How to solve the cold start problem
All businesses start from zero and if the growth comes from the word of mouth, it's a real problem. Here are a few tactics on how others have solved the cold start problem from a16z podcast.
The a16z podcast is one of the best podcasts on startups. In their most recent episode, they dive into the subject of launching a product from scratch and how can you solve the “cold start problem”.
I found it interesting because there are similarities between starting a new startup and starting a newsletter.
In the podcast, they talk about how to break down the challenge and share examples of how companies like Reddit and Clubhouse had solved it, which I’ll also go through here.
Network effect businesses have it hard at the beginning
A business with network effects means that becomes more valuable to the customers when there are more customers. A classical example of this would be a phone. If you are the only one with a phone, the service would be useless, but the more people have phones, the more valuable it becomes.
There are differences between services for how many users they need to have in order to become valuable. In the podcast, Andrew who has just published a whole book about the cold start problem calls the point where the service is valuable enough for the users to keep using the “atomic network”.
According to him Slack and Zoom could see that after getting just two or three users, they could see recurring usage that indicated value for users. On the other hand business like Airbnb needed 300 listings in a specific city before becoming viable. Or in the case of Uber, a few dozens of drivers were needed in order to make sure that the pickup times were low enough for the service to be sufficiently valuable for users.
How others have solved the cold start problem?
Reddit had a very hustle way to solve the cold start problem at the beginning. The founders at Reddit started posting with different usernames and made the service feel like there were a lot more users on the network. That was enough for the initial users and they got the network up and running.
The founder of Reddit Alexis notes that he does not recommend doing this these days, since there are so many places to get initial users.
In order to get their atomic network working, Clubhouse founders needed also to hustle a lot.
Cofounder of Clubhouse Paul tells in the podcast how at the start the Clubhouse had only one room. They were obsessed with perfecting the experience in the one room with a few tricks.
One way they made sure that the experience was up to par was to handpick the users from pre-existing real-world networks. For users, it meant that all of your friends were already part of the club when you joined. They also had one of the founders jumping in to welcome the new people every time someone new joined.
Starting with a single-player mode
Some companies like Instagram have solved the cold start problem by building something valuable for users to use in a “single-player mode”. In their case, it was the photo editing and publishing tool, before the network became valuable.
I feel lucky that a substack newsletter can have value from day one. Receiving and reading a newsletter is clearly a single-player mode and the cold start problem is not as bad as for many network effect businesses. But even though there’s value from day one some cold start problems still exist.
Most newsletters rely on word of mouth growth, starting from zero subscribers means that there’s no one who could read your letter and tell about it to their friends.
The (only) solution for a newsletter is to try to reach a new audience by actively promoting the posts of the newsletter where ever you can. It means hustling and actively promoting on different social networks and other free sources of readers.
It might be that I wrote this whole post just to justify my actions for promoting the newsletter on Twitter and other places. 🤔
Newsletter growth update and thoughts
The previous newsletter I wrote was about the coronavirus and I was hesitant to promote it since it was about politics. I’m not sure how well it will go with the startup and growth stuff that I’m otherwise focusing on. If you have any thoughts on that, send me a message!
For this post, I’m definitely planning to promote it on Twitter and maybe post also to Indie Hackers since it could have some useful stuff for others who are starting up. I’ll update you on how the promotion works.
And I’m happy to say that even without additional marketing activities, we somehow got two new subscribers. They probably came from the initial post on the Indie Hackers.
But go and subscribe if you haven’t already! 😊
Subscribers: 3 → 5