Before diving into AI growth strategy, let’s start with a simple question. How did you discover your favorite AI products?

For most people, the answer is word of mouth.

This matches my own experience. When ChatGPT launched, there was a wave of excitement inside the Bounce team. Everyone was talking about it. I tried it to generate landing‑page headlines for an experiment and immediately saw its value. I upgraded to the premium tier quickly when I realized it delivered more recent information and higher‑quality outputs. Fast forward a few years, and my 83‑year‑old mother recently asked me to help her get set up on ChatGPT. Now she loves it.

That is the power of word of mouth. Someone has a wow moment, tells a friend or colleague, and that person decides to try it too.

And this is especially important for AI because most people are not actively looking for AI products. They already have a solution that works well enough. They only try the new AI product because someone they trust is raving about it. In other words, AI adoption does not come from latent demand. It comes from curiosity triggered by someone else’s wow moment.

But for this dynamic to work at scale, people must be able to feel that wow moment for themselves. That requires removing as much friction as possible from the first experience.

This is where freemium becomes essential

Freemium is not new. It has been a key driver for many of the products I have brought to market over the years. I was one of the early pioneers of freemium at LogMeIn. Back then, it gave us a massive advantage because it let users experience value immediately. Even though LogMeIn had potentially higher bandwidth costs than many software products of that era, we still made freemium work because we engineered the model around strong unit economics. The product was designed to support tens of millions of free users with a clear, valuable path to paid.

Today, with AI products, freemium is more important than ever. AI is about the wow. And that wow only spreads when people can experience it themselves with zero friction. Freemium is the mechanism that unlocks the viral growth loop at the heart of modern AI adoption.

Word of Mouth: The Real Engine of AI Growth

Almost every new startup today has AI at its core. But AI is not a category where people wake up searching for new tools. The market lacks strong latent demand. People are content with their existing workflows until someone shows them something dramatically better.

That is why the wow moment matters so much. It is not an incremental improvement. It is an emotional reaction that breaks through inertia. And the fastest way for that emotion to spread is word of mouth.

Every breakout AI product follows this sequence:

1. Someone tries it and gets an unexpectedly powerful result.

2. They tell someone else.

3. That person tries it, feels the same impact, and shares it again.

This is the natural viral loop of AI adoption. But it requires frictionless access.

Freemium: The Lubricant That Makes Word of Mouth Work

A wow moment only matters if people can experience it quickly and without barriers. That is why freemium has become the default GTM motion for AI products.

A strong free tier serves three critical purposes:

1. It removes all friction from the first experience.

2. It maximizes the number of people who can feel the wow moment.

3. It fuels word of mouth because people love sharing something that is both valuable and free.

This is PLG in action. The product creates demand by delivering value upfront, which then spreads organically through users.

And freemium, when done right, is not a charitable act. It is an economically disciplined growth strategy.

But getting the economics right can be even more challenging today than it was for LogMeIn. Many AI products have real compute costs on each query or workflow, so founders must design the free tier around sustainable usage limits, upgrade paths, and conversion ratios. Unit economics do not work without a compelling premium path. The free tier creates the wow moment, but the premium tier must offer clear additional value that users naturally grow into. That combination is what allows freemium to scale profitably.

Examples: The Freemium Flywheel in Action

Gamma: Speed to Value Drives Sharing

In a previous post I highlighted Gamma because it delivers value with incredible speed. You get the wow moment almost instantly. Gamma’s generous free tier makes it dead simple to experience that value firsthand. Their usage caps and credit model then create a natural upgrade path without forcing users prematurely. This is a classic PLG motion.

Lovable: A Prosumer Pattern That Works

I first heard about Lovable on a podcast, tried the free version, and immediately saw the potential. I shared it with many people right away and even wrote a Substack post about it that same week. And, just like with ChatGPT and Gamma, I upgraded quickly because the premium tier offered value I clearly wanted. That is the freemium loop at work: frictionless free access, instant wow, natural upgrade.

Cursor: Developers Feel the Wow Fast

Developers are not out looking for a new coding tool. They feel perfectly fine with what they already use. But when someone shows them Cursor generating entire code blocks or debugging in seconds, they try it. And once they try it, they share it. Again, freemium makes the loop possible.

Heidi Health: Freemium Works in B2B too

Heidi Health shows that this pattern is not limited to consumer or prosumer tools. Healthcare is typically slow to adopt new technology. But Heidi puts the product directly into the hands of clinicians through a free tier designed for frontline users, not administrators. This bypasses the slow top‑down process that normally favors incumbents and instead builds internal advocacy inside the practice. Once clinicians feel the wow moment, they tell colleagues, and the product spreads. Freemium becomes the wedge into the organization. One of Heidi Health’s early investors, who also invested early in Canva, recently wrote that Heidi is tracking on the same growth curve Canva followed at a similar stage. That is impressive validation of this bottom‑up motion.

Seeding the First Wave: Get Them In, Get Them to Wow

Word of mouth never starts on its own. Every breakout AI product begins with a small, intentionally chosen group of early users who feel the pain deeply enough to try something new. But seeding is only half the job. To unlock a wave of sharing, those users must reach the wow moment fast, ideally in their very first session.

These first users rarely come from broad advertising. They come from deliberate outreach:

• founder credibility within a specific problem domain

• clear articulation of an urgent, painful problem

• problem‑centric content that resonates with early adopters

In healthcare, for example, early traction almost never begins with AI messaging. It begins with speaking directly to the daily reality of clinician burnout and documentation overload. When someone who feels that pain tries a tool that gives them relief within minutes, the wow moment hits hard. And once they hit that wow, they tell others.

This pairing—getting the right early users in and getting them to wow instantly—is what creates the spark. But achieving instant wow is not just a product challenge. It is a testing challenge. You need to run tight, iterative activation experiments to continually reduce friction and speed up the path to value. This is exactly what I wrote about last week in my article on 30 Seconds to Value.

Freemium then turns that spark into a scalable engine. But without fast activation, and without testing to continually improve activation rates, even the best seeding strategy cannot ignite sustainable word of mouth.

The Core Insight

AI is a category with low latent demand. People are satisfied with how they do things now. The only way to break through that inertia is to deliver undeniable value as early as possible.

And the moment someone feels that value, they talk about it.

That is why word of mouth is the primary growth driver for AI startups. And that is why freemium is not optional. It is the mechanism that makes the wow moment accessible, shareable, and scalable.

My next Substack post is a collaboration with my podcast co‑host Ethan Garr, where we will share his Perfect Customer Loop framework. It is one of the most effective tools I know for unlocking the advocacy that AI products depend on.

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