The Will Ferrell Effect
Why Meme Startups Should Be More Like Leo Than Will
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Thanks to our Verified Not Boring Readers, it feels like we’re going a little bit viral here. Today, we’re going to talk to about what companies that go viral can learn from Will Ferrell and Leonardo DiCaprio.
Let’s get to it.
The Will Ferrell Effect
🎧 If you prefer listening, bring your ears over here: The Will Ferrell Effect (Audio Edition)
It Is What It Is
What started out as a meme in our small group chat grew bigger than we ever imagined.
On Thursday and Friday, 👁👄👁 (“it is what it is”, or “IIWII”) took over my Twitter feed. All the cool Gen Z kids were tweeting 👁👄👁 , adding 👁👄👁 to their names, announcing to LinkedIn that they now worked at 👁👄👁, and leaking screenshots of the 👁👄👁 app. Curious onlookers who asked what it was were met with a uniform response: it is what it is. They’d have to give their email address and wait until 06/26 7PM PST.
While tech twitter held its breath, the IIWII team solicited donations to three racial justice organizations - Loveland Foundation, The Innocence Project, and The Okra Project. People speculated that IIWII was a revolutionary new app, a new way to share voice notes and images, and that it might just change the world.
Then, at 7PM PST on Friday night, IIWII dropped. It wasn’t an app or a marketing stunt for a new company; IIWII simply started as a meme and used the attention to launch a temporary ecommerce store, the proceeds from which support racial justice. At 9PM PST, the team released a statement explaining how IIWII came about, the hype it built, the team’s diversity, and a reminder that, “unlike IIWII, #BlackLivesMatter and other social movements aren't trends or hype cycles.”
IIWII was the performance art manifestation of a trend that’s happening with increasing frequency and speed: Meme Startups.
Meme Startups are companies propelled as much or more by the buzz around them early in their lives than by the products they make. They use or become memes to build anticipation, jumpstart demand, and raise money.
For IIWII, the meme was an end in and of itself; for Meme Startups like Clubhouse, HEY, Superhuman, Robinhood, Allbirds, Roam, and Substack, memes are a means to an end.
Becoming a Meme
When you think of a meme, the first thing that pops into your head is probably an image like this one:
A single image, Impact font, black-outlined letters. Memes like this one fly around the internet at the speed of creativity, mixed and remixed, propelled by people’s desire to be recognized as a funny member of the in-group.
The definition of a meme extends beyond that familiar format. A meme is “an idea, behavior, or style that spreads from person to person within a culture.”
Memes aren’t new. Richard Dawkins coined the term “meme” all the way back in 1976, when the internet was still a series of disparate networks like ARPANET, X.25, NPL, and Merit. Dawkins wasn’t thinking about Reddit or TikTok when he defined a meme in The Selfish Gene, writing:
We need a name for the new replicator, a noun that conveys the idea of a unit of cultural transmission, or a unit of imitation. 'Mimeme' comes from a suitable Greek root, but I want a monosyllable that sounds a bit like 'gene'. I hope my classicist friends will forgive me if I abbreviate mimeme to meme... it could alternatively be thought of as being related to 'memory', or to the French word même. It should be pronounced to rhyme with 'cream'.
Memes exist because we humans love to copy each other - the amount of writers writing about René Girard and Mimetic Theory is a hilarious meta-example. Founders and marketers hack that innate predilection in order to make their products spread and to jumpstart and catalyze the loops that drive growth and ¯\_(ツ)_/¯ profitability.
Memes are such a key to how tech communicates with itself that VCs even use them to stand out and generate dealflow.
As we covered in Business is the New Sports:
Either your product grows via word of mouth (WoM), or you need to pay a lot to acquire customers. VC Chamath Palihapitiya points out that “startups spend almost 40 cents of every VC dollar on Google, Facebook, and Amazon.” Just yesterday, Scale.ai CEO Alexander Wang claimed that apps are dead because of the difficulty scaling demand via paid acquisition.
For many consumer startups, memes are the answer to the customer acquisition conundrum. Memes are ideal for virality because they’re easily shareable yet inside-joke enough to create in-group pride. They’re also easily remixable, and they make people feel good about themselves for telling everyone about your product with their own unique spin. As more people tell more people, virality and compounding kick in, and you’re off to the races.
Memes have been around as long as humans, but today, they move at warp speed.
Two months ago, Clubhouse was the only thing in my Twitter feed. Two weeks ago, it was HEY. On Friday, it was IIWII.
Imagine that a meme has a certain amount of fuel to burn. Our stone age ancestors burned that fuel very slowly, over centuries as ideas spread from one distant tribe to another. On the internet, memes burn fast - many of today’s startups burn theirs in weeks or even days.
Meme Startups need to be careful to avoid the Will Ferrell Effect: when something becomes so popular that it moves too quickly from the in-group to everyone and becomes overdone and tired. Just like that, it goes from hilarious to lame, from meme to parody.
There are three things that meme companies need to do early to avoid the Will Ferrell Effect:
Balance Exposure: Walk a narrow tightrope between taking advantage of the early buzz to be everywhere, while holding enough back that they don’t burn all of their fuel.
Build In Stickiness: Build network effects or switching costs into the product from the jump that reward power users and maintain a sense of stratification. This is important for many companies, but particularly those that get an early flood of users due to curiosity instead of a deeply-felt need for the product.
Evolve: Continue to iterate on and improve the product without straying too far from the core value prop. This may generate new memes.
These choices all involve serious trade-offs. Like raising too much money, early hype can make it more difficult to build sustained success by making companies think they have more figured out than they actually do, enabling them to ignore their core loops, and exposing so many target customers to a product before it’s fully built out.
If you’re lucky enough to become a meme, you need to be prepared with a second act or you risk becoming a parody of yourself. Just ask Will Ferrell.
The Will Ferrell Effect
When I was a kid, no one was funnier than Will Ferrell. I grew up on him - he joined the cast of SNL in 1995, when I was eight-years-old, and his Spartan Cheerleaders skit with Cheri Oteri is my first SNL memory.
Over his seven year SNL run from 1995 to 2002, Ferrell acted in 393 total skits, including some of the all-time greats. He did Celebrity Jeopardy, More Cowbell, Harry Caray, Inside the Actor’s Studio, and George W. Bush. He even did my #1 favorite SNL skit of all-time: Dissing Your Dog.
That run landed him at #12 on Rolling Stone’s SNL all-time list. It also led to a historic run of big screen bangers.
Will Ferrell was a meme-generating machine. In the early 2000s, if you couldn’t quote every Will Ferrell line, you weren’t cool. Simple as that. The cycle fed off of itself: Will Ferrell put out a movie, everyone quoted him, Ferrell was in the zeitgeist, he put out a new movie, you knew you had to go see it ASAP. From 1998-2005, Ferrell’s career was up and to the right.
You couldn’t hang out with a dude between the ages of 10 and 45 without hearing a Ferrell quote. “More cowbell!” “You’re my boy, Blue!” “Hansel, so hot right now.” “Mom! The Meatloaf!” “I’m Ron Burgundy?” Guaranteed laughs.
Ferrell leaned into the success… and overexposed himself. He burned his meme fuel.
Imagine walking up to a group of your friends right now and yelling, “I’M IN A GLASS CASE OF EMOTION!” (We all know that guy who still does it.)
It wouldn’t hit quite the same way, would it?
That’s the Will Ferrell Effect. One minute it’s cool, the next it’s not.
Ferrell has one, incredibly recognizable style. That made it easy for him to turn into a meme, get early traction, and go on a hell of a ten year run. It also meant that when his original reserve of meme fuel ran out, it was done. After Wedding Crashers, he went hit or miss from 2005-2010. Notice, though, that even the high grossing movies did worse as a percent of budget than his 2001-2005 gems. Like an overhyped, overfunded startup, even when he did well, he couldn’t grow into his valuation.
Then it got really ugly. Look at his past decade of movies. Aside from The Lego Movie and mayyyybe Eurovision Song Contest, they’re all terrible. One was even called Downhill (haven’t watched, but guessing it’s a memoir).
By 2009, Forbes called Ferrell “Hollywood’s Most Overpaid Star,” calculating that Ferrell’s movies only earned $3.29 for every dollar that he was paid.
Compare Ferrell’s career to Leonardo DiCaprio’s. Other than “being really cool and dating a series of young supermodels,” Leo doesn’t really have a schtick. He stars in a lot of memes, but he isn’t a meme.
From This Boy’s Life in 1993 to Once Upon a Time in Hollywood, Leo has had a nearly-uninterrupted string of movies loved by both critics and audiences alike. I think there are a few reasons:
Balance Exposure. He’s consistent enough that people don’t forget about him, but selective enough that he avoids embarrassing flops and overexposure. Over 26 years, he has starred in 26 major motion pictures, a clean one per year. Over 25, Ferrell has appeared in 54.
Build in Stickiness. Leo’s performances aren’t straightforward and they’re rarely the same. The same guy who played Jack in Titanic played a Rhodesian (now Zimbabwe) with a convincing accent in Blood Diamond. If you’re a Leo fan, you need to watch everything he does to see how he’s going to play it.
Evolve. Leo didn’t win his first Oscar until 2016. He’s continued to improve his craft throughout his career, and was willing to take big bets outside of his core value prop. The Revenant won him an Oscar in part because it was so different from other roles he’s played. Leo’s memes prove it - check out the range on his giphy page.
Leo’s in this sweet spot between Ferrell and someone like Daniel Day Lewis, who is almost reclusive and throws everything into the pursuit of perfection. Lewis is like HEY creator Basecamp - intentionally not venture scale, but throws the sporadic haymaker.
All three actors have had successful careers - I can’t knock Will Ferrell for making me laugh for years and earning $100 million while I sit here and write a free newsletter.
But if you’re a Meme Startup, you want to be Leo.
The Downside of Virality
But wait, isn’t getting a lot of users early on without spending a lot on marketing an unadulteratedly great thing? It depends. Remember that memes only have a certain amount of fuel. On the internet, it’s dangerously easy to burn through that fuel before you’re ready.
Remember HQ Trivia? The synchronous mobile game show launched in June 2017, grew to 2.3 million simultaneous users, was heralded not just as the future of mobile games but of television, and raised $15 million in February 2018.
On Boom/Bust: The Rise and Fall of HQ Trivia, HQ’s Animation Director Rusty Wyner says, “The problem was that article made it get way too popular… that spike in popularity just made it grow too quickly, it was too viral.” HQ quickly went from fun gameshow to meme. Interviewed for the podcast, GV Partner M.G. Siegler said:
“All of a sudden, you’ll have 200,000 users using it overnight. That not only can break down the system behind the scenes, but it also just breaks the way you’re thinking about how you should be building your company going forward.”
After a surge in popularity, things went south for HQ. Co-founder Colin Kroll tragically passed away from an overdose in December 2018. In April 2019, HQ fired Scott Rogowsky. Then this February, the company shut down with a drunken finale after an acquisition fell through.
Going too viral, too quickly can be a problem for a bunch of reasons:
Your systems aren’t ready. HQ Trivia crashed fairly often. It was part of its charm, but it was also a frustrating experience.
Your features aren’t ready. You’re going to get one shot to impress users, and you might not have a complete enough offering to keep them coming back.
Your team isn’t ready. Getting really popular, really fast goes to people’s heads. It’s easy for your team to think it has things figured out and get complacent.
Virality shines a spotlight that exposes the good with the bad. Even 👁👄👁caught heat for calling one of its shirts “Breathtaking.”
So what do today’s Meme Startups - Clubhouse, HEY, Superhuman, Robinhood, Allbirds, Substack - need to do to end up like Leo instead of Ferrell and HQ?
How to Avoid the Will Ferrell Effect
Avoiding the Will Ferrell Effect comes down to transitioning from being known as a meme to being known for a great product that happens to leverage memes to remain relevant and grow.
Nike is the Leo of Meme Companies. It builds quality athletic gear and puts athletes first, and it also happens to be on the right side of the meme over and over again.
Its slogan, “Just Do It,” is iconic. When Zion Williamson blew the soles off his Nikes, the company owned the moment - they made him an enhanced sneaker and later signed him as the face of the Jordan brand. When The Last Dance captivated the nation during quarantine, it gave Nike a boost. The company stood with Colin Kaepernick in 2018 before it was fashionable.
Not only are Nike’s memes excellent in their own right, they all sport similar clean looks and short, powerful statements that make them easily remixable for the lulz.
Nike has been at this game for a long time; Phil Knight had the opportunity to build the company in relative obscurity before becoming world-famous.
Our Meme Startups aren’t so lucky. They, and the other startups that plan on using memes for cheap, early growth, need to do three things to leverage virality instead of letting virality crush them.
Balance Exposure.
Build In Stickiness.
Evolve.
There is a whole class of startups that live somewhere between meme and real company, between 👁👄👁 and Nike. More precisely, these companies owe much of their early success to becoming memes, but must figure out how to grow into the hype and high valuations that come with memedom.
Clubhouse, HEY, Superhuman, Robinhood, Allbirds, Roam, and Substack are simultaneously products and memes. There’s a thin line between cool and cliché that I walk every time I send an email from Superhuman or a newsletter from Substack while wearing Allbirds, trading on Robinhood, and taking notes in Roam.
Certainly, being a Meme Startup is a champagne problem. While others launch into obscurity, Meme Startups have a shot because they catch fire early and become memes. But that’s a blessing and a curse: on the one hand, free marketing and early adoption are net positives; on the other, these companies are often able to raise money at tremendous valuations, which means that they need to stick with it when things get tough after the initial meme fuel runs out and keep working to get really, really big.
Put in strategy framework terms, these companies need to Cross the Chasm and reach the Early Majority before the Innovators and Early Adopters get tired of them and they die on the… Vine.
To understand how they might do that, let’s take a look at one Meme Startup that made it to the other side.
Allbirds: Spending on Materials Instead of Marketing
Allbirds are a meme, but they’re also a great business. Tim Brown and Joey Zwillinger launched Allbirds in 2016. Within just over two years, they sold their millionth pair and seven months later, raised $50 million from T. Rowe Price at a $1.4 billion valuation. They haven’t needed to raise since.
For a little while there, you couldn’t walk into any startup or VC’s office without seeing a few pairs of Allbirds Wool Runners, the comfortable, environmentally-friendly shoes that simultaneously signaled status and virtue. The shoes were so ubiquitous that they made it into the VC Starter Kit, the parody ecommerce box that launched the career of one of tech Twitter’s most popular parody accounts by the same name.
Here’s the challenge with the Will Ferrell Effect: once everyone you know is wearing Allbirds, it’s no longer as cool to wear Allbirds. So people in tech move on to Atoms, Mahabis, or whichever sneaker brand only some people have heard of.
But there’s good news - apparently, people outside of Silicon Valley wear sneakers, too. Allbirds balanced exposure by making the leap from the tech bubble to Hollywood - celebrities like Oprah, Matthew McConaughey, and Mila Kunis have been spotted rocking Allbirds. Leonardo DiCaprio himself personally invested in the company because of its use of environmentally friendly materials, and even Barack Obama is a fan. Fun fact: Obama wore Allbirds to the Duke/UNC game in which Zion Williamson blew out his Nikes.
By positioning itself as the sustainable shoe company, Allbirds built in stickiness in the form of a values-aligned customers, including Leo, a la Patagonia. Allbirds doesn’t just tell people that you work at a startup anymore; it tells them that you care about the planet. When Amazon copied its product, a death knell for many brands, Allbirds was able to leverage that moment into a meme. Zwillinger penned a letter to Jeff Bezos on Medium, telling him that Amazon forgot to copy the most important part - Allbirds’ approach to sustainability. That post received 18.6k “claps” on Medium, generating even more WoM.
Because of the product’s strong WoM, the company apparently spends very little on paid acquisition - south of $500k per month on annual sales that topped $140 million two years ago and is likely closer to $300 million today.
That’s the power of going viral, even for a physical product like shoes. If done right, the money you save on marketing can be applied to better use. Growth from marketing spend is costly and fleeting; over the long-term, product wins. To that end, the company has invested in evolving its product line by developing new shoes made of new materials.
On a recent episode of the podcast Venture Stories, Henry McNamara, a VC backing Allbirds, said “What Allbirds really is is a materials company.” It sounds like something a VC might say about his portfolio company, but the facts back him up. Allbirds has patented and trademarked its ZQ Merino Fibre, TENCEL Lyocell tree fiber, Sweetfoam from sugar, and Trino from ZQ Merino Fibre and eucalyptus tree fibers.
Allbirds has been able to move beyond the memeable shoe that made it famous by producing apparel based on the same sustainability ethos and technology. Its focus on sustainability and materials, made possible by not having to blow 40 cents of every dollar raised on paid marketing, opened the doors to a partnership that will become a new growth-fueling meme: a partnership with Adidas to create the world’s most sustainable shoe.
Allbirds masterfully parlayed its early virality into mainstream adoption by balancing exposure outside of tech, building in stickiness through values-alignment, and evolving its product line and patent portfolio to the point where it was able to partner with Adidas.
Leaving Some Fuel in the Tank
We could go on and discuss the unique challenges and opportunities for each of the Meme Startups, like:
Why Basecamp’s capital structure means that HEY doesn’t need to cross the chasm for HEY to be a success (as Nathan Baschez did here),
How Robinhood’s failure to build critical infrastructure and support before it went viral caused the app to fail on the market’s most volatile days, and contributed to a young trader’s suicide,
What Clubhouse is already doing to change its perception from “another exclusive club for white tech bros” to the best place on the internet to have intimate conversations on topics ranging from BUILDING to race, with people from Marc Andreesen to MC Hammer to Oprah,
Or why the difficulty in learning Roam is actually a feature, not a bug (as Rob Litterst did here).
We might even discuss why I actually kind of liked Will Ferrell’s most recent movie, Eurovision Song Contest, which fortuitously debuted on Netflix while I was in the middle of writing this, and why Netflix is the perfect place for actors like Ferrell and Adam Sandler to go after they’ve suffered from the Will Ferrell Effect.
But to avoid running out of fuel, I need to balance exposure, hope that the leaving you wanting more builds in stickiness, and get to work on next week’s piece so I can continue to evolve.
At the end of the day, a meme is only good insofar as the product can back it up before the cool runs dry.
That’s all for today. You stay classy, Not Boring.
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Thanks for reading,
Packy
Strong analysis, but I'm worried about the research after you claim to have "liked Eurovision Song Contest." It watched like it a classic, overplayed Will Ferrell meme movie. Please explain yourself.