Avoiding the 'Limelight Effect' in Your New Business

In early 2010, as Groupon surged in popularity and similar businesses flooded the market, a small startup called Yipit began to take shape. Yipit took a different approach by not creating its deals but rather compiling and curating deals from other companies into a neat daily email for its users.

Just like when a new club opened up in town, the Yipit team had a plan to get people excited about their new website. They wanted to get the word out so that more and more people would start using it. They were hoping that once a few people tried it out, they would tell their friends and the website would grow even more. They were really happy when a big tech magazine wrote about them and lots of people started using their website. The CEO of Yipit, Vinicius Vacanti, said on his blog that it felt like all their hard work had finally paid off. Now, people from all over the world are using their website and they are thrilled.

All that hype and excitement turned out to be a big letdown. Yipit only ended up with 200 active users, way less than Vacanti thought they would get. It felt like everyone knew about Yipit for a day, but then reality hit the next morning. The spotlight can make things seem bigger and better than they are, called the "Limelight Effect."

"Inside the Mind: The Impact of Being in the Limelight"

Lots of companies go through what Yipit did. It's easy to brush off this story as just a typical problem for a new startup that hasn't taken off yet. But Yipit's high hopes and then letdown weren't just a fluke; they happened because they cared too much about what the media said and not enough about what actual users thought. If a startup doesn't realize this, they can keep getting caught up in the hype over and over again, until it starts to wear down their employees. Eventually, the excitement over the product fades, and it becomes clear that users aren't as thrilled as the company thought. At that point, the only choice is to step back and accept that maybe it's time to move on from the product. This is what we call giving up.

Positive press is supposed to help entrepreneurs and get the word out about their business, right? So why is everyone talking about this spotlight effect? What's the deal with that?

How Attention Disrupts Our Brain Function

Back in the 1990s, Dr. Gilovich and his friends at Cornell University got a bunch of college students to help with a cool experiment. They had five students waiting at a table in one room, while in another room, one student got to pick a new t-shirt to wear. The student could choose from three shirts with famous people on them: Bob Marley, Jerry Seinfeld, or Martin Luther King Jr. After putting on the new shirt, the student joined the rest of the group.

As soon as the students walked into the room, the researcher said they were too busy to join the group and took the students who picked the shirt back to another room. The rest of the students filled out a short survey while the student with the t-shirt answered some questions alone. Gilovich was curious to see if the student thought more people noticed their cool new shirt than did.

So, the answer is totally yes! This dude Gilovich and his crew did this study and found out that only about two out of five students noticed the t-shirt that someone was wearing. But get this - the students who were by themselves and had to pick a t-shirt thought that like, four people remembered it. So, they thought way more people noticed than did. They like, totally overestimated how much attention their friends were paying. Crazy, right?

After finishing their research, Gilovich and his friends found something interesting:
Most people think that others pay more attention to them than they do. They call this the "limelight effect." It's like thinking you're the star of the show when really, everyone else is just focused on their stuff.

The Hidden Threat to Your Launch: Self-Consciousness

Have you ever felt like everyone is watching your every move? That's called the "spotlight effect." It can make us act differently because we think everyone is paying attention to us. But in reality, people are usually too busy worrying about themselves to notice what we're doing. So, being too self-conscious can mess up our choices.

We've all been there: You accidentally drop some food on your shirt during lunch. You start to panic, thinking everyone will see the stain, so you spend the rest of the day hiding from people to avoid feeling embarrassed. But really, most people probably wouldn't even notice the stain. They just see you acting all weird and avoiding everyone.

Imagine you're starting a new business and you're super excited about it. But sometimes, you might get a little too caught up in trying to impress everyone. You might spend too much time worrying about how you look to others, not realizing that it's making your team stressed out. You might also not realize how much money it costs to get customers to buy your product. And if you're not being true to yourself, your brand might come off as fake. All of these things can lead to your team feeling frustrated. Sure, some companies can bounce back from these mistakes, like Yipit did. But the thing is, when you're just starting, time, money, and staying positive are super important. Every little mistake can add up and lead to a not-so-great outcome. It's like getting a bunch of tiny cuts from paper - it might not seem like a big deal at first, but it can add up over time.

In his book Burning Entrepreneur, Venture Capitalist Brad Feld talks about how successful entrepreneurs stay focused on growing their businesses. They work hard on improving their products, making their customers happy, and taking care of their employees. The best entrepreneurs don't let distractions get in their way - they just keep pushing forward and ignore all the unnecessary noise.

Balancing the Spotlight: How to Maintain Control

Have you ever felt like everyone is staring at you? That's called the spotlight effect. It's hard to stop ourselves from thinking that everyone is paying attention to us, even when we know it's not true. I talked to Dr. Gilovich to see if there's a way to make the spotlight effect less intense. He gave me three ideas for companies, especially startups, to help them stay focused:

1) Explore the Alternative Perspective

So, like, Gilovich said when we think a lot of people are gonna pay attention to us (like if we have a big marketing thing happening), we imagine that there will be a huge crowd watching. We focus on the best possible situation. But we should also think about what would happen if things didn't go as planned. Like, if our startup got a bunch of bad press, how much would it affect us? Usually, it would blow over after a little while and we could just go back to normal. And if we get good attention, it would have a similar impact.

2) Cutting Through to the Truth

Imagine you have a big circle that includes everyone who might be interested in buying what you're selling. Then picture a smaller circle inside that one, which includes only the people who will see the magazine or website where your company is featured. Inside that circle, there's an even smaller one for the people who will read the whole article. And then an even smaller one for those who will click on the link to your website. Keep making the circles smaller and smaller until you reach a tiny circle that represents the few people who might try your product and like it. This strategy helps you realize that not everyone is paying as much attention to you as you might think, which can be a good thing.

3) Explore Diverse Perspectives

Instead of just looking at how many people will hear about your product launch, think about whether those people are the ones you want to reach. Dr. Gilovich said that getting feedback from people outside your company and industry can help you see things from different angles.


Getting attention from the media can be super helpful for a new business. It's awesome to get free advertising and have other people say good things about your company. But if all the excitement makes you make bad choices, it can hurt your business in the long run. As Brad Feld says, try to ignore all the distractions and focus on what matters. That way, you can avoid any negative consequences of being in the spotlight.