Fred Wilson Nails Early Stage Distribution Playbook

Posted on February 25, 2011. Filed under: Hyperpublic, venture capital | Tags: |

Fred Wilson just wrote a post on marketing/distribution for early stage companies that is an absolute must read (to the point that I feel a need to reblog it).  His main point is that spending money to grow before your product is awesome enough to grow organically, is a waste of time and resource.  I’ve been thinking about this a ton vis a vis hyperpublic and also in preparation for a talk a gave on Wedneday at Jon Steinberg’s Viral Meetup at General Assembly.  I just wrote a response to Fred’s post which I’ll reproduce below because I think his lesson goes beyond just how to think about paid growth, but also to how to think about spread in general, and when the right time is to optimize for spread:

My response to Fred:

“wow…weird…almost identical to my talk at Viral meetup on Wednesday…but I went even further. forget about paying for traffic in early days, but I also said forget about trying to induce virality in early days. your last point about making the product not suck was my entire point. I talked about the idea of “gift virality” which I’ll define as “users perpetuating your product out of affection to the recipient.” If I think about why I share Groupme, it’s not because I’m unlocking a new feature by hitting Fbook like, or even saying something about myself, by displaying my usage. I pass groupme along because it’s a gift i can give to friends that doesn’t cost me anything. Too many viral mechanics focus on rewarding or incentivizing spread before the product has become awesome enough that it is a “gift.” That type of inducement is non-replicable and short term. Rather than chasing the techcrunch company that got 1 million users in 48 hours, especially for early stage companies that are resource constrained, I would argue that early teams should spend all their attention turning their product into a gift. Once that’s achieved, all of the mechanics which you very clearly and helpfully outline are known science. Too many consumer internet apps chase growth before their product is awesome. It’s important to have users and data to make a product better, but optimizing for spread before your product is a “gift” (especially for utility based products) is a distraction and inefficient use of internal bandwidth. Paying for growth is an amplification of that mistake. Both induced viral mechanics and early paid acquisition are band-aids that artificially inflate but do not solve the problem of distribution. Great post Fred, one of my favorites you’ve ever written”

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8 Responses to “Fred Wilson Nails Early Stage Distribution Playbook”

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Great post…my question is when exactly you know that your product has become a real gift to start pounding the pavement with it?

Aside from tons of feedback from people that you might respect, products are never finished…so when do you say we’re there…we have enough for now?

This question is often asked as “how do you know when you’ve achieved product market fit?” As unscientific as this sounds, I’ve often heard that “you know.” You’ll see the product growing naturally without direct intervention.

Sean Ellis has written a lot about this at startup-marketing.com, and he actually measures it by surveying users with a very specific set of questions. When “at least 40% of users saying they would be “very disappointed” without your product” then you’ve reached fit and it’s time to step on the gas with marketing.

ok agreed, but “users perpetuating your product out of affection to the recipient” can also mean word of mouth. Word of mouth and virality are two different things that are often confused, the mechanics of both are very different.

i would say word of mouth is one mechanism that can contribute to virality, but not all virality is the result of word of mouth.

i dont think so. viral means a mechanism within an application itself that leads to new user adoption. ie, hotmail tag at the end of every email, me adding you to a groupme chat. Word of mouth is a user liking a product so they “tell” their friends

i think you’ve got it wrong brother. virality refers to the notion that one “infected node” infects another. that can happen through word of mouth, a hotmail tag, or any other means, the mechanics that you’re referencing act to increase that phenomenon by lowering the friction to perpetuate and receive a product, but virality is a measure of the spread, not the mechanic that facilitates it. if i create groupme and they have zero software based mechanics for one user to share with another, but every single user tells 10 friends via word of mouth and each of those friends downloads the product and then tells 10 friends via word of mouth, that is, in fact viral growth: http://en.wikipedia.org/wiki/Viral_marketing

whatever the words are – and i have my own interpretation – they are important important differences. In the Hot Mail example, the user doesnt have to do anything but use the product. Doesnt have to *explicitly* endorse it or praise it. Its *implictly* built into the software. The implicit usage – with the hot mail tag – does the work. Groupme too.

My telling friends I love hyperpublic may have the same effect – but its word of mouth. Without me taking an explicit action it doesnt happen.

Big difference imo. ymmv

I think Jordan you’re right the first step to a viral product is the product needs to be a gift. That would viral effects for utility or even video. For example gmail (by invitation) or Charlie bit my finger were both gifts. Our product is a gift of perfect execution of unlimited free cloud storage. People tell their friends to try, especially those who are about spend $100 on 1tb of external hard drive. And it’s a gift because users can at last monetize their content. People want to share all this and in our next release coming shortly we are paying users to refer others. We still make a good profits. So their are lots of ways a website can bs viral. But first it has to be a gift/users have to love it!


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    I’m a NYC based investor and entrepreneur. I think there is one metric that can be used to measure the value of a human life and that’s impact. How did you change things? How many people did you touch? How different is the world because you lived in it and how positive was the change that you affected? (p.s. i don’t use spell check…deal with it) You can email me at Jordan.Cooper@gmail.com

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