• Causal Engines

Your Most Powerful and Yet Underutilized Channel: Referrals

In the world of the Internet, trust is key. Think of how many websites, apps, games, and other services are clamoring for a user’s money, emails, and/or time. Users are far more keen to join communities they already are connected to; think of why you first joined a lot of the products you use day-to-day: maybe your friends were all on a social media platform, or a classmate introduced you to a presentation software, or your colleagues were raving about a project management software.

Often, before they are ready startups love to jump on paid media as a channel to grow. However, sometimes I think they jump too fast. When users who see a product they have never heard of, and have no real passion for, paid media doesn’t always cut it.

Instead, they should focus on finding their first 100 users who happen to love the product and instead become advocates. Find the users who care an almost irrational amount about what your product does - these 100 people form the building blocks to harness the network effects that will drive your growth. These are the people who will tell their friends, their family, their coworkers about that product. Think about how vital the first 100 users of Facebook were - these were the 100 people that helped push the product to the other 9000 undergraduates at Harvard, the 100 people that showed their friends you could check a relationship status or post pictures and more.

As David Sacks points out, your startup is a movement. Beyond simply creating a good product, great startups are able to rally people behind a mission and cultivate passion in that mission by connecting to their users on a deeper level. That same passion is what drives people to pack Tesla showrooms or lineup for a new iPhone or annually pilgrimage to Dreamforce. When you create a movement, you create a devoted userbase that can push your product.

The best movements recruit their friends and other key people close to them to try out a product. You can imagine these advocates at the center of a cluster of users, someone who can provide the trust that is so vital to get your product into the hands of new users. By creating a faithful following you can foster a community, one that can incite interest in your product and reinforce the strength of the movement.

When Uber first started out, they did not grow by paid media, but rather by referrals within highly tight-knit communities. This enabled them to grow further and faster, than was thought possible. Uber’s $10 discount when referring another user was just the thing they needed to jumpstart growth. More so than other companies, using Uber requires building trust; in 2009, getting into a car with a stranger who wasn’t a medallion-official taxi driver was a foreign concept. By incentivizing referrals, users were brought in by a trusted friend, someone who could push them past that initial hesitation and into becoming a user.

Creating compelling products requires connecting with your users - so does creating a compelling movement. Don’t make the mistake of doing one without the other - a great entrepreneur can make both a convincing “what” and “why” of their product. You do that, and your business will truly thrive.

We would like to thank Demi Oba at smile.io for their inspiration.

This article was a collaboration between Archit Bhise and Alex Li.