decision-making.
• Used by major companies like L'Oreal and Mastercard.
• Handles various types of contract workflows.

"Ironclad is a platform that helps companies harness the power of contracts to drive better business outcomes."

The quote explains Ironclad's role in leveraging contracts as strategic assets for businesses to enhance their operations and make informed decisions.

• HMC manages Harvard University's endowment and invests in venture capital.
• Seeks partnerships with new and established fund managers.
• Offers insights and support to help ventures succeed.

"HMC has managed Harvard University's endowment for nearly 50 years and was one of the first institutional investors in venture capital."

The quote highlights HMC's long history of managing Harvard's endowment and its pioneering role in venture capital investment.

• Started in product management at PayPal after college.
• Worked on the PayPal yellow button on merchant sites.
• Enjoys the decision-making, leadership, and execution aspects of product management.
• Believes in continuous learning and improvement in product skills.

"I love the decision making. I love validating whether you're right or wrong, and I think product puts you at the epicenter of that."

This quote reflects Sujit Dash's passion for the decision-making process inherent in product management and the satisfaction derived from validating product decisions.

• Sujit Dash encourages exposure to both large companies and startups.
• Believes in learning frameworks from large companies and iterating products in startups.
• Suggests that young talent should gain experience in various settings for a well-rounded perspective.

"For young talent, I would always encourage both sides, make sure to go into a large company, but also make sure to dive into startups and really get the reps in."

The quote advises young professionals to seek experiences in both large corporations and startups to gain diverse skills and perspectives.

• User understanding combines intuition with insights into human motivations.
• Observations about human behavior help in identifying patterns and motivations for product development.
• Focuses on understanding and catering to creators' needs for community, clout, and cash.

"You start to synthesize those motivations into patterns and behavior. With that, you actually create sort of the why a product should be built."

This quote explains the process of translating human motivations and behaviors into the foundational reasons for building a product.

• Relies heavily on intuition and understanding of human behavior.
• Compares the role of a consumer social product manager to that of an anthropologist.
• Observations and insights into human nature guide product decisions in the absence of data.

"More than anything else, I think about being in consumer social as almost like being an anthropologist."

The quote likens the role of a product manager in consumer social to that of an anthropologist, emphasizing the importance of understanding human behavior and culture to inform product decisions.

• Success often comes after multiple iterations and learning from failures.
• Constraints can lead to innovative solutions, like Dubsmash's lightweight approach to video sharing.
• Understanding customer motivations and behaviors is key to product success.

"That early overnight successes are never really actually overnight successes."

This quote challenges the common perception of overnight success by revealing the iterative process and prior failures that often precede a successful product launch.## Viral Growth and User Retention

• Dubsmash utilized watermarks in videos to create a viral loop and organic growth.
• Initial user retention was poor, with only a 5% retention rate after 30 days.
• Lack of retention mechanisms, social network integration, and video hosting due to financial constraints impacted user retention.
• Despite high install rates driven by celebrities and media exposure, the focus remained on improving product retention.
• The team aimed to improve retention metrics, particularly looking at D30 and D90 (Day 30 and Day 90 retention rates).
• Initial attempts to pivot towards a messaging feature to improve retention were unsuccessful due to competition and the nature of the app’s use case.

"We had every video with a watermark on the bottom right that said dubsmash.com." The watermark was an early innovation to drive organic growth by promoting the app through user-generated content.

"The hard part was that we saw the retention really early and it was awful. After about 30 days, out of 100 people, maybe five stuck around." This quote highlights the initial challenge Dubsmash faced with retaining users, which was a major concern for the team.

"We sort of though it was growing and we started seeing celebrities using this across the world." Celebrity usage and media exposure led to spikes in downloads, showing the product's viral potential despite retention issues.

"We were constantly looking at sort of D 30, D 90, really." The team's focus on D30 and D90 retention rates indicates a long-term perspective on user engagement.

• Dubsmash lacked a robust algorithm for content personalization, unlike platforms like TikTok.
• The app was initially a "weekend hack project" and lacked features that would drive long-term user engagement.
• The team recognized the lack of product-market fit and focused on improving the product rather than getting caught up in hype.
• The app’s simple design allowed it to expand internationally, even on lower-end devices, but this also contributed to retention issues.
• The team explored adding messaging features to improve retention but faced challenges due to existing social networks and the app's use case.

"For dub Smash, it was genuinely just like a weekend hack project and it went out there." The app's humble beginnings as a hack project set the stage for its initial growth and subsequent challenges.

"We were obsessed with retention. We wanted to get that number to be really, really high." This quote underscores the team's commitment to improving user retention as a key metric for success.

"We tried to pivot into messaging also really didn't work as well." The attempt to pivot towards messaging is highlighted as a strategy that ultimately did not succeed in improving retention.

• The team at Dubsmash was focused on the right goals but failed to nail the user motivation.
• Consumer internet products aim to become a daily habit for users, a goal Dubsmash struggled to achieve.
• The team maintained an optimistic outlook and continued iterating on the product despite low retention.
• The challenging times included facing competition from apps like Musically (the precursor to TikTok) and maintaining team morale.

"We didn't nail the user motivation." Identifying user motivation as a key factor that Dubsmash failed to capture, which is crucial for any consumer product.

"Good products make it to your home screen, great products make it into your mind." This quote emphasizes the goal of making a product not just frequently used but also top-of-mind for users.

"We never stopped trying." Persistence in the face of challenges is highlighted as a key attitude for the team at Dubsmash.

• The team managed expectations during successes and failures, aiming to maintain a balanced perspective.
• A tough decision was made to downsize the team and relocate to New York City to rebuild and refocus.
• The board and investors supported the decision, recognizing the need for time and reduced burn rate to achieve success.
• Personal resilience and optimism were necessary to deal with the emotional impact of downsizing and office closure.

"We didn't get too excited. We tried to temper expectations with our team." Managing expectations within the team is emphasized as an important leadership strategy.

"We realized we didn't have the team to do it." Acknowledging the need for a team restructuring to effectively tackle product challenges.

"We believe in you. We know you're going to need time." Investor support is recognized as crucial during the company's pivot and downsizing period.

• The team looked for early signs of validation and unique user behaviors that indicated a product's potential.
• A pivot to focus on a dance challenge platform was inspired by observing a small community's unique use of Dubsmash.
• The pivot involved shutting down non-performing markets and tailoring the product to the new use case.
• Significant improvement in retention rates indicated the first signs of product-market fit for Dubsmash as a dance challenge platform.
• Seeing a "smile curve" in user retention graphs was a validation of the product's success and a motivator for the team.

"We saw about 20% of the users still sticking around, which is crazy to see." Improved retention rates are cited as evidence of the product's newfound success.

"We saw this incredible marketplace of audio producers actually uploading audio beats, dancers starting to take those and create dance challenges." The emergence of a new user ecosystem around the dance challenge use case is described as a positive outcome of the pivot.

"It's validation at the end of the day that all of this hard work, sweat and tears, that would be the thing that would motivate me." The smile curve in retention data is celebrated as a validation of the team's hard work and the product's resonance with users.## Community Savviness and Motivation

• The community showed high levels of engagement and entrepreneurial spirit, even at early stages of follower counts.
• Users with varying follower counts would mimic influencer behaviors to monetize their presence.
• The desire to become entertainers and earn revenue was a strong motivator for community members.
• The platform sought to develop tools to facilitate this monetization process for users.

"So what we saw was a user with 10,000 followers would say, hey, I'll promote your account. Just hit me up on cash app for $50 and I'll promote your account."

This quote illustrates the entrepreneurial activities of users within the community, seeking to monetize their social media presence by promoting others for a fee.

• Platforms tend to develop their own "hall of fame" of creators who rise through the ranks natively.
• The presence of large influencers can potentially stifle the growth of new creators due to perceived unattainability of success.
• It's essential for platforms to create a democratic system that allows equal opportunities for new creators to grow their follower base.
• Dubsmash avoided showcasing leaderboards to maintain accessibility and the notion that fame was attainable for all users.

"It's really important for platforms to actually create more of a democratic system in actually growing their user base."

This quote emphasizes the need for social media platforms to foster an environment where new creators feel they have a fair chance to succeed and grow their audience.

• Social capital derived from leaderboards and follower counts can be addictive but may not reward new or less popular users.
• The design of influencer networks can inherently benefit those already successful, particularly when migrating existing social graphs to new platforms.
• Founders and investors may not always give due consideration to the structure of platforms and how users connect based on various vectors like location, interests, or conversations.
• There is still opportunity for innovation in how users connect around specific content types or vectors that are underexploited.

"That's where it's challenging, fundamentally, in the setup of these networks, is how you actually design those."

This quote draws attention to the inherent challenges in designing social networks that equitably reward users and encourage diverse connections beyond traditional social graphs.

• Location-based features in social networks have long fascinated creators and users alike.
• Google Maps is highlighted as a platform successfully connecting users to places through robust reviews and trusted sources.
• The aggregation of community opinions on places can be more valuable than individual friend recommendations.
• The value in location-based services lies in the collective data and trustworthiness of community-driven content.

"It's valuable because when you actually look at a place, what you're really looking for is you don't necessarily care about what your friends think about what this place was and what their taste preferences are."

This quote explains the value of community-driven content in location-based services, where the collective insights are often more valuable than individual opinions.

• The evolution of social networks has moved from connections based on address books to user interests, and further opportunities exist for connections based on location and conversations.
• Apple's privacy changes have dramatically reduced targeting capabilities, making it harder for new platforms to replicate the growth strategies used by TikTok.
• Despite these challenges, there is confidence in the ability of teams to iterate and find product-market fit.

"Getting users to download an app in 2023 is really tough."

This quote acknowledges the current difficulties in user acquisition for new apps compared to the earlier days of the App Store.

• Competitors like TikTok bought market share through targeted advertising and content curation, which was a novel strategy at the time.
• This approach forced other platforms to recognize the need to compete in new ways, such as creating creator funds.
• Startups with limited capital had to consider strategic partnerships or selling as a response to aggressive growth tactics by well-funded competitors.

"No competitor had ever bought users at that scale."

The quote highlights the unprecedented scale of user acquisition strategies employed by TikTok, which significantly impacted the competitive landscape.

• Selling a business requires complete commitment and focus from the founders.
• M&A processes are emotional and require connecting with potential acquirers on values and principles.
• Founders must be prepared to seed control and focus on getting an offer across the line rather than getting caught up in negotiations.
• Transparency during the M&A process can lead to emotional turmoil for the team, so careful communication is necessary.

"It requires a tremendous amount of focus to actually really get it over the line."

This quote emphasizes the intense focus and commitment required from founders to successfully navigate an M&A process.

• It's crucial to connect with product leaders or CEOs rather than just the corporate development teams during M&A processes.
• Founders should remain calm and not be swayed by the emotional highs and lows of the process.
• Term sheets and letters of intent (LoIs) from large companies may not always lead to a successful acquisition, as the real process begins with due diligence.
• Founders should be wary of getting overly excited by initial offers and should prepare for the complexities of the actual acquisition process.

"We went through sort of almost two to three failed processes until we found a successful process with Reddit."

This quote reflects the trial and error nature of M&A processes and the perseverance required to ultimately succeed.## Due Diligence Process

• Due diligence involves convincing stakeholders why an investment is a good idea.
• Competing with internal projects and other companies in the same space can be challenging.
• Honest communication with investors is crucial.

"e diligence starts, you have many people around the table who are trying to say, this is why it's a bad idea."

This quote highlights the adversarial nature of due diligence, where convincing stakeholders is a key aspect of the process.

• Investors have specific expectations, such as seeking massive consumer social wins.
• Aligning investor expectations with company strategy, especially when deviating from initial goals, is difficult.
• Transparency with investors about company status and challenges is beneficial.

"Saying this to your investor base, respectfully, it's not what they signed up for."

Harry Stebbings is emphasizing the difficulty of aligning investor expectations with a pivot or change in company strategy.

• Recognizing when to compete and when to partner is critical in a crowded market.
• The decision to partner can be driven by the competitive landscape and the company's unique position or knowledge.
• Being honest about the company's capabilities and limitations is key to strategic decision-making.

"This is a game where either we go and raise 100 million dollar and eat $100 million, and even with that, we're unsure if we can compete at this scale."

Sujit Dash explains the financial challenges and competitive environment that influenced strategic decisions at Dubsmash.

• Consumers need connections beyond their friend graph, focusing on interests.
• Platforms like Reddit that facilitate community and interest-based connections provide significant value.
• Copying successful platforms like TikTok is not necessarily beneficial for consumers.

"I don't think really the US needs a TikTok."

Sujit Dash argues that what consumers need is not another TikTok clone, but platforms that enable connections based on interests and communities.

• Reflecting on successful outcomes can lead to recognizing the importance of timing and partnership choices.
• Positive outcomes can validate past decisions, even if the process was challenging.
• Finding the right partner earlier could have alleviated some difficulties.

"Ultimately, we were successful. The entire team moved over to Reddit."

This quote reflects on the successful acquisition of Dubsmash by Reddit, indicating satisfaction with the outcome.

• Focus, intellectual honesty, and stamina are essential traits for entrepreneurs.
• Conserving resources and being honest about the company's status are part of strategic focus.
• Perseverance through challenges is a testament to entrepreneurial stamina.

"Mindset as an entrepreneur, number one, a lot of people talk about focus."

Sujit Dash discusses the importance of focus and other key traits in the entrepreneurial mindset.

• The mindset shifts from individual entrepreneurship to collaboration within a larger company.
• Effective communication and collaboration are crucial for success in an executive role.
• The ability to align with teams and articulate vision becomes increasingly important.

"Now, on the other side, with cash in the bank, at least at a large company like a Reddit, it's a little bit of a different Mindset."

This quote points out the different mindset required when transitioning from an entrepreneur to an executive at a larger company.

• Media interest can influence the acquisition process.
• Engaging with journalists strategically can lead to increased visibility and potential acquisition interest.

"So, interestingly enough, a journalist was able to snuff out that two acquirers were actually coming in and thinking about acquiring the company."

Sujit Dash explains how a journalist's interest led to the acquisition of Dubsmash by Reddit.

• Video is a challenging format for monetization due to its impact on ad serving.
• Reddit's focus on conversations and community engagement differentiates its approach to video.
• Rethinking feed paradigms to elevate conversations is part of Reddit's strategy.

"Look, our magic at Reddit is with our conversations."

Sujit Dash emphasizes the value of conversations on Reddit and how this influences their approach to video and monetization.

• Pivoting Dubsmash towards a dance challenge platform was a critical and successful product decision.
• The decision was daring and bold but necessary for the company's survival.

"The single best, probably product decision was pivoting the whole company of Dove smash towards this dance challenge platform."

Sujit Dash reflects on the pivotal decision that contributed significantly to Dubsmash's success.

• A framework for responding to user feedback includes listening to what they love, monitoring actions, acknowledging dislikes, and owning necessary changes.
• Balancing user feedback with product vision is key.

"I have a framework, sort of listen to what they love, monitor what they do, acknowledge what they hate, and own it."

Sujit Dash shares his approach to incorporating user feedback into product development.

• Facebook is characterized as an execution machine rather than a copy machine.
• Original ideas and execution are both aspects of Facebook's success.

"No, I think they're an execution machine."

This quote suggests that Facebook's strength lies in its ability to execute on ideas, whether original or inspired by others.

• TikTok's disregard for privacy and conventional rules is seen as a strength in its growth and market position.

"Probably a disregard for privacy and conventional rules."

Sujit Dash gives a candid assessment of what he believes is one of TikTok's strengths in the competitive social media landscape.

• Selecting investors who provide consistent support through challenges is important.
• Tools like negotiation books and inspirational music can be part of a founder's toolkit.

"But probably actually Nihal meta from Eniac stuck with us through and through, thick and thin."

Sujit Dash appreciates the steadfast support from investor Nihal Meta during Dubsmash's challenging times.

• United Airlines' use of iOS features and robust tech stack for customer service is impressive.
• Adapting to customer expectations and using technology to solve operational issues can lead to a positive customer experience.

"United Airlines most people's expectations when they fly is their expectations are sky high and their tolerance for mistakes are incredibly low."

Sujit Dash praises United Airlines for their innovative approach to customer service and product strategy.