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Does Insane Viral Growth at Launch Ever Translate to Success?

If you look at some of the "hot" launches in the last few years that get a ton of buzz - Meerkat, Yo!, Secret, even Foursquare - many had insane viral growth at the beginning but it feels like none were able to sustain it in anyway. Got me thinking that really seeding a community (like Pinterest or FB did) is really the right way to go. Any thoughts to prove or disprove this theory?

4 Replies

Julien Fruchier
1
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Julien Fruchier Entrepreneur
Founder at Republic of Change
For every action, there's an equal and opposing reaction. I see this third law of Newton at work in business all the time.

At a micro level, it can look like Ello's 15 minutes of fame, followed by the quiet period they seem to be going through right now. At a macro level, it looks like Groupon's meteoric rise followed by it's equally meteoric fall from grace. You can see it in the market too. Every big spike is followed by a deep valley.

Long term success, like Facebook's, Apple's and Google's seems to have a pattern of small successes and failures in quick succession with an overall progressive trend. I guess the opposite trend applies to businesses caught in the slow spiral of death.
Thomas Knoll
1
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Thomas Knoll Entrepreneur • Advisor
Executive Advisor & Business Coach. I help entrepreneurs survive and thrive at building their teams and businesses.
Successful companies are successful, because they can sustainably provide something of value to people who are willing to continually invest their money or time into the product/service. And most successful companies are successful, because existing customers are so happy (or addicted) that they will volunteer to acquire additional customers (read, "friends and family and colleagues") on behalf of the company. This can significantly drive down the cost of acquisition. This also inherently increases the lifetime value of that customer, because the higher the density of relationships between customers, the more like all of those customers are to either "stick together" or "blindly follow the herd".

So, what's my point?

Hacks, which leverage social proof and network effects to quickly grow the customer base, can be very successful at creating those network affects early. They can't however create value of the long term. The product or service still has to provide that value.

You can have a great product that fails to reach the right market. | FAIL
You can have a shitty product that fails to reach the right market. | FAIL
You can have a shitty product that saturates the right market. | Viral then slow march to death
You can have a shitty product that saturates the wrong market. | Flash in the pan
You can have a great product that saturates the right market. | Success then ...?

That last one can happen quickly or it can happen slowly, but it is what is required to be successful.

IMHO, Etc.,
TK
Louis Alley
3
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Louis Alley Entrepreneur
Senior Software Engineer at Grokker, Inc.
These discussions always kind of irritate me. They have ever since I started in the industry in 2007. I came from a physics background, so I've never had any formal business education. Why do they irritate me? Because in the face of business uncertainty, people have tried to break it down, make it scientific. You get all these buzz words like "growth hacker" and "viral", "social proof", "social lift", "Landing Page", "hypergrowth", "net promoter score" etc. And then people start asking these questions like "how much [buzz word #1] do I need to increase my [buzzword #2]". People like to pretend that these buzzwords are real things, independent from the reality of your product and the people who consume it. Maybe I'm naive, but for what I've seen so far, there are only 2 factors that drive 90%+ of any tech business.

1. Market demand.

This is the whale. Probably accounts for 60% of that 90% or more. Most companies don't sufficiently test it before throwing money at product development. Straight up, if you are serving a hungry market, they will shower you with money even if your product is mediocre.

2. Product Execution

This is, of course, measured absolutely and relative to competition. If you're early to market, you can reduce the competition factor and win even with a mediocre product.

If these two things are in place, the marketing factor doesn't take a lot of creativity, just activity. Certainly, you have to do some marketing - get your product boosted via influencers/bloggers, put a share button on things, form a mailing list, FB Page, etc. Certainly, there are certain types of products that will spread faster than others (i.e. communication products that require both people to be signed up). But you don't need to be a pioneer with some new gorilla marketing bullshit.

Without demand and execution, you're not going to succeed in the long run no matter how good your marketing is. So I look at a company like Ello or Secret, and I think their fast early growth reflects a perceived demand in the market place.

In other words, a lot of people have a problem they want solved -- dependence on Facebook or a sounding board for their dirty personal crap. But their overall success depends also on executing against that need. I glanced at Ello and could tell it didn't offer me enough. Secret was interesting for a while, but then it seems Quora is maybe a better platform for getting sincere feedback anonymously, and I started seeing the same types of problems over and over without any creative way to resolve. If you grow really fast, it can be difficult to execute fast enough to keep up with that... but it can also be difficult politically within a company to make the dramatic changes necessary to keep your product execution up to snuff. There will be people telling you to keep doing the same thing because it's been working so far. It takes power and courage to change, and frankly most people, even entrepreneurs in Si Valley, don't have enough.

I think part of the problem is such a high dependence on VC funding. Entrepreneurs don't feel like they can pivot after they've talked up a certain strategy to investors so far. They don't have full independence. I think this could be improved if startups moved elsewhere, needed less funding, and bootstrapped more often. We'd see better products. We'd see more courageous products.

You could also look at a business like Dave Ramsey's Lampo Group. It grew over a long period of time, and it didnt' grow at the same rate as Secret or Ello. But his instructional materials end up being effective at solving a big problem (personal finance), so people use them and recommend them. And now the guy is worth $50M+, and consumer debt is as high as it's ever been, so I don't see his customer base slowing down any time soon... so no wonder he has 400 employees and growing.

My point is that separating out "growth" as its own thing - having a theory that says "fast viral early growth will cause a burnout" is really not all that useful and probably missing the point. Bottom line for each of these businesses: How much market demand backed by $$$ existed for the problems they claim to solve? Did these products actually solve those problems?
Navin Arora Founder Appsjunction
0
0
Navin Arora Founder Appsjunction Entrepreneur • Advisor
Appsjunction.net Founder, Business Connector, Mentor, Speaker, Author, Business Consultant, CXO, Motivator, Racer, Gamer
quite liked the insights provided above. Especially Louis Alley's observations. Many thanks to all who contributed above.
Cheers
- N
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