#1: Create great websites and people will tell their friends

How did Trade Me get to be so big?

One user at a time!

Everybody using Trade Me today was introduced by an existing user.

We believe there is nothing as powerful as word-of-mouth.

Competitors have spent a large amount of money on advertising campaigns trying to accelerate their growth. Many of them are no longer in business. None have achieved anywhere near the same rate of growth as we have by spending more-or-less nothing on marketing.

We prefer to spend our money on creating better websites.

With this approach it’s important we’re patient. It takes time for word to spread. As Rachel Hunter said, “It won’t happen overnight but it will happen.”

There’s also a flip side to this to be careful of: people tell their friends when you piss them off. We try not to do that!

For example, people don’t like pop-ups or animated ads, so we don’t allow them on the site.

Related posts:

Other posts from the Trade Me Manifesto series:

18 thoughts on “#1: Create great websites and people will tell their friends”

  1. Rowan, how do you think this fits with the wisdom of carefully selecting a market and DOMINATING it before moving on to the next? Did Trademe adopt a similar strategy from the start? Pick a core group of users who share similar traits, focus on them and gain critical mass and domination in that market (by having a good website and offering), then move to another market segment.

    There are way too many startups now that have a “Trademe” business model where from day 1 they believe they can offer every service to everyone and end up diluting their offering and being of little use to anyone (think any one of the many plumber/builder websites out there). Search any one of them for a trades person in your geographical area and there’s 1 or 2 people. What a contrast it would be instead if they focused just on one small geographical area first, dominated that and got people talking about it.

  2. Sam –

    Good point.

    I’m not sure if it was so clinical or premeditated. However, that was pretty much how it worked out.

    The biggest category in the early days was ‘Computer Parts’, today it’s ‘Womenswear’. Those are quite different audiences. There is no way that Trade Me could have gone into the ‘Motors’ or ‘Real Estate’ or (more recently) ‘Job’ or ‘Travel Accommodation’ categories without first having a solid foundation.

  3. Sam –

    I’m not sure if it was so clinical or premeditated. However, that was pretty much how it worked out.

    The biggest category in the early days was ‘Computer Parts’, today it’s ‘Womenswear’. Those are quite different audiences. There is no way that Trade Me could have gone into the ‘Motors’ or ‘Real Estate’ or (more recently) ‘Jobs’ or ‘Travel Accommodation’ (aka Travelbug) categories without first having a solid foundation.

  4. Chad –

    Trade Me is a big user of Google AdWords today. But, in 2000 when I started at Trade Me, this wasn’t such an obvious option.

    AdWords had only just launched, and in those days Google itself wasn’t especially well known or widely used.

    Is it an effective option today?

    If you can make it work for you (i.e. your revenue from new customers is more than the cost of acquiring them via AdWords) then it is a very accessible way to kick start your product. Certainly it make a lot more sense than billboards, bus shelters or TV ads.

    Provided you’re smart you can control your spend and also ramp the exposure as your product improves (you often don’t want too many people to visit right in the beginning, as chances are your product is not going to impress them at that early stage).

    I would be nervous though if your entire business depended on AdWords, as you can never know what the costs will be in the future.

  5. Nice article built on commonsense.

    As we all know, most new websites don’t have huge advertising budgets to be able to afford blanket Google Adwords coverage and rely on word of mouth advertising for the first year or so.

    I am going through this phase myself with my accommodation website. It’s really interesting to watch web stats slowly climb as the brand gets out and people tell their friends of places their keen to stay at.

    Strategic advertising in specific media gets the ball rolling. Word of mouth referrals gets the ball rolling faster.

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