The Grass is Often Greener on Your Side of the Chasm

by Natasha Prasad

A few weeks ago, Fred Wilson and Jeff Bussgang supplanted our usual LTV class with a fireside chat on lean startup methodologies, monetization and VC value-add.  A Fred idea I found particularly compelling suggests that entrepreneurs should be “hunch-driven”, rather than “data-driven” in the early days of a startup.  Indeed, if Jack Dorsey and Mark Zuckerberg hadn’t stuck to their hunches, Twitter would never have gotten past 1000 users and Facebook’s newsfeed wouldn’t exist.

Hunches, however, can only get you so far: most successful startups will at some point face the excruciating transition from early adopter glory to mainstream success.  Founders like Dennis Crowley, who admit to having built products for their own friends, are now struggling to gain momentum with the mass market.  If users outside of NYC, LA and San Francisco lack the vanity-driven penchant for public bar and restaurant hopping, how can Foursquare possibly grow beyond its 6 million strong userbase?  It probably merits some sort of pivot (sorry, at least I held it in till the second paragraph).

Market pivots are painful.  Not simply because you need to get your engineering team, company culture and external investors behind a new vision but because any significant product change can alienate the fanatical userbase that got you off the ground in the first place.  When social news site Digg launched a slightly less geeky version of its product last summer, its nerd powerbase turned hostile, flooding the newsfeed with rival Reddit submissions and quitting en masse.  In fact, any site that crowdsources its content is especially vulnerable to this kind of scale/product quality tradeoff.

So, is it possible to live in the chasm?

Power users tend to be highly engaged, passionately vocal and valuably prescient in vetting hunches; you really don’t want to push them out.  But, barring the success of Second Life, living off a tiny group of loyalists and generating positive cash flow really isn’t easy.  How can you balance these competing tensions?

1. Seed your site with high quality users: Quora has done an impressive job in nurturing an informed and prolific community of contributors as well as encouraging self-governance through norms.  If mainstream users can derive value from “read” rather than “write”, scaling need not lead to deterioration in product quality.  On Wikipedia, for instance, 20,000 users contributed 80% of the content.
2. Know what kind of market you want to serve when you grow up:  Product Market Fit is a fantastic milestone, but the pursuit of this legendary goal tends to emphasize “Product” over “Market” as the active lever; the sooner we recognize the other side of this equation, the easier it will be to pivot in the direction of longer-term alignment.
3. To each his own: Facebook, Twitter and even Foursquare to some extent hold huge appeal in that they are different things to different people.  The versatility of each platform enables users to derive value however they see fit.  Supporting the creation of sub-communities of users based on different use-cases and consumption patterns is one way of ensuring power/mainstream user harmony.