Every few years a great unbundling occurs

In 2010, Andrew Parker wrote a defining post about the "unbundling" of Craigslist where he outlined the opportunity to carve out niche products from broad horizontal networks like Craigslist. The broad networks are everything to everyone, the niche ones are something special to a certain group. If you add up the value creation of the vertical companies (ie: Airbnb, Zillow, Stubhub, Etsy etc) it is greater than the sum of its parts (i.e: Craigslist). It turns out going vertical, is pretty profitable.

The destiny of every massive social network or marketplace is unbundling. It's a not a matter of if but when. There is startup "unicorn status" (reaching $1B+ valuation) and there is startup "unbundling status". Unbundling status looks undesirable on the surface but it means you're doing lots right. It is one of the rarest clubs around.

What is a vertical network?

It's a social network or marketplace for a particular audience, usually giving customers/users that warm and fuzzy feeling that the product is for them. Sometimes it starts out as a utility and blossoms into a social network or marketplace. Vertical networks could be anything such as games (ie: Roblox) or photo-sharing apps (ie: Snapchat).

Example: Poolside.FM looks like a Mac from the 1990s but is a popular internet FM radio station/social network targeting a unique audience

The Great Unbundling of Reddit

Reddit is being unbundled as we speak. It's largely due to three reasons:

1. Major social platforms today are noisy. People have found refuge in groups (iMessage, Fortnite worlds and group chats). If Facebook is Walmart, tools and communities like Discord (ie:gamers) or Public.com* (ie: casual stock traders) are boutique stores
2. There is too much surface area for Reddit to possibly cover within constraints of subreddits. This creates opportunities for startups to swoop in, create brands and products that really resonate with people
3. COVID created an unsafe physical world yet people still want to explore their interests. The need has only grown but the ability to physically experience your interests have become more difficult. The internet provides the safest alternative to be with your people and buy products that earn status, reputation and major utility

These reasons compound together to generate terrific thirst for vertical network products worldwide. In 2020, people are particularly willing to try your product, download your app and join your waitlist. Press is particularly willing to write about you. It reminds me of the same hunger that existed for mobile apps back when the App Store launched in 2008. These moments are few and far between.

Some examples of subreddits and their startup vertical communities

r/medicine → Doximity (1m+ medical professionals on it)

r/Beauty -> Supergreat app (backed by Benchmark)

r/sports → StadiumLive (spaces for gen-z sports fans)

r/Streamers → Pipeline.gg (top esports streamers community by top esports player Snoopeh). Note: I think many influencers will launch their own vertical networks and be successful