r/wallstreetbets and the Lesson of Viral Exposure for Startups
Be careful what you wish for, because you might not recover

Before the second week of January, the subReddit r/wallstreetbets was a loosely-knit group of stock traders who mostly posted screenshots of their painful losses on bad stock bets. By the last week of January, it was a market-moving phenomenon. Millions and millions of dollars were made, and even more millions were lost, maybe billions by the time the dust settles.
All it took for that explosion was a story, a hook, a catalyst, and the right viral spark, one that produced thousands of press hits over the span of two weeks. In turn, up to 8 million subscribers latched on to r/wallstreetbets (WSB), many of then with wallets (and life savings accounts and 401Ks) wide open.
By the end of the last week of January, the story had fallen apart, the hook disintegrated, and the catalyst appeared to have already happened on a much smaller scale or wouldn’t be happening at all, depending on who you believe.
This mirrors the rise and fall of nearly every viral-fueled startup I’ve ever been involved with or even tracked leisurely. But I still get the question at least once a week, obviously more so over the last month:
“How do I get my company on that kind of viral gravy train?”
Cautionary tales and horror stories
That kind of rocket ride, pun intended, certainly makes you think: If a press-fueled viral push can move that much money with kind of velocity — through an organization with no structure, no reach, and no product to speak of — surely your company can create and ride a smaller and more targeted tsunami to a windfall of honest revenue.
But the truth is, the viral math doesn’t add up. For example, despite the infinitesimally small odds of getting hit by a bolt of lightning, approximately 240,000 incidents happen each year. Technically, it could happen to me or you. But a strategy to increase your chances of being hit while simultaneously hedging on a positive outcome is akin to trying to get hit by a very small bolt of lightning.
There’s no such thing. And you can’t predict it, no matter what you saw in Back to the Future.
So when we talk of controlled viral exposure as a tiny lightning bolt in a bottle, it kind of sounds silly. That said, “viral exposure” is often the primary marketing plan for a lot of pre-execution startups. In fact, it appears almost as often as “digital advertising,” which has its own bad math.
To save you from that bad math, and to find a viable alternative, let’s take a look at (what I think) really happened with WSB and GameStop.
How the story, hook, and catalyst cause a spark
The spark that turned the WSB saga into a massive blaze was based on an age-old story: The idea of average people coming into life-changing money by exploiting a market imbalance in an existing system.
WSB fell backwards into that story when one of their short squeeze plays — admittedly a very ripe one — caught fire. That story centered around the target of the short: the distressed video-game retailer GameStop.
I started following the GameStop story on January 12th, the day the stock nearly doubled in price for no good reason. Prior to that, the only recent press I had seen on GameStop was about how it was being managed into the ground. I’d read a smattering of stories about retail workers and store managers having to carry out what they believed to be business-killing decisions from above.
Retail, brick-and-mortar, and physical media. GameStop was on the wrong side of all three of those things.
Then I got distracted until a few days later when the WSB connection to GameStop hit my radar. I was already a little familiar with WSB. I manage my own portfolio, and although I’m nothing close to a day trader, WSB was a place to suss out a few crazy ideas. But when I revisited WSB in that third week of January, the vibe was different. It was still about meme stocks and loss porn, but the talk about $GME had shifted and spread.
GameStop had quickly become the poster child of a perfect storm of antagonism: Retail businesses succumbing to the pandemic, brick and mortar losing the battle with eCommerce, and physical media dying off in favor of digital media.
The hook was that GameStop — and all of the underdog themes that it represented — had seemingly found its heroes in the unlikely form of a bunch of self-proclaimed knuckle-headed online traders. A rebel alliance going up against the evil hedge funds who were shorting GameStop out of existence, and anyone could join the fight.
The catalyst was a short squeeze that would be produced if enough people bought shares of a stock that were under the duress of an unheard of 140% short interest. That short squeeze could produce a spike in the value of $GME to… well, who knows… the the moon!
Boom.
How the WSB story relates to viral exposure for startups
The foundational story that fueled the WSB explosion and the resulting 20x rise in GameStop’s valuation is the same story at the heart of every successful startup idea: Find and exploit a market imbalance by solving an existing problem in a new and novel way.
It’s the reason why every startup seems to be a viral candidate in the making.
The hook can be similar too — a small band of rebels taking on an entrenched and possibly evil incumbent. It’s like Robin Hood, until Robin Hood becomes Robinhood.
And the hook doesn’t have to be limited to good vs. evil or David vs. Goliath or democratization vs. monopoly. The hook can be about a new solution that removes pain and friction in everyday life. It can be about an advancement in technology that creates possibilities that weren’t there before. It can be about a creature comfort at an affordable price.
But it’s that damn catalyst. That’s where viral exposure goes off the rails, because you and I don’t have any control over whether or not the spark happens, or how controlled the resulting explosion is.
Why I’m a customer but I didn’t buy any $GME
Let’s go back to the the WSB story and, to further relate it viral startup exposure, let’s say I was a customer and the product I was looking for was a stock poised to break out either because it’s mistakenly undervalued or there’s a technical issue making it cheaper than it should be.
By the time I was exposed to the viral WSB story, $GME was in no way undervalued. Yes, there was maybe a technical issue with the short interest and potential squeeze, but not at the value I saw, which at the time was somewhere around $70.
But more importantly, that’s not what the viral story was selling me. What was being sold was a revolution and a battle against hedge funds. And I knew immediately that this was not that. And even if it was, it had a long way to go and a lot more catalysts needed without the whole thing imploding.
Which it did, roughly on February 1st, depending on who you believe.
What viral exposure really is
The truth about viral exposure it that it almost always happens in one of the following ways:
- It’s a lightning strike
See above. Every once in a while you get a true lightning strike. And as I said, it’s nearly impossible to predict or harness this.
2. It’s paid for
Forget about unreliable and deadly lightning strikes. Viral exposure is actually easy to come by if you pay for it. 50 years ago, there were record companies creating worldwide famous acts out of thin air and marketing money — a practice that would produce decades of broke-but-famous pop and hip-hop stars. Today, there are social media consultants creating Instagram influencers out of nothing but money, bots, and fake photos.
3. It’s unwanted
Remember, almost all viral attention — for a company, a celebrity, or a random average person — comes unintentionally and is unwanted. For every “local kid makes good” story that gets legs, there are 100 more “local kid does bad” stories that we don’t think about in a business context outside of crisis management.
4. It’s a multi-year “overnight success”
The most likely option, because startup is full of the 10-year-overnight-success. There are companies that build and struggle for years before they wind up in the public eye. And that’s where a lot of the misunderstanding about the value of viral exposure comes from.
I’m not saying that every startup needs 10 years of ramp-up time before gaining traction, or even five years or even three years. I’m also not trying to crush your viral dreams.
But if you’re going to chase a viral plan, make sure you keep these things in mind.
Will viral exposure produce the results you’re looking for?
Another truth about viral exposure is that in a lot of cases it results in negligible return to the top line, and sometimes even negative return to the bottom line.
When the company is underprepared, it can lead to a lot of missed opportunity, as the company scrambles to override a bad hook or the wrong catalyst and push product onto an unsuspecting, large, sometimes angry crowd.
When the company is overwhelmed, that’s even worse, because it will guarantee an angry crowd. Remember, being a startup buys you no breaks or pity or empathy. You’re expected to act like the incumbent, regardless of how novel your solution or how low your price.
But mostly, results don’t materialize because either the story, the hook, or the catalyst don’t match the expectations of the customer when presented with the actual product.
It took an experienced eye for me as an investor with 20 years of independent experience to even have the gut to realize that the reason I had been drawn back into visiting WSB was not the reason all the others around me were being drawn into WSB for the first time.
In other words, WSB the subreddit grew by an order of magnitude, but not with members who were there for the reasons the subReddit was built on. These new folks were about a revolution, not some quick side cash or loss porn on an admittedly stupid stock bet. And the press (most of them anyway), repeated the former story, not the real story.
So that begs the last question.
Can you recover from viral exposure?
We’ve all heard those stories about lottery winners who go bankrupt not long after their windfall. Winning the top prize in the lottery has about the same odds as a lightning strike or a viral breakout.
So you have to ask yourself: Will you be able to recover from the viral exposure you’re looking for?
How much benefit did WSB members get out of the GameStop story? Again, from what I’ve seen and I believe, the original subReddit members are hanging around in alternative threads in the subReddit. Not hiding, but certainly not a part of the new majority, and openly bemoaning what became of their thing. A lot of them cashed out of $GME when their thesis — the short interest and the squeeze, not the revolution — proved out.
The WSB/GameStop story isn’t funny because it’s too sad. A lot of people got hurt because their expectations were misaligned. And while the blame for that outcome is totally and completely on them — not WSB, not hedge funds, not Robinhood— it doesn’t change the fact that a lot of negative outcome happened.
More like a tornado than a lightning strike.
So be careful what you wish for, because you may not be able to recover.
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