Online Supervision Bessemer Venture Partners

Choice overload affects most Internet users. In August of 2021, Statista reported that in an “internet minute,” Facebook users shared more than 240,000 photos, Twitter users posted 575,000 tweets, and Discord users sent 668,000 messages. In the same Internet minute, TikTok users watched 167 million videos, Facebook Live videos got 44 million views, and users performed 5.7 million searches on Google. The emergence of new forms of content on the Internet only adds to this overload; As the co-founder of the NFT OpenSea market recently pointedHowever, the number of NFTs on the platform actually exceeded the number of websites on the Internet in 2010.

Not only do many consumers find themselves overwhelmed by the vast amount of content, but also in the age of misinformation, they may struggle to make decisions about content that is factual, useful, or relevant to them.

Over the past few years at Bessemer, we’ve seen the emergence of tools and marketplaces that regulate the information we consume as well as the media we see online – including who we follow, our interests, and our preferences.

That’s why we believe the future of content curation will reduce search friction and reduce the self-education required to navigate the Internet. In this article, we’ll break down the trends driving us toward a more regulated internet, examine how platforms are regulated today, and explore exciting new business models to take advantage of the opportunities that regulation offers.

In addition to the huge amount of online content, there are four trends that are accelerating the demand for regulation.

1. The emergence of creators as specific vertical search engines. Creators are often the preferred entry point for people on the Internet. Instead of trying to find the products and services they want through a Google search, consumers are increasingly turning to trusted advisors in the form of creators. These creators offer content and products that consumers know they will love, because they love and trust the content and tastes of the creator. As a result, content creators are increasingly embracing curation tools to better serve their followers. Examples include content tools such as Fanhouse, writing tools such as Substack and Mirror, and e-commerce product aggregators such as LTK (formerly LiketoKnowIt) and Voila.

2. Low trust in large social and research firms. In conjunction with the rise of paid discovery by creators, there is a general feeling of waning trust in the companies that consumers have historically relied on to find content and products online. As Sari Zoet, founder of Startupy explains, historical monetization of content via the advertising model means that “regulation is taking a back seat to advertisers’ exposure.” This means that “there is less digital real estate available to take care of your recommendations,” and the content offered is designed to maximize the monetization potential of the platform. Partly because this imbalance of incentives, content, and product discovery platforms monetizing through advertising has lost some consumers’ trust. In addition, the advertising model has contributed to the decline in consumer confidence in social media. According to a recent Pew survey in 2021, only 27% of Americans surveyed reported that they trust social media.

3. The growing importance of online identity, and the emergence of “niche businesses”. With online identity becoming increasingly important and consumers buying their identities and communities online more than ever before, regulation has emerged as a form of self-expression between consumption and creativity, according to a Brian Solis report for Fast Company. Steve Rosenbaum, author of Curation Nation, posits that sharing behavior on social media fundamentally changes the structure of our online relationships, which can be visually represented by a “social diagram,” or a map of relationships between social media users rather than our social networks that only reflect the people who We know them in real life, as we share, we form new connections based on our personal interests. These resulting social graphs are known as “niche business,” a term coined by Brian Solis in his article for The Fast Company. The emergence of these interest-based social graphs is reshaping behavior on social platforms. With the emergence of new platforms that allow easier and richer “accurate” content creation and sharing, users of social networks are increasingly motivated to share content with their niche businesses. Content creators are motivated by the value they place in their niche businesses, as well as the ability to leverage organization to express their identity in that niche business. For example, exhibition platforms such as OnCyber ​​and Hyaliko allow NFT fans to share their collections within their own NFT communities by displaying their favorite pieces in 3D galleries.

4. The increased power of the algorithm-dependent processing process. Today, the curation process is also enabled and accelerated through the use of increasingly powerful allocation algorithms. One of the best current examples is TikTok’s For You page which uses a powerful algorithm to show users what content they want to see. Instead of displaying content from followers through an algorithm-driven model (Instagram), TikTok curates every viral video created on the platform to provide a true algorithm-driven experience so that the videos are shown to online users that are more likely to match their tastes and interests. Personal. AI models are increasingly becoming available to startups through projects like OpenAI and companies like HuggingFace that release publicly available AI models.

We currently observe three main types of regulation appearing on the consumer Internet:

1. Individual and creative organization. In this category, individuals coordinate through online tools and social platforms. One such example is homeware influencer Laura Jackson. Jackson, along with her brother-in-law Daniel Crowe, have garnered more than 150k followers on Instagram by curating her favorite household items like mugs, prints, and rugs into aesthetically pleasing posts. As she told the Financial Times, “In a bustling market, we source the best…. We have seen that there is a particular need for a reliable authority that can see all that is out there, and deliver truly orderly and tasteful editing.” Like many social media influencers, Laura is asked where to buy recommended items; Given this unique need, companies like LTK are emerging to help content creators earn affiliate revenue from what they publish.

People are increasingly turning to gadgets to help acquire, select, arrange and display items that show their personal interests and identity. As mentioned earlier, online galleries showcasing NFT art (OnCyber, Hyaliko, Monaverse, The Gallery) are great examples of this trend. But organizing tools extend beyond the NFT space, including content hubs like the mirror and even social UI elements like Twitter Lists.

2. Organization led by the company. Companies are also discovering the power of offering curated content and products to confusing customers. These “contractor” markets range from NFT art (Makersplace, Foundation) to music (Catalog, Sound.xyz) to groceries (Umamicart, Foxtrot), to e-commerce (Thingtesting). Companies typically establish a vertical focus – for example, Umamicart focuses exclusively on Asian groceries – and then the organizing team has a set of criteria to further differentiate the products added to the market. In the NFT space, Bessemer Group’s Makersplace leverages an in-house curating team to highlight new projects and NFTs by renowned artists and emerging creators alike. Just as partner Jeremy Levine discovered the rise of vertical markets several years ago, we’re beginning to see the same vertical trend apply to content curation. By focusing on one sector and doing in-house regulation, these markets are able to win the trust of consumers who would rather not have to do the hard work of educating themselves on what to buy and then search the entire internet for that product.

3. Algorithm processing and vertical search. As with TikTok, companies make use of artificial intelligence algorithms to generate structured experiences. While many of today’s most effective examples are within social platforms that have collected massive data on consumers, such as Spotify’s music curation and suggestion algorithm or Twitter’s content algorithms, there are a few startups that are now using increasingly accessible algorithms to launch Their own algorithm – thoughtful experiences, from search engines to social platforms. One such example is Deft’s eCommerce search engine which is focused on ecommerce. Algorithm-based regulation is spreading beyond the For You page – becoming a popular way for companies to customize experiences for their users at scale.

There are elements of organizing experience that lend well to interesting business models and distribution mechanisms. Here are some of the growth strategies that have got us excited about investing in tools and companies that take advantage of regulation to deliver unique consumer experiences.

1. Create scarcity. Regulation allows creators and companies to create a dearth of discrete products. Oftentimes, content creators and marketplaces will share limited quantity items for a high-intention audience. This leads to increased demand, which leads to a scarcity of products. When implemented as a “drop” or “auction” model, this increases scarcity and adds manipulation to the consumer experience. One example is the NFT Music marketplace Sound.xyz for limited music, which often sells out in minutes.

2. Take advantage of the inline sharing. Curators often benefit from distributing creators who also use the tools. Moderators will discover the tool, and use the tool to share content or products, which then leads to consumers and other curators discovering the tool themselves. Through this distribution mechanism, curation tools (such as creator tools) can navigate the expensive distribution channels of the platforms (Instagram/Twitter/TikTok) themselves. For example, many users discover the NFT OnCyber ​​gallery platform because users create galleries through the platform and then share the galleries they’ve created on Twitter.

3. Benefit from community-led distribution. Organized markets and instruments of regulation can also benefit from community-led distribution, since by definition they cater to the “niche business” of consumers. By focusing on specific vertical services and interests, curation platforms can go directly to their communities with new distribution methods such as groups (eg Facebook groups and Discord channels) or use less saturated channels where the community already exists. For example, Weee! It is distributed to its “specialist business” via WhatsApp.

These are just a few of the interesting ways in which regulation markets and tools find and engage consumers, and why we are so excited to invest in this area. In addition to these sharing and distribution methods, curation platforms are also capable of achieving unique relationships with end consumers. They gain confidence by limiting supply and creating opportunities for consumers who have traditionally been the most passive users of the Internet to participate more actively by lowering the barrier of entry to “organize as creativity”. Additionally, curation platforms create opportunities for discovery by emerging products, creators, and artists, opening up a world of discoverable products and content for consumers by creating new, high-quality supplies.

We believe the renaissance of regulation has only just begun. When we look at our investing history at Bessemer, it becomes clear how Pinterest, the place for inspiration and image discovery, was an early pioneer in the curation and expression movement. With online identities and communities becoming increasingly important, Web 2 and Web 3 organizing tools provide creators and consumers with innovative new formats for online organization. We anticipate that there will be an ongoing trend for companies taking advantage of regulation through tools or the marketplace, to deliver better consumer experiences.

If you’re building in this space, I’d love to hear more. Email me at [email protected]

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