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How Paypal and Reddit faked their way to traction

• khadim 13y ago
  So should every startup fake their way to traction?
  • jerryji 13y ago
    Or can every startup fake their way to traction _nowadays_?
    • pcunite 13y ago
      That is why it is getting crazy important to get mentioned on sites like TechCrunch, etc. It is not the best mouse-trap that wins ... just be the most known and funded one.
  • minimaxir 13y ago
    There's a reason that modern startups are now hiring "growth hackers" unironically.
  • Wilya 13y ago
    There doesn't seem to be much drawbacks to this strategy. I can think of very few startups that failed because of shady early tactics, as long as it stayed only a way to get to traction, and wasn't a decisive part of the business model. If you're small, nobody will care enough about you to learn about your tactics. If you're big, you should have enough money to rebuy a reputation with marketing/PR.
    • loceng 13y ago
      Except for being genuine, authentic. You can't be 90% genuine - that's not possible.
      • jerf 13y ago
        Mmm, I think you may be confusing perception vs. reality. As much as we'd like to think the two are inseparably joined and it's impossible to fake being genuine (or vice versa, impossible for a really genuine thing to be perceived as inauthentic), I don't think the facts support that idea.
      • pessimizer 13y ago
        Authenticity is a brand, and you will be rewarded for it by the customer. Honesty is a quality that can only be recognized when someone maintains truthfulness and fair-dealing when they know that they will be punished for it. Honesty will, if anything, destroy your authenticity.
    • moepstar 13y ago
      I don't even think there's any drawback to this strategy. Let me explain: So $business_name faked their way into relevance, $somebody found out about it, $angry_mob_of_other_founders argue and rally against it. Nothing of this will matter in any way cause it's almost certain Joe Normal will never ever hear the slightest about it and will happily continue using $business_name. The only possibility of Joe Normal ever finding out is if $business_name overdid it in a way that might prompt (inter)national media to report about it or have it mentioned by a buddy to him. Even then, he couldn't care less about it cause he still could peddle his wares on the site (or whatever), make a profit from it, and just shrug about the advice given by his buddy.
  • hsuresh 13y ago
    I would't like if a startup fakes. They'd lose my credibility. However, some of the examples seem reasonable - like the case of reddit. It is more about providing value to the early adopters - clearly reddit needed more users to contribute, so no harm in creating fake users to seed the content. The example of PayPal seems bad - i am not sure if PayPal was a paid service for merchants back then, but if it was, they were just being evil.
    • khadim 13y ago
      startup fake to build credibility. if found faking anyway they didn't do it right.
  • 3pt14159 13y ago
    It doesn't really work in the areas where it is easy any more. Too many people are doing it. Reddit clones ESPECIALLY do this, usually by creating crawlers that crawl reddit. But yeah, it still works for dating sites (I know someone that started one) and the like. Normally you have to have a couple friends help you, because activity is great, but eventually people want you to jump on the webcam.
  • jusben1369 13y ago
    Wait. Isn't the point that this is only for startups that need two sided traction and thus need to artificially stimulate one side?
• blairbeckwith 13y ago
  I'm usually not bothered by stuff like this, but let's play some role-reversal. "Dating services know what men want (who doesn’t) and seed the network with photos of Latin American models with eclectic interests (not that the latter matters)." In to... "Dating services know what women want (who doesn't) and seed the network with wealthy-looking men with genuine personalities (not that the latter matters)."
  • dylangs1030 13y ago
    I'd prefer Italian models myself but I mean they already know apparently... On a serious note, it probably worked. This might come across as sexist, but aren't we as men more easily "gamed" when it comes to dating? We are very visually oriented...more so than females.
    • Perceval 13y ago
      Counterpoint: https://www.google.com/search?q=romance+novel+covers&safe=off&source=lnms&tbm=isch&sa=X&ei=T9YYUt2vCJb_4AOw94DoDA&sqi=2&ved=0CAcQ_AUoAQ&biw=750&bih=799 https://www.google.com/search?q=romance+novel+covers&safe=of...
      • kenshiro_o 13y ago
        How is that a counterpoint? It only shows covers of romance novels where the men look muscular and the women pretty. If men paid less attention to looks than female why are there so many arguably good looking women with so many arguably plain looking (but possibly wealthy) men?
  • Killswitch 13y ago
    Dating services are shady... Friend Finder Networks (AdultFriendFinder, etc) actually hires people to sit there and pretend to be interested people in order to bait users into becoming paid members because the only way you can message someone is by being premium. I think that's really shady. I'd understand just starting out, but AFF has been around for 10+ years.
  • 13y ago
• mjburgess 13y ago
  I think we need to distinguish between "faking", "demonstrating" and "supplying". Faking should be reserved for literally providing false data with the intention that it's believed to be true, eg. the dating site example. Most of those examples were not faking anything. Rentoid actually supplied a serivce, though it wasnt "user-generated". Reddit supplied links their potential users would be interested in. This is a mixture of demonstrating how the service works, and supplying actual content to potential users. By way of contrast, what the dating site admins should have actually done, is ask all their single friends to sign up (and any other single people they could get their hands on directly). It seems a perfectly good and moral business strategy to generate your own content which is representative and useful. I think "faking it" is a bit more questionable.
  • dylangs1030 13y ago
    Do you think "faking" something is more questionable or the word itself sounds questionable? The author doesn't share your definitions of the word faking or its pejorative connotations. So the only reason to go about doing everything in this post would be to satisfy not using the word faking itself. That's not actually achieving anything. It's just more complicated term usage because you don't think the word can be used positively. It's all semantics. I think the author was very clear and the whole concept made sense to me despite the use of the word "faking"...it didn't bother me at all.
    • mjburgess 13y ago
      I was pointing out that undue author was overloading the word "faking" and in doing so obscuring what was actually going on and lumping together a lot of different practices.
  • photorized 13y ago
    Your examples are mostly still "faking" - faking consumer interest, faking popularity. Companies do that all the time.
    • raverbashing 13y ago
• hsuresh 13y ago
  Another way of looking at what reddit did, is to think of them as hacking a way to provide value to the initial users. Faking doesn't necessarily have to be about lying, it can be used to provide value, even though the system is designed to work well only when there is a significant userbase.
• omegant 13y ago
  This post is perfectly timed for us. We are trying to rise a market place and it´s really difficult to go beyond the egg and chiken problem. Even more if the model is new and there is no data to support our point.
• lifeisstillgood 13y ago
  A few years back the major tv companies in the UK underwent a scandal involving faking tv phone-in competitions - runners on the show called in pretending to be viewers, calls went unregistered. Almost none was intended to gain pecuniary advantage but it was fraud. I think people went to jail. I fail to see why the same scandal should not be seen here Edit: Reddit is deception, hard to see fraud. Dating sites with fake profiles are likely to be fraud if its a pay site(AFF sounds outrageous). The odd ball is PayPal - if the eBay supplier got less money from the sale than if they had dealt with a normal user with a credit card the I guess there could be a case for fraud. Be interested in a real lawyers view
  • lifeisstillgood 13y ago
    Having had time to mull this over, I was not vitriolic enough. Disruption of sclerotic industries is a Good Thing. VoIP has destroyed the International call market and brought innovation to an industry that was impressed by Caller ID. But if one company achieved success in the VoIP market over its competitors by dishonest, underhand or fraudulent means then they should be punished - enough to end the moral hazard. This is why Über and the like are facing opposition from disinterested parties - because "disruption" of an industry by new technologies is a Schumpter style positive - but it is not a Cloak of Immunity for any particular company engaged in that disruption. We do not have a good track record in this - and that matters.
    • lostlogin 13y ago
      I'm not so sure. Where does one draw the line? A quiet restaurant fills its window seats first to make it look busy. New businesses give out their invoices starting from strange numbers such as 26792 rather than 1 to make things look better. I'm handed 2 for 1 vouchers by shops and food places to make them busier. Amazon sells (sold?) books at a loss to drive others out of business (a technique used countless times in the non-internet. There is a line there somewhere, but I'm not sure where it is. Obviously fraud and dishonesty is not ok, and most my examples I am fine with. However I'm sure that different people have different boundaries.
• lifeisstillgood 13y ago
  A few years back the major tv companies in the UK underwent a scandal involving faking tv phone-in competitions - runners on the show called in pretending to be viewers, calls went unregistered. Almost none was intended to gain pecuniary advantage but it was fraud. I think people went to jail. I fail to see why the same scandal should not be seen here
• liquidcool 13y ago
  Missed a couple big ones from companies they mentioned. Yelp paid professional reviewers to seed cities they wanted to establish themselves in. To my knowledge they were honest reviews, but people were still put off by it. And the Airbnb spam debacle was left out as well. (http://davegooden.com/2011/05/how-airbnb-became-a-billion-dollar-company/ http://davegooden.com/2011/05/how-airbnb-became-a-billion-do...) For the record, I use both services frequently, but those are notable omissions. Really curious how much PayPal dumped into buying eBay items. Doesn't seem like something you could do for long, so I imagine it had to be highly targeted.
  • noloqy 13y ago
    If I were PayPal, I wouldn't primarily be focused on buying items, as it would be very expensive strategy. I'd try sending sellers email first, indicating that you are interested in purchasing their product and asking them if they support PayPal. Having thousands of sellers just visiting your site to see what this "PayPal" is about is a great way of getting your name out there at no cost. Also, if I'm not mistaking, buyers have no right to force sellers to accept a payment method that the seller did not support. Of course you could try to persuade them after you've bought their product, but insisting goes way too far.
    • the_watcher 13y ago
      Looks like PayPal's strategy worked. Also, eBay used to be a much more unregulated (read: easy to spam/game) than it is now.
    • notatoad 13y ago
      >buyers have no right to force sellers to accept a payment method that the seller did not support. sure they do. after you've won an auction or otherwise agreed to buy you are restricted to only the accepted payment methods, but before making a purchase you can contact a seller saying "i'll buy this if you can accept paypal"
  • danielharan 13y ago
    You could turn around and re-sell those items, suggesting buyers use Paypal :)
• volume 13y ago
  I forget where I read it, but "Pud" of FckedCompany and Adbrite fame explained how he used to run a BBS back in the day and the techniques (similar to the blog post) he used to get traffic carried over into how he got traction for FckedCompany.
• gcb0 13y ago
  Makes you wonder if that also worked for Tesla
• dfritsch 13y ago
  I think that this is an obvious extension of what new businesses have been doing for decades. If you open a storefront, you would do a soft opening to test the idea and then a grand opening to generate traffic. If I was having a grand opening, I would get every friend there, even if they would never shop at my business, to make the place seem full and busy during the "party". Obviously this is not on the scale of a start up, but I think the idea of faking initial interest is actually common for any business. The article hints at how sinister your faking is seems to affect how much backlash you get from it.
• Tossrock 13y ago
  So the meta-story is that that's what medium.com is doing right now, right?
• getglue 13y ago
  Reddit grew b/c of the fall of Digg.
  • davidw 13y ago
    This was well before that time. It was already well established when it was a competitor to Digg.
• dvdhsu 13y ago
  Paypal buying eBay items wasn't actually the primary method for stimulating growth. Initially, Paypal offered new users $20 for opening an account, and $20 for referring somebody to open an account. They then dropped the bonus to $10 for both, then $5, then $0. This allowed them to grow immensely, and they reached 100,000 users in one month. These bonuses weren't "cheap" though: they cost PayPal around 60-70 million. Here's a reference - an interview between Elon Musk and Salman Khan: http://www.youtube.com/watch?v=vDwzmJpI4io&feature=player_detailpage#t=682 http://www.youtube.com/watch?v=vDwzmJpI4io&feature=player_de.... It's worth a watch.
  • pearjuice 13y ago
    >60-70 million Great strategy if they actually worked out they could get it back in x time with y users actively using Paypal. The real step is taking the risk. What if only half of the money returns and there is no further adoption? How did they ever take that step? Or were they monitoring the user growth 24/7 and if it didn't match their planned strategy, they would pull the plug on bonuses? Amazing however they managed to pull it off.
  • dataminer 13y ago
    The whole interview is very insightful, thank you.
• Dogamondo 13y ago
  This reminds me of the tactics the music industry used to use to gain initial traction for their manufactured groups and artists who had never built up an organic following before being signed. Case in point is Lou Pearlman's creation, Backstreet Boys, who's first album and titular single was called "Backstreet's Back", with lyrics that alluded to the fact that they had been around for a while and were making a 'comeback'. Their music video was noted for having a mass of adoring, screaming female fans chasing them down the street and going silly over them. This was before they were even known, but eventually became a reality.
  • ubershmekel 13y ago
    Sorry, that's wrong. "Everybody (Backstreet's Back)" is the first single from the Backstreet Boys' _second_ international album from 1997. They were huge thanks to their 1996 international album called "Backstreet Boys": >becoming one of the biggest debut albums ever and contains a number of the band's most memorable singles
    • wyck 13y ago
      Though the release might be wrong, it is no uncommon to seed an audience in the music business to create buzz/interest. This happens in many industries, it's a marketing tactic. Hell even small restaurants seed tables to create atmosphere because no one walks into an empty restaurant.
    • Dogamondo 13y ago
      Ubershmekel, you are dead right! Sorry, I stand corrected. After reading the Wikipedia article I guess they really were 'back!'. (I was listening to Smashing Pumpkins at the time in all honesty!) In another example of the music industry seeding their own success, I remember when it wasn't uncommon for a major label to ship a number of initial releases to record stores and then buy them back to push their artist up the charts (which were all based on record sales). The result was that the album or single rode high up the charts getting more rotation on terrestrial radio and MTV, until it became a self-fulfulling prophecy and eventually outsold the buy-back investment and then some. Thanks for the BSB correction :)
• nkurz 13y ago
  Judging from the comments so far, I'm guessing I'm in the minority. But from my point of view, all of the practices described are duplicitous and unacceptable. Yes, there is a differentiation between 'faking' and 'fraud', but this is a legal distinction. Morally, they are equally offensive. Unquestionably, lies and deceit can be useful in achieving business success. This does not mean that they should be condoned, much less encouraged.
  • schuylerlarson 13y ago
    If the fraud is what allows for the site to come into existence and is providing what a market needs then i see it as a requirement for the founders to get their product to market.
  • paulhauggis 13y ago
    I see no problems with faking certain things until you have gained a critical mass of users. As long as you're not scamming people out of money or doing anything that would hurt them, it's fine. Most businesses need to do this at one point or another. If you don't, you will most likely fail.
• leokun 13y ago
  This is the kind of bullshit advice you get from (non-pg) mentors at YC and places like 500-startups. Such advice has a few traits: * It's too general to be of any use to you. * It's too specific to be of any use to you. * It's stuff so obvious you've probably already tried it and it obviously hasn't worked for you. If there was a formula that worked, everyone would do it. There isn't, so general, vague sounding bullshit is the order of the day. They might as well be prescribing hanging garlic from your door. You get a couple of people who have seen success one way or another, usually through being at the right place at the right time with the right idea in a situation of extreme uniqueness, and they are never helpful. At least not strategically. They probably are helpful in terms of the business of startups: management and fundraising etc. I think the real lesson is to just build your idea as best as you can and if there's traction it'll work, if there's signal follow it, if you don't get anywhere quickly, try harder or try something else. Or give up.
• cmbaus 13y ago
  I remember years ago, I had a blog entry hit the homepage of Reddit: http://baus.net/rails-wrong-language/ http://baus.net/rails-wrong-language/ . I think the user that posted it was Linuxer or something like that. But the account had a ton of karma and there was some question if it was just a bot run by Reddit.