"The Danger of Early Hype in Consumer Social: Building Sustainable Growth"

Hatched by Glasp
Aug 23, 2023
3 min read
2 views
Copy Link
"The Danger of Early Hype in Consumer Social: Building Sustainable Growth"
Introduction:
Hype is an inevitable part of any successful consumer startup. It can either make or break a company, depending on how it is applied. While hype may seem tempting and alluring, it is important for founders to approach it with caution. Hype functions similarly to an economic subsidy in a marketplace, kickstarting transactions and attracting a larger group of users. However, it also poses risks, such as the inability to remove the subsidy once the startup reaches scale. In this article, we will explore the dangers of early hype in consumer social and discuss strategies to build sustainable growth.
Building a Sustainable Flywheel:
One common technique that founders use to kickstart their startup is by subsidizing transactions. This helps to get the flywheel spinning and attract users faster. The higher average value per transaction appeals to a larger group of people, creating a positive feedback loop. However, the risk lies in becoming reliant on the subsidy. Many companies have found themselves unable to remove the subsidy once they reach scale, leading to an unsustainable business model.
The Hype Subsidy:
Hype creates the illusion of something being bigger and more important than it actually is. In the world of consumer social networks, hype acts as a subsidy on engagement. Users invest their time and engagement in a platform based on the expectation of future rewards or status. However, once hype starts, it becomes out of a founder's control. The founder no longer has complete control over how much they subsidize engagement, which can lead to unpredictable outcomes.
The Hype Air Pocket:
When a flood of new users sign up for a product, the weaknesses in the network become apparent. Push notifications, for example, can become too noisy and cause the flywheel mechanics to break down. If a product's flywheel has weak parts, it cannot catch up to the hype fast enough. When the hype subsidy drops to zero, the network hits an air pocket. This is why it is crucial to avoid hype until the product and flywheel are fully working.
Catalyzing Competition:
Hype not only affects a startup internally but also catalyzes incumbents to react. When a startup gains hype, incumbents may see them as a threat and react accordingly. This can hinder the startup's growth and make it difficult to establish a foothold in the market. Being underestimated in the early days gives startups more time to figure things out and surprise the incumbents when it's too late.
Actionable Advice:
- 1. Focus on building a sustainable flywheel before seeking hype: Instead of relying on subsidies or hype, focus on creating a product and flywheel that can sustainably attract and retain users. This will ensure long-term growth and stability.
- 2. Test and iterate before scaling: Before scaling up, thoroughly test your product and gather feedback from early adopters. This will help you identify and address any weaknesses or flaws in the user experience.
- 3. Establish a strong community: Cultivate a community of engaged users who are passionate about your product. They will become your advocates and help spread the word organically, reducing the need for early hype.
Conclusion:
Early hype in consumer social can be tempting, but it carries significant risks. Founders should focus on building a sustainable flywheel and establishing a strong community before seeking hype. By avoiding early hype and prioritizing long-term growth, startups can increase their chances of success and avoid the pitfalls that come with premature hype.
Resource:
Copy Link