Andrew Chen Archives

Subscribe · Featured · Recent · The Cold Start Problem 📘
Dear readers, I have moved to Substack and I will be writing here from now on:
In the meantime, I will leave up for posterity. Enjoy!

Adwords is not enough for success on the consumer web


Viral growth is a requirement for consumer web success
Every web entrepreneur should be a student of organic, viral growth. Even though I’ve worked in the online advertising industry for the last few years, I’m humbled by the numbers that a well-designed viral site like Tagged can put up. These stats are HUGE, and they are only getting bigger.

Google AdWords is not enough

It’s convenient to assume that you can outsource all of your marketing out to Google, and buy lots of AdWords. Or let’s say you’re ambitious enough to want to buy from ad networks, or other ad sources. This is a myth.

The largest sites ultimately cannot be bought through online ads. To achieve 50 million users via Google Adwords, let’s work backwards:

  • 50 million users
  • 500 million uniques that land on your page (with 10% registering)
  • 50 billion ads with a 1% clickthrough rate

Let’s pick a range of CPMs, from $0.50 to $2:

  • At the low end, $0.50 CPM means $25 million in ad spend
  • At the high end, $2 CPM means $100 million

These are obviously impossible numbers to achieve just using ad spend. The only way to solve this is to make sure that every user you bring in brings their 10 friends. Then, when you spend a targeted $10k at the beginning of your site’s existence, you can get the momentum going quickly.

Design viral into your product, not into your marketing strategy
A lot of people would claim that once you have a product, you can design a “viral” strategy around it. Do you really believe that designing a word-of-mouth strategy for a music CD is the same thing as a product like Plaxo or LinkedIn? The answer’s no. The truth is, you have think about how viral fits into your site at the beginning.

Let’s talk about how most people think of viral…

When users see the product, this is what seems to happen:

  1. User sees the product
  2. User tries the product
  3. If user likes product, make it easy to tell their friends
  4. Word of mouth spreads
  5. New users try the product
  6. … and so on

Let me say that this is a very old-fashioned way of looking at viral product use, because it’s inherently tied to an assumption that people have to go through a full cycle of evaluation before they spread the word. What’s another way?

How to SHORT-CIRCUIT the viral process

Instead of thinking that viral is something that’s tacked onto the end of your user experience, instead think about how it could get integrated into your user process. In fact, the earlier, the better. You want to make it so that in TRYING the product, they spread it to their friends.

Ideally, the funnel looks like:

  1. User sees the product
  2. User tells all their friends to use the product
  3. User tries the product
  4. [Site propagates regardless of whether or not the user likes it]

Then regardless of whether or not the user tries the product, or if they like the product, or if they get off their lazy asses to tell their friends, the deed of propagating the site is already complete.

How do you do this? Let’s take Tagged as an example – click here to try out the site. Or try Flixster, another site that’s gotten incredible traction lately. As soon as they sign in, they are trying to import your Gmail/Hotmail/Y! contacts. They make it an integral part of the user experience.

Or take a look at something like Plaxo, whose entire existence is about asserting control over your communications hub, thus making the viral effect even better.

By spreading the site at the earliest possible moment in the experience, you’re not at the whim of the user to act outside of his/her normal processes.

Too annoying? Or too ruthless?
Some might say that they hate the fact that these processes exist, and that they might be too ruthless or even immoral. These points are definitely worth debating. I certainly believe that if you’re able to create a engaging user experience, adding these techniques to the front-end isn’t bad.

If you believe that:

  • Ruby on Rails makes development easier
  • Product creation is cheaper
  • Infrastructure is cheap

… then the corollary is that there’s more competition. Breaking out of the noise in any way possible, even if ruthless, will be a key technique for success in the Web 2.0 world.

If you’re interested in a high-level listing of different user acquisition methods, check out an earlier blog I wrote on the subject called 10 obvious ways to ruthlessly acquire users.

PS. Get new updates/analysis on tech and startups

I write a high-quality, weekly newsletter covering what's happening in Silicon Valley, focused on startups, marketing, and mobile.

Views expressed in “content” (including posts, podcasts, videos) linked on this website or posted in social media and other platforms (collectively, “content distribution outlets”) are my own and are not the views of AH Capital Management, L.L.C. (“a16z”) or its respective affiliates. AH Capital Management is an investment adviser registered with the Securities and Exchange Commission. Registration as an investment adviser does not imply any special skill or training. The posts are not directed to any investors or potential investors, and do not constitute an offer to sell -- or a solicitation of an offer to buy -- any securities, and may not be used or relied upon in evaluating the merits of any investment.

The content should not be construed as or relied upon in any manner as investment, legal, tax, or other advice. You should consult your own advisers as to legal, business, tax, and other related matters concerning any investment. Any projections, estimates, forecasts, targets, prospects and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others. Any charts provided here are for informational purposes only, and should not be relied upon when making any investment decision. Certain information contained in here has been obtained from third-party sources. While taken from sources believed to be reliable, I have not independently verified such information and makes no representations about the enduring accuracy of the information or its appropriateness for a given situation. The content speaks only as of the date indicated.

Under no circumstances should any posts or other information provided on this website -- or on associated content distribution outlets -- be construed as an offer soliciting the purchase or sale of any security or interest in any pooled investment vehicle sponsored, discussed, or mentioned by a16z personnel. Nor should it be construed as an offer to provide investment advisory services; an offer to invest in an a16z-managed pooled investment vehicle will be made separately and only by means of the confidential offering documents of the specific pooled investment vehicles -- which should be read in their entirety, and only to those who, among other requirements, meet certain qualifications under federal securities laws. Such investors, defined as accredited investors and qualified purchasers, are generally deemed capable of evaluating the merits and risks of prospective investments and financial matters. There can be no assurances that a16z’s investment objectives will be achieved or investment strategies will be successful. Any investment in a vehicle managed by a16z involves a high degree of risk including the risk that the entire amount invested is lost. Any investments or portfolio companies mentioned, referred to, or described are not representative of all investments in vehicles managed by a16z and there can be no assurance that the investments will be profitable or that other investments made in the future will have similar characteristics or results. A list of investments made by funds managed by a16z is available at Excluded from this list are investments for which the issuer has not provided permission for a16z to disclose publicly as well as unannounced investments in publicly traded digital assets. Past results of Andreessen Horowitz’s investments, pooled investment vehicles, or investment strategies are not necessarily indicative of future results. Please see for additional important information.