Science of Growth: A Catalyzing Event to Accelerate Growth
Clarifying misconceptions of the big launch
One of my favorite definitions for an entrepreneur is “someone who solves problems making the world the way it ought to be.” The challenge is that it often takes the world time to catch up with that vision.
It’s tempting to think therefore that the key is to find a big enough stage or platform on which to unveil your solution. However, as students of the Lean Entrepreneurship movement hear repeatedly, it’s usually not a good idea to launch your product with a “big bang”. This is solid counsel from my experience.
However, one thing we repeatedly noticed in our Science of Growth research was many companies built awareness by drafting off larger events to catalyze growth once they had product-market fit.
Many of these events seem to be later considered their “launch” advancing the misconception that a big bang launch is a prerequisite for success. No company from those we analyzed is this more apparent than Twitter.
I’ve been attending SxSW every year since before Twitter’s break out year in 2007. Every year since 2007, journalist rush home to talk about the next thing to launch at SxSW and ask is [startup] the next Twitter. It’s a great narrative especially when you consider Twitter is today worth over $25 Billion. This has dramatically increased the popularity of the SxSW Interactive Festival and become startup folklore. Unfortunately, it’s not actually true. As Evan Williams talked about on Quora here is what actually happened at SxSW in 2007 (emphasis mine):
contrary to common belief, we didn’t actually launch Twitter at SXSW — SXSW just chose to blow it up. We launched it nine months before — to a whimper. By the time SXSW 2007 rolled around, we were starting to grow finally and it seemed like all of our users (which were probably in the thousands) were going to Austin that year. So, we did two things to take advantage of the emerging critical mass … networks are all about critical mass, so doubling down on the momentum seemed like a good idea. And something clicked.
When we look through the cases we’ve analyzed, this pattern of a product or service launching earlier and then later having a big event “chose to blow it up” appears to actually be a common pattern. I’d like to highlight 3 types of events that can have this catalyzing impact.
Example 1: Something Happens on Your Product
YouTube: Lazy Sunday
As you may remember in December of 2005, a Saturday Night Live skit “Lazy Sunday” was uploaded to YouTube. While eventually the video was pulled at NBC Universal’s request, this didn’t happen until February after over seven million views of the video on YouTube’s service. You can see in the HitWise analysis the impact on traffic to the service from the video:
This caused the Chief Counsel of NBC Universal, Rick Cotton, to claim NBC ultimately made YouTube worth $1.5 Billion to Google at an industry event. While that seems a bit extreme, the Lazy Sunday event certainly catalyzed their growth.
Example 2: A Big Event Needs Your Product
AirBnB: Denver DNC Convention
In 2008, the Democrat Party made the decision to move Obama’s speech at their convention in Denver from the Pepsi Center (capacity 18,007) to the larger outdoor venue of Invesco Field (capacity 76,125). The decision immediately created logistical challenges as there simply were not enough hotels in Denver to handle the expected additional visitors.
Here is how CNN Money characterized it:
For Airbnb co-founder Brian Chesky, that was a Eureka moment
“We were thinking to ourselves … light bulb’s going off,” he said. “That’s where they’re going stay: They’re going stay at Airbnb homes.”
In a matter of weeks, hundreds of people started listing their Denver apartments on Airbnb for visitors to rent. Airbnb allows users to rent out everything from an extra room to a separate home.
“Had it not been for the DNC, it’s hard to know what Airbnb would be today,” Chesky told CNNMoney. “These things, it’s hard to get them going and you need a big kind of pop.
Example 3: Your Competitor Makes a Big Mistake
Moveable Type Licensing Misstep
Sometimes the event is actually even a misstep by a competitor. To me this case of Moveable Type vs Wordpress is actually one of the most interesting examples an event catalyzing growth theme. Specifically looking back on the May 2004 decision to change to the Moveable Type license.
In a Forbes Magazine story 8 years later when reviewing WordPress’s early history, the author explains:
In a field dominated by Movable Type, their service [WordPress] attracted thousands of users through word of mouth. After Movable Type’s owners decided to charge users in 2004, WordPress attracted a deluge of incensed refugees fleeing the company. By that August WordPress boasted 15,000 users and a pack of loyal developers refining code for free around the world.
As Product Manager of Moveable Type Byrne Reese explained in his blog post mortem later:
what users feared most of all, is a repeat of exactly what happened the day Movable Type announced its licensing change: one day waking up to the realization that you owe some company hundreds, if not thousands of dollars and not being able to afford or justify the cost monetarily or on principle.
It’s clear that Byrne is absolutely right. When you go back now and look at the early reaction that fear is clear and WordPress definitely used it to their advantage. For example, Ari Paparo now a startup CEO and at the time an Internet Marketing consulting wrote a post titled “Time to Update the PowerPoint” where he says:
As part of my consulting work I’ve implemented several corporate blogs, both as intranet and external solutions. In every case, I pitched some of the big advantages to MT:
* Low cost license
* Flexible, no restrictions
* Easy to create multiple blogs
* Easy to add new users
Well, that’s all shot to hell.
It’d be easy to misinterpret what I’m saying as just work hard and hope you get lucky with a larger event coming along you can leverage for your startups exposure. However, that isn’t my conclusion at all.
I believe once you have achieved product-market fit, entrepreneurs need to proactively identify and exploit these event driven opportunities.
To me this is the most helpful role of communications / public relations as startups begin to scale. Although sometimes this work needs to simply be done by founders themselves, whether that is proactively spending time in Denver to ensure a good experience during a political convention or setting up monitors at a conference in Austin to make sure your early customers have a great experience.
Creative Commons: Photo from DNC Convention in Denver
I’ve expanded on this thinking in my recent book The Science of Growth: How Facebook Beat Friendster and How Nine Other Startups Left the Rest in the Dust you can pre-order on Amazon now.
I’m a serial entrepreneur turned venture capitalist and professor. If you are interested in getting more content from me, consider subscribing to my twice monthly email newsletter: http://seanammirati.com/email/