Kevin’s comments note that some digital startups — those lucky enough to have deep pockets — can afford to spend considerable sums on acquiring new users. “The churn rate is extremely high,” Kevin observes, citing the fact that some startups pay between $0.50 and $10 for every new app download.
Without a critical mass of users capable of generating the powerful network effects necessary for bringing in users — and the advertisers that follow — the odds of success for these startups are very long. As Columbia Business School’s Olivier Toubia — also quoted in the article — observes, “It’s a chicken and egg thing. The app will be useful only if there’s enough people posting, but people won’t post until it’s valuable.”
The complete article can be read at:
http://www.wsj.com/articles/letting-an-app-rule-the-evening-1456463161
