Starting with “For Nerds”

Nerds are a small percentage of the population. But an astonishing percentage of top consumer web companies started out by targeting nerds. This makes sense if these companies are technology companies. But most aren’t—they’re media companies that use technology very well. Still, it’s a compelling list:

• Google started out as the search engine for nerds. One of the first specialized versions of Google focused on Linux. (Hopefully DuckDuckGo will be more than the search engine that appeals to people who search for nerdy education theories and programming languages.)
• Reddit is massively popular and started out massively nerdy.
• Amazon.com sells lots of different products right now, but they started out with the nerdiest product category: books.
• For an app that’s mostly used to broadcast which bar someone’s at, Foursquare’s user base skews strongly towards software developers and the like.
• LinkedIn is a solidly middle-management site. But when it started, it was a career network for Paypal alumni and their college classmates—a very nerdy audience, indeed.
• Even mainstream social networks started out with nerdy audiences: Facebook was an Ivy-only institution for a while, and early Twitter’s most popular user was Robert Scoble.

Nerds are not just default early adapters. If anything they’re more set in their ways than the rest of the Internet. But that makes them a good group to start with: once they’re locked in, they’ll be stable supporters of a product. And nerds are useful because they stress-test software and social conventions. MySpace’s original audience consisted of musicians and their fans. Once they got a nerdier audience, their users started exploiting a bug in MySpace’s code and using this to create extremely customized profiles. That’s the kind of thing a site can fix when they have a few hundred users, but not when they’re much bigger.

This doesn’t mean that nerds are a perfect audience. In fact, path-dependence is a more likely explanation: people who make good products start by making products they or their friends will use. Nerds have nerdy friends. So good products are disproportionately likely to be designed with nerds in mind, and then expanded outward. It’s still hard to think of any successful consumer web companies that either started out targeting the mainstream, or targeting some other niche group. Etsy is a good business, but it’s not going to take over the world.

What does this mean?

• Nerdy VCs are going to keep winning compared to MBAs.
• Nerds themselves have a competitive advantage in investing. For now, that means picking which company to work for and get options in, but if the IPO market loosens up, this could be more broadly applicable.
• Non-nerdy markets look better than they are. Mommy-bloggers may be responsible for a lot of consumer spending, but they don’t congregate the way nerds do.
• Google+ has long odds because it expanded too fast and too generally. What could it have done differently? Perhaps by inviting academics already associated with Google, or immediate friends of Google employees.
• Don’t sell nerds-only companies short. A site like Github could end up being a “portfolio” for people other than coders, for example.
• Startup founders should ask themselves if their minimum viable product is something a nerd would use. Good indicators: it does something cool, but takes at least a few minutes to set up; it only works on the iPhone 4 or in Chrome.