🪄 Unethical Growth Hacks used by Startups in their Early Days

Hey,

The Spells Master is back!

Welcome to the 56th issue.

Today's topics:

1. Unethical Growth Hacks used by Startups in their Early Days

2. A tool to Personalize Outreach At Scale using Enrichment Data combined with AI

3. One recommended video on The Uber Story: Fraud, Betrayal, Death & Cars

Unethical Growth Hacks used by Startups in their Early Days

Many big companies of today were ruthless in their early days when they were looking to grow themselves.

It was absolutely necessary for them to do it so they could win but you'll never find them admitting to breaking bad.

Sometimes these companies went on the other sides of the law while sometimes they deceived their users by empoying shady manipulative tactics.

At the end of the day, all businesses are dependent on finding ways to manipulate human behaviour or psychology as they say.

So you gotta choose if you want to be grow ethically to get decent ROI or you want to game the system to get rich.

This is a non-exhaustive list of companies that grew unethically.

1. Uber

Uber exploited the 1099 loophole to abusively underpay workers and then actively broke the law in various cities around the world. They breached laws and taxi regulations.

But the real genius was Uber's Greyball System.

They knew the police would try to catch them while running unauthorized vehicles unlike taxis. So they developed a system to shadowban if the police downloaded their app from certain places like the police station or government offices.

So if you were a police using the app, you'd see Uber app being a ghost town. But if you were a normal user, you'd see drivers everywhere.

2. Reddit

The hard thing about kickstarting a 2-sided marketplace is you have to seed one side first otherwise its hard to solve a chicken and egg problem.

Reddit solved that problem by creating fake accounts in its early days and the founders posting under different usernames.

This system is often used by many big companies even today. It keeps the engagement high to not make it seem like a Dead Internet.

3. Airbnb

Airbnb created a bot to automatically reply to people on their rival site Craigslist to kickstart growth on Airbnb's marketplace.

They used fake email accounts to reply anyone who ever posted on Craigslist with their beautiful rentals.

They used hot girls in their marketing to get more replies.

4. YouTube

YouTube and VK (Russia's Facebook) hosted copyrighted and pirated content knowingly on their site to get user adoption.

YouTube even allowed people to spam their videos to their friends.

5. Stripe

In the early days, Stripe broke a ton of FinCEN Regulations before the regulators catched up.

At one point, $600k of a drug ring went through Stripe when nobody was looking.

You can't do this in today's landscape.

Most YC companies did similar thing like Uber, Airbnb, Coinbase, etc... as VCs often prefer their founders to have a mean streak.

It is essential to create a monopoly.

6. PayPal

PayPal created a bot that bought goods on Ebay but they insisted on paying it using PayPal.

They grew so big using Ebay itself that Ebay had to acquire them for $1.5 billion.

7. Facebook

Facebook had access to email addresses of all Harvard students and used those to mass spam all users to join Facebook.

Everyone knows the Cambridge Analytica Scandal.

In 2016, Facebook initiated a secret project called "Project Ghostbusters." The project aimed to intercept and decode the communication flowing between Snapchat's servers and users to understand user behavior.

Recently, Facebook used its Onavo VPN to illegally track its users when accessing Snapchat and other competitors' apps.

8. LinkedIn

LinkedIn grew via contact database abuse.

It even got a fine of $10 million after importing address books of users and inviting a ton of people onto the platform.

In places like India where data privacy is not a concern, LinkedIn still performs contact abuse by sending tons of emails to get you to sign up.

9. Tinder/Bumble

All dating apps fake seed both sides of the marketplace to generate demand.

In places where demand is high for girls but supply is low, they use fake female bots.

10. iOS Apps

In the early days, iOS apps used to juice their valuations using vanity invite metrics.

You couldn't access full features of an app unless you invited 50 people.

These apps got bought for 7-8 figures with their inflated metrics.

11. MySpace

Everyone loves Tom from MySpace but he spammed a database of around 100 million email addresses announcing MySpace launch.

12. Glide

The live video messaging app spammed their users contacts to trick them into downloading their app.

Earlier, they used to text directly with "Tried video texting? http://i.glide.me/join but later on, they sent curious messages like "Check out this app! :) http://bit.ly/1oXkplq"

A few of those bit.ly links had been clicked on >1,000 times.

1,000 messages every 10 minutes for a month means around 4.3M people might have clicked on those links.

13. OpenAI

OpenAI, along with other big AI companies, scraped billions of webpages of copyrighted text, images, and videos for their next-generation AI models.

Next time, you feel bad about your tiny little growth hacks, remember the big companies have done much worse.

You only get charged if you confess so no matter what happens, they never admit to anything or leave any traces back to them.

Watch Mira Murati's interview where she dances around a question. She's the CTO so obviously she knows.

The big companies like Google aren't going after OpenAI for scraping YouTube videos because they need to scrape copyrighted text too for their own AI models like Gemini.

So they never confess at least publicly.

Sometimes they do confess but they get away with a fine because they are rich.

In short, use the big tech or the big tech uses you.

A tool to Personalize Outreach At Scale using Enrichment Data combined with AI

Clay allows you to run hyper-targeted outreach campaigns.

The thing about Cold DMs & Cold Emails is it still works when you actually come with the right offer and do a bit of background search on the person you are researching.

Now, AI has gotten so good that you can scale your outreach channels to another level while keeping it all personalized.

One recommended video on The Uber Story: Fraud, Betrayal, Death & Cars

The Uber Story is a Netflix-style documentary that covers its entire history of Fraud and Betrayal.

After watching this, you'll realize how ruthless Travis Kalanick is as a CEO.

Netflix made a show on it called SuperPumped covering the Uber story but it was too stretched out. I found the above video to be much better. There's a few unethical growth hacks in the Uber story that the video covers.

Tweet of the day

Naval is where I first heard about Scott Adam's Talent Stacking principle.

Its one of my favorite mental models.

Rabbit Holes

1. There's a lot of bot traffic on 𝕏 - X isn't the only one with bot problem. There's countless other social medias that suffer from the same problem.

2. What are some hidden social media growth hacks? You don't see them online being discussed but startups are using them widely. Happen to know any? - This short snippet has pretty cool social media growth hacks. You should use them if you aren't yet.

3. Spark Creativity with Thomas Edison’s Napping Technique - Naps are good for the brain. Who knew? I got introduced to this technique from reading a blog that summarizes Andrew Huberman 3-hour long videos. These techniques are extremely good to learn Neuroscience which is a fascinating field.

Until next time,

Your Spells Master!

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Read all the old case-studies here.

More Startup Spells 🪄

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3. How Koreans win Pitch Competitions (LINK)