The Danger of Early Hype in Consumer Social: A Smarter Way to Save and Share Your Links

The Danger of Early Hype in Consumer Social: A Smarter Way to Save and Share Your Links

In the fast-paced world of consumer startups, hype plays a significant role in determining their success or failure. Hype, defined as the moment when a startup's significance expands ahead of its lived reality, can either make or doom a startup. It can be either organic or manufactured, but regardless of its origin, it holds immense power over a startup's trajectory.

However, as tempting and sexy as hype may be, I firmly believe in avoiding it for as long as possible. Unlike economic subsidies, which can be controlled and strategically utilized, the hype subsidy is beyond anyone's control. Subsidies, as we have seen with on-demand marketplaces like Uber, DoorDash, and Instacart, can be a valuable weapon in getting a flywheel spinning. But they can also blind startups to the reality of their long-term sustainability.

Hype creates an aura of greatness around a startup, making it appear bigger, more important, and more inevitable than it actually is. It acts as a subsidy on engagement in a consumer social network, enticing users to invest their time and energy in a platform earlier than they normally would. Users engage in status-seeking behavior, not necessarily because they receive immediate rewards, but because they anticipate future rewards. This can be due to the rich-get-richer effect of networks or simply the desire to be an early adopter in something that eventually becomes significant.

Everyone wants to be part of what they perceive as the next big thing. However, the challenge arises when a startup loses control over the hype subsidy. While a marketplace can determine how much they subsidize each transaction, once hype takes hold, it becomes uncontrollable. Applying hype too early in a network's evolution can have disastrous consequences. It becomes difficult to gauge user engagement once the hype subsidy is removed, and startups risk optimizing for the wrong metrics.

If a product's flywheel has weak parts that prevent it from spinning faster, the actual user experience on the network may not catch up to the hype quickly enough. When the hype subsidy eventually drops to zero, the network hits an air pocket, resulting in a significant decline in user activity. This is why I advocate for avoiding hype until a startup has achieved product-market fit (PMF). It is crucial to wait until the product and flywheel are truly working before unleashing the power of hype.

Furthermore, hype has the unintended consequence of catalyzing incumbents to react rather than being surprised by a startup's success. Being underestimated in the early days can be a blessing in disguise. Companies like Pinterest, Robinhood, and Etsy were initially perceived as niche, but they leveraged the element of surprise to their advantage. They had more time to figure things out, and by the time incumbents realized the threat, it was too late.

Unlike economic subsidies, hype is better utilized after achieving PMF. It should be used as a tool to further amplify a startup's success, rather than as a means to kickstart it. Stoking hype too early in a startup's lifecycle may provide short-term gains, but it ultimately sets them up for failure or, at best, a lucky acquisition. It can also lead to a long and painful road to rebuilding.

In conclusion, it is crucial for startups to tread carefully when it comes to hype. While it may seem enticing to ride the wave of early excitement, it is important to focus on building a solid product and achieving PMF before succumbing to the allure of hype. Here are three actionable pieces of advice for startups:

1. Prioritize product-market fit: Invest time and resources in refining your product and ensuring that it resonates with your target audience before seeking external validation through hype.

2. Embrace being underestimated: Use the element of surprise to your advantage by staying under the radar in the early days. This will give you more time to iterate, improve, and solidify your offering.

3. Utilize hype strategically: Once you have achieved PMF, use hype as a tool to amplify your success and attract a wider audience. Leverage it to build momentum and secure long-term sustainability.

By following these guidelines, startups can navigate the delicate balance between hype and sustainable growth, ultimately increasing their chances of long-term success in the consumer social space.