The Cold Start Problem: How to Start and Scale Network Effects

by Andrew Chen

Coupons presented a solution to the problem, and marketing legend Claude Hopkins used them to their full advantage, as he describes in his 1927 memoir, My Life in Advertising. He writes about solving this for his client, Van Camp’s Milk, which made a powdered milk: So I devised a plan for making Van Camp’s Milk familiar. In a page ad, I inserted a coupon, good at any store for a ten-cent can. We paid the grocer his retail price. For three weeks we announced that this ad would appear. At the same time we told the story of Van Camp’s Evaporated Milk. We sent copies of these ads to all grocers, and told them that every customer of theirs would receive one of these coupons. It was evident that they must have Van Camp’s Milk. Every coupon meant a ten-cent sale which, if they missed it, would go to a competitor. . . . The result was almost universal distribution, and at once.41