The Placebo Start-ups

There are many things that puzzles me as to how majority of today's mega start-ups succeed. I don't pretend to be an expert in this matter because I am none the wiser. However, I have noticed a phenomenon that has become a trend in the strategy that start-ups today rely on to succeed. And that is none other than the placebo effect.

This is how Wikipedia puts it:

"A placebo is a sham or simulated medical intervention that can produce a (perceived or actual) improvement, called a placebo effect."

Take this phenomenon and compare it to the strategy of many of the fastest growing social start-ups today but instead of using medical intervention, replace it with social buzz. Some calls it viral marketing or word of mouth or whatever, you get the point. The main idea is to have as many people talking about a product as possible in the shortest time possible. Then periodically repeat this treatment over and over again for the longest time possible.

After a period of time, net citizens will start believing that this product is really something and start trying and using it. The reality may be that the product in itself might not be of any real use or give any real benefits. But the placebo effect kicks in and all of a sudden it becomes the best thing that ever happened to us. Only when the numbers start pouring in does the potential of the product become something of real value. When this happens, the value then is no longer in the product itself but the people and data that it has accumulated.

I have seen this happening many times. I am very impressed with how some start-ups have executed this strategy effectively. But not everyone that tries to employ this strategy will work out as expected. This is the same with the placebo effect when applied to medicine. Notably, the ones that succeed are usually those that have managed to successfully convinced or employ influential people to hop on board their ship.

So maybe it is more important today to play mind games in order to succeed than to actually produce a useful product. Don't get me wrong, either way, there are tons of winners from every camp but these placebo start-ups seem to be the trend the last couple of years. What do you think? Are you a placebo start-up too?