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Cash App is crushing the fintech category ✅
How CashApp is using network effects & culture to accelerate growth
This week we are going to learn an important lesson. We are going to learn that even if you work in a ‘boring’ category (I’m looking at you finance and insurance) there is no excuse. There is no excuse for creating category-generic & boring brand work. And in fact, if you are willing to take a ‘risk’ & embrace creativity, you can crush the competition & dominate your category.
This is the story of Cash App.
No before the trolls come out in force and say “…but Will! …Block, the holding company of Cash App, share price is down over 35% in the last year!” let me provide a little context.
Yes, their share price is down (a lot), but this has nothing to do with bad marketing. Block has been affected by a myriad of macroeconomic factors including inflation, recession and market crashes. Simply, Block has been hit hard like many other tech stocks over the last few years.
Ref #1: Although Block’s share price has fallen CashApp continues to dominate.
Yet despite these turbulent times Cash App has performed exceptionally well. In fact, it is one of the primary growth drives for Block. In 2022 alone Cash App generated $774 million in gross profit up 51% from the previous year.
So how did Cash App, despite these turbulent times, perform so well?
Let’s break it down.
#1 THE POWER OF DISTRIBUTION
It’s easy to forget that when CashApp launched it was entering an already crowded market. Peer to Peer (P2P) payments was already dominated by the likes of PayPal & Venmo. Google had also recently launched an almost identical product to Cash App, with its email payment system.
Yet one thing Cash App understood, and mastered, better than anyone else was the power of distribution. They understand that no matter how good your product is, it is all for nothing unless you can actually get the product into people’s minds and hands. As Marc Andreessen elobrares:
“[T]he general model for successful tech companies, contrary to myth and legend, is that they become distribution-centric rather than product-centric. They become a distribution channel, so they can get to the world. And then they put many new products through that distribution channel. One of the things that’s most frustrating for a startup is that it will sometimes have a better product but get beaten by a company that has a better distribution channel. In the history of the tech industry, that’s actually been a more common pattern. That has led to the rise of these giant companies over the last fifty, sixty, seventy years, like IBM, Microsoft, Cisco, and many others.” Marc Andreessen, partner Andreessen Horowitz
The idea of distribution is identical to what Byron Sharp, Professor of Marketing Sciences, calls physical and mental availability. To radically oversimplify he basically states the brands grow by making themself easier to buy (physical availability) and ensuring they are top of mind when are ready to buy (mental availability).
What’s most impressive about Cash App is the way in which they achieve said availability…because whilst their tactics are not new, their execution is flawless. You see whilst most fintech companies obsess over performance marketing CashApp embraces a more creative and effective approach.
Let me explain.
One of the brand’s first initiatives was Cash App Fridays. An initiative that sees the brand give $100s of dollars away every Friday to CashApp members. This activity is more than a mere giveaway however. It was born out of the brand actively listening to it users. In 2017 the brand noticed that most CashApp-related tweets were women encouraging men to Cash App them to get their nails done, and men telling women to Cash App them for fresh haircuts. The brand identified this growing conversation & tapped into it with Cash App Fridays.
Ref #2: Cash App Fridays was one of the brand’s first & most successful ways to grow distribution
Cash App Fridays are a smart way to grow distribution (ie availability) in a number of ways. First, it’s a far more authentic & engaging way to reach an audience than just doing random giveaways. Second, as people need to have the app to receive the giveaway, it’s a smart & cost-effective way to drive customer acquisition. In fact, Cash App’s customer acquisition cost (CAC) averages around $20, which is far lower than that of other P2P apps. Third, it is a clever way to grow the brands social following on platforms such as Twitter where the #CashAppFriday conversations where already taking place.
Ref #3: Cash App Fridays has helped the brand’s twitter following to grow expotentially.
Any startup or scaleup can learn a lesson from Cash App here. They can learn that no matter how competitive a market, or similar the product is, those with the greatest distrubtion/availibility will win out. And one of the best ways to grow availability when your company is young & budgets are small? Listen to your audience & tap into existing conversations.
#2 NETWORK EFFECTS
Anyone who has tried to grow a following on social media (humble brag I have 25k followers on Twitter) will appreciate the power of network effects. In short, the power of network effects is that their ‘value increases exponentially whilst costs increase linearly’. In simple terms this means that when you start out on socials, growth is hard. It feels like an unbelievable effort for very little traction. However it also means that with consistency, and good content, the same amount of effort results in exponential audience growth over time.
Yet there is a way to cheat this process & grow more quickly. Let me explain.
If you can tap into existing & larger networks you can grow expotentianlly faster. Ever noticed how big creators are always working together? It’s because their tapping into each others respective networks. Ever wondered why brands such as Supreme & Louis Vuitton do brand collaborations? It’s because their brands are tapping into each others respective networks.
Ref #4: Collaborations such as Supreme x Louis Vuitton are great examples of two brands tapping into each others respective networks.
CashApp has always leveraged this trick exceptionally well. It has done it via influencer shoutouts with the likes of Travis Scott, sponsoring popular podcasts such as Bar Stool Sports & partnering with popular IP such as Nintendo’s Animal Crossing. Now again whilst this may not be the most original tactic their execution is flawless. They don’t show up in these spaces like a typical finance brand, talking about interest rates or credit cards (ick). They show up in a way that adds to the experience and benefits the community surronding the influencer, podcast or video game they are partnering with.
Ref #5: CashApp taps into existing networks by adding to the experience...for example they don’t pay musicians for a shoutout they work with them to create new music.
The second lesson brands can learn here is that tapping into existing networks, and adding value to said community, can help them to accelerate their distrubtion/availability.
#3 CULTURE FIRST
All the short term tactics outlined above are useful when a brand is in its early stage of growth. They offer a more cost-effective & creative way to grow distribution than an increasingly expensive performance marketing. Yet as any seasoned marketer knows short term tatics alone will never result in long term brand growth. Name me one global iconic brand that grew from short term tatics or performance marketing alone…you can’t. Don’t believe me? Go ahead and challenge me. Drop me some suggestions in the comments below and let’s discuss it ✌️.
Ref #6: As proven by the ever brilliant Binet & Field brands can only truly scale by investing in both short term sales AND long term brand building.
Why do i bring up the importance of long term thinking in this piece? Because this is the pivot CashApp is going through right now. They are beginning to establish their new brand positioning & creative platform and making work which (in my opinion) is some of their best to date. And why is this work so effective? Because they tap into culture.
Btw if your a scaleup or bigger company looking to overhaul your brand positioning & creative platform, at Defiant we specialise in that. Come say hi 👋.
The word ‘culture’ is thrown around a lot in marketing & by advertising agencies. And honestly many tend to overthink it when in reality its quite simple to understand. Let me breakdown what it is & why it is important, in four simple steps:
Fame is the single biggest driver of brand growth.
Fame = getting people to talk about your brand.
Culture = what people are already talking about.
So tapping into culture (what people are talking about) increases your chances of fame (getting people to talk about your brand) and therefore growth.
Ref #6: As proven by the ever brilliant Binet & Field brand fame is the biggest driver of growth.
Cash App understands and taps into culture better than almost any other financical services brand i know. They understand that one of the hottest topics in America is financial inequality. They also understand that black Americans are almost x6 times more likely to be unbanked compared to white Americans. Not only do they understand these cultural issues but they are actively trying to address them and improve the situation. Their new brand platform ‘That’s Money’ looks to both normalise conversations around money & breakdown a lot of financial jargon that prevents many from becoming ‘banked’. Yet CashApp doesn’t do this in a cringey or purpose washing way. It does it in an incredibly powerful way because the brand has taken the time to really understand black culture.
Ref #7: CashApp new brand platform is so effective because it truly understand and taps into black culture.
The final lesson we can learn here is the importance & power of culture. That when you are ready to truly scale you need to move beyond just short term tatics and invest in long term brand thinking. And one of the best ways to do this? Take the time to understand the culture surrounding your audience and build a brand around it.
Are you scared? Or perhaps your lazy? No i didn’t think you were. Then what excuse do you have for not forwarding this newsletter on to just three people. The more you share, the more we grow & the more time we can invest in this community💪.
CashApp proves that no matter how ‘boring’ the category your brand is in, you can still make work that is highly creative & effective. CashApp also teaches us three important lessons at any stage of growth. When you are a startup focus on tatics that will help grow you distribution (ie physical and mental availability). Feeling impatient? Then look to tap into existing networks (ie influencers, brands or IP) to accelerate growth. Finally, when ready, you need to invest in long term brand building if you want to scale. And one of the best ways to do this? Take the time to understand the culture surrounding your audience and build a brand around it.
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Expect big thinking & small typ0s. I'm #MadeByDyslexia
Co-Founder | Strategy Partner