When it comes to consumer startups, hype is both a blessing and a curse. Hype, which refers to the moment when the perception of a startup's significance expands ahead of its actual reality, can either make or break a company. While it may be tempting to embrace the excitement and attention that hype brings, I believe that it's important to avoid it for as long as possible.

When it comes to consumer startups, hype is both a blessing and a curse. Hype, which refers to the moment when the perception of a startup's significance expands ahead of its actual reality, can either make or break a company. While it may be tempting to embrace the excitement and attention that hype brings, I believe that it's important to avoid it for as long as possible.

To understand why avoiding hype is crucial, let's draw a parallel to the concept of economic subsidies in a marketplace. Subsidies are commonly used by founders to kickstart transactions and accelerate growth. By offering a higher average value per transaction, the value proposition of the marketplace becomes more appealing to a larger group of people. However, there is always a risk associated with subsidies - the danger of becoming dependent on them. Many companies have found themselves unable to sustain their business models without the subsidy they initially relied on.

Hype functions similarly to an economic subsidy in the realm of consumer social networks. It creates an illusion of something bigger, more important, and more inevitable than it actually is. In this distorted reality, consumers are enticed to invest their time and engagement in a platform earlier than they otherwise would. They engage in status-seeking behavior, expecting to be rewarded in the future for their early adoption.

The problem with hype is that, unlike economic subsidies, it is not within a founder's control. Once hype takes hold, it becomes a force of its own, with a crowd of people determining the level of subsidy provided. This lack of control makes it difficult to predict how consumers will engage once the hype subsidy is removed. Without a clear understanding of user behavior, a network can quickly hit an "air pocket" when the hype dies down, and the actual experience fails to meet the inflated expectations.

This is why I advocate for avoiding hype until a product and its flywheel are truly working. When a flood of new users sign up for a product, any weaknesses or flaws in the system become glaringly obvious. Push notifications, as seen in the case of Houseparty, can become overwhelming and lead to disengagement. If a product's flywheel has weak parts, it cannot catch up to the hype fast enough, resulting in a disappointing user experience when the hype subsidy disappears.

Moreover, hype can also catalyze incumbents to react rather than be surprised by a newcomer. Take the example of Clubhouse, which prompted Twitter to swiftly launch Twitter Spaces as a response. When a startup is underestimated in its early days, it has more time to figure things out and gain a competitive edge. By the time incumbents realize the threat, it's often too late for them to catch up.

In the world of online education, the unbundling of platforms like Udemy highlights the importance of catering to specific communities and fostering a social learning experience. While Udemy prides itself on offering a vast catalog of courses on any topic, the trend is shifting towards smaller, more thoughtful communities. Education 3.0 seeks to replicate the social aspects of traditional learning environments, such as college or group classes, online. The social aspect of learning is often overlooked by edtech startups that prioritize transactional efficiency.

To navigate the dangers of early hype and harness the power of a highly engaged network, here are three actionable pieces of advice:

1. Focus on building a strong product and flywheel before embracing hype. Ensure that your product is ready to deliver an exceptional user experience and can sustain the influx of new users that hype brings.

2. Cultivate a niche market and be underestimated in the early days. By targeting a specific community or audience, you have the opportunity to create a tailored learning environment and gain a competitive advantage.

3. Prioritize the social aspect of learning. Encourage collaboration, interaction, and community-building within your platform. Leverage technology to replicate the social experiences that make learning a new skill enjoyable and rewarding.

In conclusion, while hype may seem enticing, it's important for consumer startups to approach it with caution. By avoiding early hype and focusing on building a strong foundation, startups can ensure that they are prepared for sustainable growth. By understanding the risks associated with hype and prioritizing the social aspect of learning, startups can create engaging and valuable experiences for their users.