The New "Social Shopping Network"

The latest entry to the social commerce wars, Flip is taking friend groups by storm with their crazy referral strategy (free money, aka up to $240 for sharing Flip with your MOST-connected friends). They're paying creators up to 3,000x more than TikTok for content... but it's not sustainable. This issue analyzes the app, it's GTM strategy, competitive landscape, and my theory on how Flip *could* win this market by building social-interest graphs.

Welcome back to Meagan’s Newsletter: The Gen Z POV, where I break down trends, industries, and tech with a Gen Z lens every other week. I’m Meagan and I’m so happy you’re here. This issue is dedicated to analyzing the rise of one of the most viral apps I’ve seen in a longtime, aiming to become the “social shopping network” and shelling out millions to build a top-tier customer referral strategy. If you’re following the social commerce wars, this will be a goodie.

Below is the TLDR on Flip… the quick highlights which I’ll be diving into:

  • I’ve received 20+ texts from friends in the past few weeks telling me to download it… so it’s gaining popularity among Gen Z (300+ of the friends in my contacts already have it)

  • The secret sauce of their viral customer acquisition strategy & why they’re growing so quickly: placing a value on each potential customer in your contacts to drive the right referrals!

  • How it’s different from TikTok Shop, Amazon, Temu and others trying to win this already crowded category (hint hint: paying creators 375 - 3000x more for engagement)

  • What Flip could be doing better to avoid the “high flying CAC consumer startup graveyard” (can’t spend on acquisition forever) & how this plays into some of the most interesting traits of Gen Z shoppers

Now… let’s get into it! ⬇️

$240 just to download an app?? Say less

Last month, I started receiving texts from a bunch of friends about a new app called Flip that’s calling itself “The Social Shopping Network.” Each text includes a link to download Flip and a free credit for me & the person who referred me ($120 each to redeem). Considering I’ve been pinged so frequently about this, I figured it was time to finally download it and share my thoughts.

WTF is Flip????

The app feels similar to TikTok — you login (usually via a friend referral), choose 3 interests (I picked Beauty, Women’s Fashion, and Personal Care), and then are brought to a video feed that shares products you can buy directly in-app being advertised by creators.

Again, I was gifted $120 in credit to spend on the app (enticing surely…), but the interesting thing is not all friends you invite are worth the same price 🤫 👀

A snapshot of the interests page + feed with videos

Why it’s growing so quickly

TBH, my first impressions of the app aren’t great. Because it’s completely focused on selling, it just feels more commercial than TikTok — I’m often not going on my phone with the hope to aimlessly buy things (especially in this economy)!

However, it’s growing like crazy because of this viral text-based referral marketing. For example, I’ve had my eye on the Pat McGrath eyeshadow palettes / lipsticks for MONTHS because it’s supposedly what Taylor Swift uses on The Eras Tour… but alas, an eyeshadow palette is $128.

However, on Flip because of my $120 in credits, I was able to get the Mothership VII Palette for literally $8. OH and my friend Matt who sent me the code isn’t going to use his… so I’m going to use his credits to buy Christmas gifts for my mom ❤️ 

To put this growth in perspective (all stats from Bloomberg):

  • Revenue increased “50x” over the past month

  • Flip app has been downloaded 3.6 million times globally, with a spike in October, coinciding with the viral push and the company expanding beyond the beauty category

  • During October Flip was the second-fastest-growing shopping app on both iOS and Android

But what’s even more interesting is that you’re worth more as a referral based on how many friends are already on the platform… ie: getting me on the platform was worth $120.

However, if I go to invite MY friends (see below), my friend Nina is worth the most (280 friends, $120 credit) vs. Jacob is worth less (219 friends, $105 credit). Now I understand why I’m getting so many texts from friends and long lost contacts alike — they’re optimizing for inviting the right (highest value) referrals! I can theoretically get up to $51,630 in credits if I invite all the friends in my rolodex.

The eyeshadow palette I bought + the “bounties” on my friends that I could invite

How it’s different (or similar) vs. other social commerce apps

Just like TikTok, Flip is also incentivizing creators to post reviews. Let’s assume for a minute that I’m a creator on Flip:

  • Sales Earnings: When a shopper orders from one of my video reviews / live shows, I’ll get 5-15% of the product purchase price

  • Engagement Earnings: I earn $15 - $25 per 1,000 unique views over 3 seconds from my reviews for the first 30 days. The earnings go up to $40 - 60 per 1,000 unique views if they stay watching for 60 seconds! Right now, 70 cents in every dollar paid out to users was related to engagement, not sales.

So off the bat, these are WAY better economics than TikTok is paying from the creator fund (2-4 cents per 1,000 unique views… so 375x to 3,000x higher creator payouts for engagement on Flip).

Here’s how Flip differs from our go-to faves like Amazon and TikTok Shop:

  • Verified Brands Only: Unlike Amazon’s free-for-all of third-party sellers, Flip allows only verified brands to sell directly. Right now there are 1,000 brands on Flip (ie: like Pat McGrath Labs) but the number is expected to hit 7,000 by end of year.

  • Domestic Brands Only: Only brands that ship from within the US are eligible.

  • No “Paid / Sponsored Posts”: Brands are strictly prohibited from contacting Flip users directly to try to get them to review their items. Endorsements must come for products that users have bought themselves, and the app includes a mechanism to report brands that cross the line. 4-5 brands have already been kicked off 😳

On top of this, brands are expected to handle their own logistics, so it likely will take longer than 2 days (Amazon Prime comparison) for products to arrive… it’s not the speediest. However, Flip will take a smaller cut of sales (ie: one pickleball paddle company says Flip is only taking 4-6% of sales vs. Amazon taking 15%).

The Earnings page within your wallet provides a good breakdown on app monetization

How is this possible? Will it last?

TLDR, venture capital is funding Flip’s crazy acquisition strategy. Flip has raised $94.7 million to-date at a supposed $500M valuation.

Here’s my hot take: other than acquisition & the crazy amount of $ they’re paying creators to post reviews… this creates 0 behavior changes for the user.

For example, nothing is fundamentally different about the way I shop on Flip vs. on TikTok Shop… and nothing is keeping me in the app (apart from the massive discounts my friends are sending me). I don’t find the content engaging, and I have no interest in scrolling a pure shopping app with random brands. Ie: I ended up just searching for Pat McGrath in the Shop tab to see if they had the palette I was looking for… then bought it / didn’t waste my time scrolling through creator videos. It’ll take time for Flip’s algorithm to really get to know me and serve curated recommendations, but I’m not willing to spend enough time on the app to give it that opportunity.

In the words of one of my favorite Taylor Swift songs: I think I’ve seen this film before… and I didn’t like the ending.

AKA this is a tale as old as time in the venture world… VCs funding crazy acquisition strategies, then when the cash runs out, users leave (remember the Jokr food delivery app?).

💁‍♀️ Temu, which I wrote about in a previous issue, is different because it fundamentally changes the price for consumers. They have a crazy acquisition strategy, but also their products are much cheaper overall. Temu is winning on price.

💁‍♀️ TikTok Shop is different because they’re winning on entertainment — you trust the creators you’re buying from, and you spend more time on TikTok because you’re coming for the entertainment (the shopping is secondary).

💁‍♀️ And then Amazon is course the gold standard, winning on delivery times / convenience, breadth of products available, etc.

🙅‍♀️ I think Flip is in this weird middle right now because they aren’t providing a real value proposition to the end consumer… so I’ll be curious if anything about the app changes in the coming months now that they’ve spent millions on customer acquisition costs (CAC). It doesn’t feel like they’re winning on anything (at least in a sustainable way).

How could it be better?

So again, I’ve had a ton of friends (20+ at least recently) text me directly about downloading Flip… but even the free "$120 in credits” wasn’t enough to get me to download it or try it out. There are too many apps today that offer free credits that it just seems monotonous / one of the same.

I’d like to see invitations become more personalized… this is where some AI fun could theoretically come in. If I got a text from one of my friends saying I could get a free Pat McGrath palette or they could GIFT it to me for free… I would’ve opened Flip SO fast.

And this is the thing about Gen Z… we really care about “things” as rewards — ie:  It's more compelling to work towards getting a free pair of AirPods than just $100 as a reward for XYZ behavior. 

It’s one thing to unlock people’s contacts… it’s an entirely different game if you can unlock those people’s interests & the things they love. The most valuable information to any app or brand that wants to market to me is siloed either in my brain, that of my closest friends, or within my TikTok algorithm.

For example, it was my friend Berkeley’s birthday this past week and I’m a birthdays person… so I went all out. She loves Dr. Pepper so I bought her a Dr. Pepper candle from Etsy, a chocolate cake from the grocery store, her favorite bottle of red wine, etc.

If I sent Berkeley a link to download Flip and free credits, she might download it — but what would Flip learn about Berkeley in the process? What if I could personalize the invite by sharing the things I know she’d like (ie: something super specific like Dr. Pepper themed merchandise)? And then overtime, Flip could continue marketing/sharing everything Dr. Pepper related within the app… meaning her time-to-value in the app is much faster? It’s almost like hacking the TikTok algorithm by going through your friends first.

For Flip to win this market & actually shift consumer behavior, they need to go beyond just tapping into social graphs… they need to map out social-interest graphs in a hyper-personalized way. I think gifting could be an interesting use case (ie: not just inviting people with credits, but instead with personalized gifts) especially as we head into the holiday season.

The D2C gifting market has been a total graveyard: 2.5 years ago I listed Goody as my favorite app on my phone in Business Insider, a D2C gifting app that made it easy to give gifts to my friends via text that had raised a $4M seed from Index. They’ve since raised $32M and have pivoted entirely to B2B to become “an all-in-one platform for business gifting” which is a $242Bn market.

No consumer startup has managed to nail gifting, and I think it could be an interesting missing piece here for Flip to unlock.

Usually I don’t focus an entire newsletter / deep dive on one company, but given how many people in my life are using Flip… it felt like it could be interesting for all of you / unpack some interesting things about Gen Z shoppers 🛒 (p.s. this is NOT sponsored in any way, but I do hope they take the above feedback to heart!)

And as promised, here are a few things (tech, culture & life) I’m intrigued by at the moment.

  • Tech: Blown away by the OpenAI succession wars going on right now, I feel like I’m watching a reality show (ICYMI, Sam Altman the CEO was fired by the board on Friday, but now OpenAI’s investors are trying to have him reinstated and fire the members of the board who fired him in the first place????). Crazy. I bet if Kris Jenner were involved, this would be sorted out STAT!

  • Culture: I love when brands set the tone on building goodwill with their customers through social media. A woman’s car caught on fire, but when she went to go check out the aftermath, her Stanley cup was completely intact… and even still had ice in it. She posted about this on TikTok tagging Stanley and it went super viral with 74M views… literally the best ad for a Stanley ever. Even better? The President of Stanley hopped on TikTok in less than 24 hours to stitch the video, offer to give her a new Stanley cup, AND buy her a new car. That video alone has 4M views, but the comments in response to the brand video are chef’s kiss (and show that Stanley sales are likely soaring as a result):

    • 242K likes: “This is awesome definitely buying a Stanley now!!”

    • 163K likes: “They responded, that’s freaking awesome. I’m gonna have to buy a Stanley now”

    • 139K likes: “Well looks like I’m buying a Stanley cup now 🥺🥺🥺”

  • Life: Honestly I’m loving life in the UK & have been keeping busy with some really cool stuff. I’m supporting UEFA’s Innovation Team on a fun project for to the upcoming Champion’s League Final, got to watch a game pitchside + do a presentation for Manchester United at the iconic Old Trafford Stadium, and even have dinner at the Tower of London. Oh and wearing lots of ballgowns here at Oxford, going to many formal dinners, and meeting the Spice Girls one by one. I also filmed a podcast with the Financial Times on being a LinkedIn influencer which you can listen to here. Last thing… I’m obsessed with Soho House, especially the ones in the countryside out here.

Again, between school, growing Gen Z VCs, and my consulting/content stuff, apologies the newsletter is coming in closer to 1x a month these days!

Hopefully I’ll get one more issue in before the holidays, but if not, happy holidays to you and your families! ❤️ And definitely check out Flip (this newsletter is not sponsored btw)!!!! If you want to try it out, lmk and I can invite you (we both get free $$$ of course hehe).

And my final CTA: There’s a Gen Z author / fellow Forbes 30U30 lister who has a book coming out soon I wanted to call out called Valley Verified, which combines the corporate drama of The Devil Wears Prada, the outsider female lead from Legally Blonde, and the startup culture of Silicon Valley. She’s a TikTok creator with 124K followers, her last book from Penguin Random House was selected to be a Good Morning America book pick, and I’m so impressed by her!!! So if you’re looking for a new book, check out Kyla’s new book!