If the last decade has been a time of digital abundance--more followers, more “friends,” more apps--2019 looks to be the year of paring down. 2018 saw the first significant decline in time spent on site for Facebook. Users are deleting the app and replacing it with tools to track screen time. But our desire to find community and connection, and to leverage technology to do so in more effective and efficient ways, hasn’t changed. As a result, the coming years will likely be a time of renewed opportunity in new forms of social systems, the kind that has been difficult to come by during the major platforms’ ascension and dominance.
This is not to say the incumbent platforms are going anywhere anytime soon. But there is likely to be a splintering significant enough to create new startup entrants with the chance to own consumer needs.
This splintering seems to be happening for two central reasons:
So what now?
The next wave of social systems will likely emphasize breadth and depth differently than the last--and may not look much like social networks at all. With the current networks, the horizontal nature of the platform is the product. Users come for the community. But it may be that with the next, the community is what keeps users long term engaged but is formed around another intent. Come for an action, stay for the community.
These platforms are likely to have four core things in common:
If you are working on a business involving this new evolution of community, I’d love to learn more.
*ShopShops, Duolingo & Dia & Co are all USV portfolio companies”
Today, Dia&Co announced their Series C round, which we recently led out of our Opportunity Fund. The crux of USV’s Thesis 3.0 is about backing trusted brands that broaden access, and this is exactly what Dia is doing.
Dia is a commerce and community platform for plus size women. Their first product has been a curated box with a try-at-home model, where customers keep what they want, send back the rest, and receive increasingly personalized product over time as Dia learns their preferences and styles. But Dia is based on a customer and not a model--how they serve her will evolve; who they serve will not.
There are two core reasons that make Dia particularly exciting as an addition to the USV portfolio. First, the size and current state of the market they are focused on. Second, how well positioned this team is to tackle this problem and the ability they’ve shown to create not just a transactional business but a large, fast scaling, emotionally engaged community.
While the plus size category has been largely ignored by retailers, it has evolved into an ideal opportunity for new brands to emerge that allow high intent, passionate customers to transact in ways they are asking for. It is rare and getting rarer to find real market gaps in the commerce world. Usually, there’s opportunity to improve on the product quality or composition, user experience, or price point. But in plus size there’s a complete supply and demand imbalance.
The stats tell this market’s story cleary. Plus size is defined by size 14 or up--a category that encompasses at least 68% of American women. But a look at 25 of the country’s biggest retailers showed that only 2.3% of their assortment was plus size. It makes up about 17% of retail overall, generally tucked away in basement levels of department stores, unmoved or reimagined for decades. (Nadia, CEO of Dia, and the Gotham Gal go into some of this during this podcast, which is excellent.) Today, even with poor experience and lack of supply, that’s a big market--about $21.5B in 2016 and growing faster annually than any other segment in retail. The potential however is meaningfully bigger.
Better yet, this customer isn’t quiet--she’s high signal. She likes and posts and comments about what she’d want to buy if it was offered. Just like many straight size women, she’s passionate about fashion and trends, even if she’s rarely able to reflect that with her dollars. Nadia Boujarwah, CEO of Dia&Co, knew this well because she’d been this customer her whole life. So when she set out with her co-founder, Lydia Gilbert, to build Dia, she understood the rarity of the opportunity first-hand--a massive market with high demand, high intent, and extremely low supply.
When I first met Nadia and Lydia 3.5 years ago, Dia was in very early days. Nadia and Lydia started by buying the clothes and shipping them to customers they emailed with. It was low tech, high touch, and not yet scalable. But the deep customer desire was overwhelmingly evident. Women were asking when their next box could arrive before their previous one had even made its way back. The more boxes they got, the more they bought--Dia could gain their trust and convince them that in a retail world where they'd always been forgotten, here they were heard and celebrated.
Several years later, Dia has seen rapid growth and has built scalable infrastructure. Deep data science and algorithmic recommendations complement the army of passionate customers turned stylists. An easy to use interface has replaced email. And sophisticated inventory management, private label creation, and complex reverse logistics make the backbone of best in class merchandising and operations. But, most of all, this trust in the brand has only strengthened and remains the highest potential element of what’s now a big business. For many of their customers, Dia has become more than a commerce platform, but a much needed tribe. Recently, a group of Dia women gathered in Nashville for vacation. They had never met in person but had long been communicating on the Dia&Co Facebook group. In each other they had found commonality and friendship; in Dia, they found a community they feel a part of, and products that they not only wore but felt proud in. Whenever they receive a box in the mail, they immediately post each item to the group to solicit opinions. They are honest with each other on what to keep and what to ditch, but always supportive.
That belonging isn’t unique to the women on the trip. Its seen throughout Dia's base of customers and gives them license to increasingly deepen mind and wallet share. That ability is at the heart of the best consumer transactional businesses and the signal of a real trusted brand.
We are thrilled to welcome Nadia, Lydia, and the Dia&Co team to the USV Network.”