Loic Le Meur has a great post up where he talks about what happens after the initial wave of hype wears off. He wrote it in response to some negative posts about G+ but the situation Loic describes is something we see in almost all of our portfolio companies.
The shiny new toy syndrome lasts a month or two at best these days and then the hot new app crowd moves on. In the wake of that you will have built a base of loyal users who will be a fraction of your total users. 30% is a good number. If you kept more than that, you are doing great. If you kept 10% or less, you’ve got serious problems. In between those numbers is where most entrepreneurs land after the hype is over.
The thing to do is focus on those who remain, service them incredibly well, and start building from there. Forget about the hot app crowd. They may or may not be back. Your loyal users will.
This is one area of business building where being a startup helps. You have nothing else you can do. You can be laser focused on your product and your users. Big companies can lose patience and focus and kill things off before they have had a chance to develop.
USV invested in Twitter, Tumblr, and Zynga the same summer (2007). Zynga and Twitter took off fast. Tumblr was a slow build. They are all Juggernauts now. Fortunately the USV team were all active loyal users of Tumblr. We loved the product then and now. So we were patient and comfortable in our committment to the business. As were the founding team.
The hot companies come and go. You can’t create lasting value on hype. It can give you a boost for sure but at the end of the day product wins and that is where all entrepreneurs must focus, particularly when the hype cycle ends.
