Laura Schaffer Dissects Cameo's Rise and Fall; Plus New Benchmarks for Companies in 2024

Laura Schaffer Dissects Cameo's Rise and Fall; Plus New Benchmarks for Companies in 2024

This week, Brian Balfour and Casey Winters are joined by Laura Schaffer, the VP of Growth at Amplitude. Laura is bringing the heat as we unpack the rise and fall of Cameo and discuss what the latest SaaS benchmarks mean for companies braving the challenging waters ahead in 2024.

Want to learn more from our guest, Laura Schaffer? She just spearheaded a robust Acquisition playbook available for free with Amplitude. You might recognize contributions from a number of Reforge all-stars as well.

The Cameo Conundrum: To Scale or Be Conservative? 🚀🤔

We kicked off the episode with a deep dive into the rise and fall of Cameo, a platform where fans pay for short videos from celebrities. The pandemic sent Cameo's growth vertical, but as the world returns to normal, they've come crashing back down to earth. 🌍💥

🦠 The Pandemic Effect

Cameo's growth during the pandemic was fueled by two factors: an increase in supply as celebrities found themselves with more free time, and an increase in demand as fans sought new forms of entertainment. We have long believed that this boost was a temporary blip, fueled by unique circumstances. Unfortunately, it's challenging to stay conservative when everyone around you is urging you to accelerate. Brian felt the pressure to scale at Reforge too and often found himself wondering if he was the one wearing crazy pants.

💭 Was It Ever A Marketplace?

In Brian’s opinion, Cameo violates some of the patterns and rules around marketplaces. The demand side is low frequency. “I might use it for a holiday or a friend's birthday, but I won't use it for all my friends' birthdays.” When there's low frequency on the demand side of the market, other elements typically need to be in place to build a large, sustainable business.

A couple of these elements are:

• A higher average selling point than what Cameo offers

• Being at the point of need when the demand side has the problem. This usually involves a lot of long-tail SEO, which never really took shape.

It's not surprising that their growth was driven by word of mouth, but it wasn't a sustainable form of word of mouth that could be continually leveraged for growth.

Casey feels Cameo is actually more akin to a SaaS-like network. “The value prop that you deliver to supply in a marketplace is demand, more users, orders, et cetera, the value prop you deliver in a SaaS-like network is fulfillment and efficiency, right? Those are very different things that you could charge very different rates for. And generally, fulfillment is not a venture scale.”

🔄 The Growth Loop Dilemma

Cameo's growth was driven by a classic content loop: celebrities create videos, fans share them, and new users sign up to book their own videos. But without demand-side retention, this growth loop isn't sustainable. Cameo's challenge was to find a way to create repeat purchase behavior on the demand side before the Post Pandemic Crash.

📉 The Post-Pandemic Crash

As the world returns to normal, Cameo's growth has plummeted. Unlike companies like DoorDash and Peloton, Cameo was unable to transition pandemic-induced habits into long-term behaviors.

Laura says ”Companies that did it well, looked at it for what it was. This is a temporary giant boost in brand awareness and getting people in the door. Then, how do we have a very deliberate pivot strategy for when those accelerants go away? And I think companies like Cameo that kind of pitched or assumed that that was going to stay the same ended up in big trouble.”

The Future of Cameo 🔮

Cameo's future hinges on their ability to pivot and adapt. They need to focus on the core problems they're solving (like accessibility and financial exchange) and find new ways to deliver value to their users. This might require a significant shift in their business model or product offering, but without change, their future looks uncertain.

That said, we respect deeply that the CEO is staying in it and grinding it out rather than jumping ship.

Lessons Learned:

🤔 The Question of Sustainability

Cameo's challenge lies in its low-frequency marketplace model. Without high average selling points or a strong SEO presence, the company struggles to maintain its growth. As Casey said, “a Growth Loop is not a business.”

The Art of Attribution 🎨

Understanding where your growth is coming from is crucial. If you can't attribute your growth to specific actions or features, you should be hesitant to increase investment. In Cameo's case, much of their growth was driven by external factors (i.e., the pandemic) rather than internal changes or improvements.

🚦 The Green Light for Growth 🚦

The key to successful scaling lies in understanding your growth drivers. Real opportunities echo in multiple chambers. If you're considering scaling, ensure you have multiple momentum drivers pushing you forward. 🎲

3️⃣ Laura’s Rule of 3 3️⃣

“If you really have lightning in a bottle, it tends to echo in a few different chambers. Not just sort of one thing that's really moving, it's a few. 1️⃣ There's a big problem you're trying to solve and 2️⃣ the market is going there and 3️⃣ no one else is solving that problem, right?

You could maybe think of that in this framework as well, which is like, if, if you really have got something that is massively a big mover. It's probably not one piece that is going to be saying that to you. It's going to echo in multiple chambers.”

🚧 Even Green Lights Should Be Treated as Yellow Lights 🚧

If you think something is working, Laura suggests still remaining conservative.

“I also think that when you're trying to approach investment [and] you’re looking through attribution as a way to figure out what you're going to do,

I think you just have to be ruthlessly honest with yourself if the attribution is driven by this thing. [If] we're not sure, let's not quadruple down and assume that's right. Let's go ahead and like nudge that and see if the return continues as we expect. Let's continue to seek out the signals that would confirm that's true as we go and or seek out the anti-signals if it's wrong.”

Key Benchmarks and Lessons for Founders/Business Leaders: A Deep Dive into SaaS Trends 🚀

Next, we’re analyzing the latest SaaS benchmarks report from OpenView Ventures and the resulting lessons for founders and business leaders.

📉 The Leaner, the Meaner? 📉

The report shows a trend towards leaner operations to drive more efficient growth. Companies are operating with fewer employees and lower burn rates. But here's the kicker - growth isn't necessarily becoming more efficient. Top-line growth has dropped, gross retention has decreased, and payback periods have worsened or stayed the same. So, are we cutting the right things? 🤔

🤖 AI: The Turkey or a Side Dish? 🤖

Many SaaS companies are banking on AI features to boost their monetization growth. But is this sustainable? AI features are becoming the expectation, not the exception. So, how long can you actually charge extra for these things? Is AI the main course (the turkey) or just a side dish in your growth strategy, and more importantly, what should it be?

🎯 The Right Bet 🎯

The key is to make the right bet. AI can be a powerful tool if used right. It can help you monetize in the short term and retain in the long term. But it's not a silver bullet. It's a part of a holistic strategy. Don't over-rotate on AI without having a plan.

🥪 The Middle Squeeze 🥪

Companies in the middle - not small enough to move fast and make big bets, nor large enough to leverage powerful data sets that are only achieved through scale - may find themselves in a tight spot in capitalizing on AI in the short term. The solution? Get big or get small. But don't get stuck in the middle.

🚀 The Future of Growth 🚀

The future of growth isn't about betting on a single trend or technology. It's about understanding your market, your users, and making strategic decisions based on that understanding. It's about being lean, but also being smart. It's about knowing when to cut and when to invest.

That’s all for now! We’re back next week with Chris Savage, CEO of Wistia! Until then, enjoy the Turkey (and the sides).