Andrew and Chris Masanto of Cofoundant, a venture incubator, have built and scaled two types of companies. They are the founders of Petlab Co., a direct to consumer (DTC) pet supplement business that is on track to generate $100M in revenue in its second year of operations. Andrew was the founding chief marketing officer of Hedera Hashgraph, a crypto protocol that claims higher security and speed than Bitcoin that has now raised over $100M and has Google, LG, Boeing and other large companies behind it as an enterprise play. Andrew was also the founding chief marketing officer of Reserve, a flexible pool of stablecoins designed to reduce risk through diversification and decentralized governance, backed by Peter Theil.
Andrew subsequently combined his passion for social impact and disruptive fintech to co-found Good Money, a digital wallet that will double as a mobile challenger bank, payment system and investment platform to enable users to decide which socially good causes to devote company profits to. Prior to fintech and DTC, Andrew built and sold several smaller companies including the Higher Click SEO Agency.
Chris, on the other hand, developed his skills at the global data and analytics firm Nielsen, before founding a U.K. advertising agency called Altitude Ads. Leveraging his experience in digital marketing, he then went on to start his first successful DTC brand, CEL. The combined experience of the Masanto brothers in data analytics, paid social marketing and DTC growth combined with a vision for emerging technology ultimately fueled exponential growth in all of these industries.
So how is community the common glue? Think about what has driven any protocol launch. It’s developers on Github. It’s HODL’ers (holding on for dear life) through volatility. It’s Telegram members. It’s Reddit and Twitter followers. It’s Meetup attendees. And it’s commitment to tribalism (i.e. defending your position at all cost). Community members have many reasons to want the project to be a success. When provided with the right incentives, which don’t have to be usage or financially focused, but rather status driven or intrinsic (e.g. they make one feel good about making the world a better place) communities can be an extremely powerful engine that drive both rapid and long term success for a business.
The Masanto brothers have expertly capitalized on community building and incentives by honing their marketing skills across a variety of platforms, especially Facebook. They are one of the top 10 spenders on Facebook at a rate of $5-10M/month and use Facebook’s platform to test what products consumers would be willing to purchase before investing time and money developing and stocking inventory. They call it “lean testing.” It’s the reason Petlab Co. has so many products customers want to buy – the joy of sharing dog photos on social media can unlock valuable data on what consumers want to buy. However, if data is the new oil, why are so few consumer facing companies using it to de-risk product development? “Most companies aren’t mining social content for this purpose,” said Chris. “Traditional market research does not have a deep enough understanding of paid social. Companies simply don’t have a system to effectively test and measure consumer demand for specific products via spending money on social.”
Instead of burning through rounds of venture funding to find product market fit and building the initial community, you find it through mining the community. This is why the brothers haven’t sought out much venture funding through all of their businesses; they instead have been able to bootstrap their businesses, customers and early community through positive unit economics, immediate product market fit and exponential growth. As Andrew points out, “Often, initial defensibility comes through first mover advantage, product market fit and creating an initial community of raving fans behind a company and its products. Only then do we build and capitalize on that foundation by developing the best systems, supply chain, and product patents. In other words, we first secure the market and then build defensibility or moats around it.”
They took the skills they learned through their respective marketing businesses and applied this in crypto as well. Andrew mined Angelist to find the whitepaper for Hashgraph, which had been in existence since 2014, but passed over as unworkable by many others. He subsequently single-handedly built the initial community responsible for the popularization of the protocol and the eventual establishment of the company, Hedera Hashgraph.
As the Masanto brothers started to realize that their formula for exponential growth worked across industries, they have formed an incubator, Cofoundant, to do just that. “Cofoundant is the parent that provides its ‘child’ companies with the elements of product market fit and exponential growth, and then leverages this initial competitive advantage through customer service, fulfillment and best operating practices,” said Chris. Andrew and Chris are also looking to impart their cultural wins and wisdom onto a new crop of companies. They have loyal teams that have stayed with them through many of the companies they previously started and manage with empathy and no ego. They liken this to a sports team where everyone is part of…you guessed it… their community.