Candy or Pain Killer?

May 31, 2011 § Leave a comment

One of the quick tests that investors have historically applied to a new product is, “is this product a vitamin or a pain-killer?”  The investment thesis is, pain killers are great investments because they solve a need immediately and thus should gain quick traction.  Whereas, vitamins, although beneficial, are seen by consumers as “nice to have” and rarely get consumed quickly or at high doses.  Typically, if investors conclude that your product is a vitamin, then they will not invest.  But something new is going on…

Not only are non-pain killers getting funded, they are growing up to be some of the most valuable businesses in the world.  The reason is, they are providing candy to consumers.  And candy is nearly as addictive as pain killers.  Think about all of the great consumer web businesses this applies to:

– Twitter – provides candy in the form of 140-character tweets.  Hard to argue the tweets are a true pain-killer for the consumer.

– Zynga games/Angry Birds – solving the pain of needing to have fun?  That’s a stretch to me.  I think this is about pure enjoyment.

– Even the Group Couponing businesses – I mean it is hard to argue that you need that half price pole dancing class or a massage.  It is just enjoyable, so you sign up.

– Facebook – the mother of them all.  Facebook is almost entirely candy – since the most used features of FB are status updates and pictures.  Maybe you can make an argument that facebook improves communication by solving the pain of not having to type out an email to everyone, but that’s a stretch for me.  I think that people check in several times a day to read posts and view pictures for pure pleasure.  That’s pure candy.

These great businesses have proven that if you provide consumers with an enjoyable service that enlightens their day, you can build a loyal and engaged customer base.  I.e. Candy is really addictive.

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