We all are looking for new ways to grow our business, find a new marketing tactic to meet this month’s numbers and figure out a new growth hack.
That at times, puts us in a business dilemma. Is it right? Is it ethical? Shall we do it if others are doing it?
Is the onus on us or the consumers who finally make the decision?
We thought of picking one such dilemma, one on trying to sell FOMO (Fear of Missing Out) for growth, as our first Case Study. We did some crowd work around this dilemma to gather some thoughts, frameworks, useful links and some perspectives to help us decide for ourselves, when we face this dilemma in future.
We asked AJVC Slack Community this question and got some really interesting thoughts:
FOMO Positive
*Sandeep Tomar* liked how Clubhouse has gone viral with invite-only signups and it has created such a FOMO that Clubhouse invites are getting sold for $100!
FOMO Negative
Himansu Varghese shared his article on how Ed tech startups thrive on FOMO and raised a question on where to draw the line between ethics & growth.
FOMO Neutral
Tanay Shah took a more neutral stand and shared how a framework around Industry, Ethics and Trust can be constructed to create some tactics used around FOMO.
We also took this conversation to an investor to a get a view on how does FOMO work in VC fraternity. Arpit Agarwal(Director, Blume Ventures) shared his thoughts:
Venture Capital industry is built on back of creating uniqueness in your business as against others in the market or closest competitors. While one is chasing customer dollars, being able to starve a competitor for investor money is equally an important tactic especially in cash hungry consumer internet businesses. Hence, the best entrepreneurs are able to create enough investor pull by employing a VC’s FOMO to be able to lock-in the money ahead of the competitor.
Arpit is right, Capital is a strong moat. For cash starved businesses sooner the duopoly (if not monopoly) is reached between two or three big players, margins start improving and a real business starts to emerge. As VC funded business typically see almost 90% of the value going to no.1 player and rest 5% to number 2 and 3, it is very important to lock capital or VCs.
Example – Swiggy / Zomato did not leave space even for Uber Eats. Ola/ Uber did not leave a space for Taxi For Sure. Almost all such businesses have to reach a duopolistic behavior sooner than later.
That’s why creating FOMO isn’t uncommon while raising funds. After all, everyone wants to fund the leader and not the number 2 or 3.
Arpit also shares a piece of caution if you plan to deploy this strategy for your next investor pitch:
However, this strategy is a double-edge sword as if it fails on you, it could lead to disastrous outcomes as this industry continues to be closely knit. But, as one entrepreneur told me, it is just another small risk an entrepreneur is taking on a long journey and having a massive outcome will eventually write off all the misgivings along the way.
There were some other interesting conversation both on Linkedin and our Slack Community. You can read them here.
In a nut shell, using FOMO to get attention from kids seems to be in negative shade while for non kids products creating artificial scarcity or limited stock, in general, is considered a good marketing strategy.
Here is the list of top 3 relevant articles that our contributors shared: