Shanli Liu explains why referrals matter most for early startups: they're free, customers pay more, and referred users refer others. A lack of referrals signals a weak product, so keep quiet until you earn real ones, then scale with ads.
Referrals are the most important type of marketing for a variety of reasons. Number 1, referrals are free. And so if you are poor, great place to start. Number 2, referrals have higher likelihoods of buying at higher prices. Third reason, people who come from referral are also more likely to refer. Big picture reason that referrals are so important when you're starting is that if you're not getting any, it means you're not that good. And so you want to let as few people know that you suck until eventually people find out about how good you are. Then you can pour gas on the fire and do all the other ways of advertising.
