Kunal Shah’s Delta-4 Theory can help you come up with a viral idea

This is repost of Medium Article back from my early days at College. Have a fun read.

Inefficiency is the largest employer of the world. Remove inefficiency too quickly with tech and you are setup for a major civil unrest.
— Kunal Shah

Context

A year ago, I stumbled upon a theory that completely blew my mind. I became curious and delved deeper into it, researching every aspect of it. If you’re looking to evaluate your startup idea or any innovative idea based on its ability to go viral, then keep reading!

Delta-4 theory

Kunal explains, using the example of Truecaller, how they were able to acquire a large userbase without any marketing efforts and minimal customer acquisition costs. The product was unique and far more efficient than similar products in the market at the time (people used to rely on phonebooks to find other people’s numbers). When users find a product that is more efficient than what they were previously using, they naturally develop a bias towards it and tend to brag about it to their friends and family. For example, I first heard about Truecaller from my uncle who was raving about its usefulness. It felt like he was a Truecaller salesperson.

In practice with some Examples

Now, let’s dive deeper into the theory. When a product replaces an old behavior with a new behavior, if the Delta (Δ) between the two behaviors is greater than 4, then the product will spread through word of mouth. If the Delta is not greater than 4, then you will need to provide incentives to users to encourage them to adopt the new behavior. Note: Delta is calculated based on intuition and efficiency.

For example, before UPI apps, people used to rely on wallet apps such as PayTM, Mobikwik, or Freecharge to transfer money. These apps were not very efficient because users had to first add money to their wallets before they could make a transaction. But with UPI apps like Google pay or PhonePe, there is no extra step required to make a transaction. Note: UPI apps offered rewards as an incentive in the Indian market, where there was some hesitation about making money transfers online.

Another example would be buying t-shirts online vs offline. Most people would prefer offline shopping because they could try on the t-shirts before buying and avoid the hassle of returning them if they didn’t like them. To overcome this, startups like Myntra and AJIO provided incentives to users to make them more inclined towards online shopping. Once customers were hooked on the service, they stopped providing incentives.

Conclusion

In conclusion, this theory is incredibly useful across all domains when it comes to analyzing ideas based on efficiency and inefficiency. If you found this blog helpful, spread the word on Twitter and don’t forget to tag me. I would love to hear your thoughts and examples of how you’ve used this theory in your own projects. Let’s start a conversation and see how we can continue to improve and innovate together!