Startups to Watch
#47 - Squad
Happy Wednesday!
For those who are new, this series is dedicated to early stage startups from LatAm that are under the radar – and have a good story to tell. I send it out every other Wednesday (sometimes every week)- and it is separate from my traditional weekly newsletter.
The basic criteria is a company that is not on the spotlight and is NOT actively raising proceeds. There is also no bias – apart from the fact that I like the story. I am not an investor or get any financial compensation to promote startups featured. This is intended for informational purposes only, using my solid base of subscribers to share intel of good people doing cool things, thus fostering the ecosystem.
Since launch, featured startups in aggregate were connected 104 times, to 47 different investors/strategic partners/companies globally.
Finally, if you are a founder and want to be considered for this series - it is very simple:
Please fill out a one-pager, in English, about your company using the topics and themes outlined in the posts. Please write it in 3rd person.
Reply to this e-mail with your one-pager attached.
I will review and reach out if I need more information.
It will be posted if I believe the startup fills the profile and audience of this newsletter.
Good Luck!!!!!!
Follow me on LinkedIn , Instagram or Twitter for daily updates!
Opinions expressed here are solely my own and does not represent those of people, institutions, organizations that I may or may not be associated with in any capacity, unless explicitly stated.
Squad: ask anyone, anything, anytime, anywhere
Context
In recent years, a transformative shift has occurred in the digital landscape, marked by the rise of social search and the verticalization of social media platforms. The digital landscape has seen a rise in social search and the verticalization of social media platforms. Once primarily a means of connecting and content sharing, social media has evolved into a multifaceted tool for information discovery. Users are increasingly turning to platforms such as Instagram, TikTok, and Pinterest as alternative search engines, challenging the dominance of traditional search engines like Google. This trend, known as social search, reflects a broader change in consumer habits, emphasizing the importance of peer-generated content over more traditional sources. Additionally, the verticalization of social media platforms, where content is tailored to specific interests or niches, further contributes to the evolving landscape of online information retrieval.
This shift is reshaping the way users seek and consume information, placing a heightened emphasis on the authenticity and relatability inherent in peer-generated content. Consumers now prioritize recommendations and experiences shared within their social circles, challenging the influence of traditional influencers. As seen in trends like "TikTok made me buy it," this shift in trust dynamics is evident, with users gravitating towards content that resonates on a personal level. Approximately 40% of Gen Z now favors social media platforms for searches, signaling a departure from the traditional search engine model and a growing reliance on social networks for information discovery. As social media platforms continue to refine their functionalities and cater to diverse user preferences, their role as alternative search engines is poised to grow, challenging the conventional dominance of platforms like Google in the realm of information discovery.
In this evolving landscape of consumer interaction and the rise of social search for lifestyle products, brands are increasingly recognizing the need to establish deeper connections with their audience. This imperative is underscored by the rise of social search, where users seek information within their social circles. To navigate this shift, brands are turning to innovative strategies like co-creation, collaborating with consumers in product development and content creation. This approach not only fosters engagement and brand loyalty but also aligns with the changing dynamics of information discovery. As consumers place trust in peer-generated content, brands employing co-creation not only attract but also retain customers by offering products and experiences that authentically resonate. In adapting to the era of social search, brands find that co-creation provides a valuable avenue for staying relevant, attracting a dynamic consumer base, and ensuring sustained customer loyalty.
Problem
In the digital age of social search, users often navigate a plethora of search engines and platforms like Google, WhatsApp, TikTok, and Instagram to seek information and tips. However, the reliability and qualification of the answers provided on these platforms can be a double-edged sword. While they offer a vast array of information, the challenge lies in discerning the credibility of the sources. For example, if someone is looking for a Japanese restaurant recommendation in downtown New York for a Thursday date, the search journey on Google may be exhaustive and not very assertive. Most user-generated content (UGC) comes from contributors whose qualifications and expertise remain uncertain and distant from the user's reality. On platforms like WhatsApp, the search process is fragmented, and on platforms like TikTok and Instagram, organizing search results is challenging.
Moreover, users and customers are not only frustrated with this extensive, unassertive, and fragmented search journey but also feel unrewarded for their contributions when they act as contributors.
Brands, on the other hand, are limited in how they can interact with their customers on the currently available platforms. Social platforms like Instagram and TikTok only offer 1:many interactions, restricting how brands can use their brand lovers and communities as powerful resources for research and development. Moreover, for many digitally native, smaller brands, hiring a market research company to develop their products is too expensive.
The Solution
Squad was created to address these issues. It generates ultra-qualified leads for users' everyday consumer lifestyle questions by leveraging users' networks, extended networks, and experts to provide answers. Squad operates at the intersection of search engines, networks, and brands. Its goal is to crowdsource opinions from friends, close networks, and a personalized AI to facilitate everyday consumer decision-making. The app combines social search with community listening and brand loyalty programs to deliver highly qualified answers to users' lifestyle consumer decisions and co-creation communities for brands.
The Platform
Users can ask and answer questions, participate in different themed squads (including brands), create lists and guides, and get rewarded (currently in beta) by participating in their favorite brand's squads or whenever someone buys or books products or services from their lists.
Customers
Squad's ICP are females aged 24-34, who mostly live in suburban areas. Although Squad launched in São Paulo, Brazil, and 79% of its users are from the country of launch, it has already attracted customers in the United States, UK, and France.
Brands such as Nuó (female hair accessories), Kage (gym weights), EatYourNuts (newsletter), and others have participated in proof of concept testing for squad's B2B2C model.
Use Case
Let’s say you are travelling to Sao Paulo, and you want to know the coolest Italian restaurant for lunch on a Saturday….
Market Size and Opportunities
Brazil is known for having one of the most influence-driven consumer markets globally, where Brazilians trust and follow the opinions of their social networks. Social influence significantly shapes consumer behavior, with a large portion of the population relying on recommendations and endorsements from influencers and peers. In this context, a social search platform like Squad in Brazil can leverage the influence-driven consumer culture by integrating features that facilitate user-generated content, reviews, and close network endorsements. The platform can harness the power of networks to drive engagement and sales for brands while guiding users in their decision-making processes.
With approximately 500 million social media users in Brazil, the market opportunity is substantial. If we consider Facebook's CPM (cost per mile) as an indicator, the market opportunity in Brazil is $270 billion. Even when narrowed down to Squad's ideal customer profile (females aged 24-34) within Brazil, the potential market is still a $41 billion business. Squad's monetization strategy, based on an affiliate and marketplace model rather than ads, coupled with Brazilians' influence-driven consumerism, brands' desire to create communities, and users' expectations of highly curated content, presents a significant window for innovation and market capture.
Milestones
Squad has been live for 5 months (launched August 2023) and has acquired over 2k users, with 30% of them active weekly since the launch. The platform has closed deals to run POCs with 10 brands and started beta-testing 4 of these pilots towards the end of 2023.
Whats Next
Squad is evolving to address future challenges. Recognizing the potential issues of a network-based platform, Squad is modifying its approach to become a tool with added network benefits. This involves implementing a proprietary AI to provide users with first answers to their questions (while the rest remains community-curated) and launching a new feature that transforms Squad into a single-player tool. Users can create lists and guides for personal use, shareable with friends and the network. Whether it's a list of favorite restaurants for a date night, preferred books of 2023, or a record of beloved shops in a city, Squad facilitates this personalized content creation and curation. Users will eventually get rewarded if a friend purchases a recommended product or books a service through their lists.
Team
Rafaela Grabert Goldlust - Co-founder, CEO
Larissa Chern - Co-founder, non-operational
Fernanda Itoda - Tech Lead, founding team
Lucas Tenorio - Tech Lead, founding team