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Platforms part 4 (chicken and egg problems (EIGHT STRATEGIES FOR BEATING…
Platforms part 4
chicken and egg problems
- Finding A Compelling Bait To Start The Loop.The first step in breaking a vicious cycle is to find an inorganic bait that attracts and hooks one of the two roles without the need for the other role being present.
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- Ensuring There Is No Friction In The Feedback Loop. Once one role comes on board, it is important to ensure that there are no barriers to getting the other roles on board.
Backward compatibility
Platforms that require near-simultaneous adoption by two markets may find it difficult to achieve traction if they try to create new behaviors on both sides. Such platforms may often benefit from backward compatibility that helps the platform remain compatible with old systems while changing behavior on one side.
Network effects rely not only on ensuring quantity and availability but also on ensuring quality and reliability. An upcoming platform can compete credibly with an established player if it offers superior reputation systems in a high-risk category.
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Friction
Friction is a good thing only if it increases the repeatability of desirable interactions and decreases the repeatability of undesirable ones.
- Embracing friction with scale Quora has been increasing participation friction as it scales in a way that encourages quality on the platform. Anyone could ask a question in its early days, but asking a question on the platform now requires the user to pay in Quora credits.
- Scaling the country club Some invite-only platforms scale well in spite of high-friction. They start small but preserve high quality as they scale. --> could this be location-specific: loyalty customers, employees etc?
a. Does the friction affect one side or both? Does friction on either side add value to the other side? Does friction on either side deplete value for the other side?
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Trust
although we are not in such a zone as uber (safe rides), Building trust among participants encourages the repeatability of interactions in such markets.
The 7c’s of trust
Confirmed Identity (fb social graph, how to claim the locations: foursquare?)
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Culture (Lyft’s motto –“Your friend with a car” –encourages riders to converse with drivers and sit in the front seat as a friend would.)
Completeness (The more information that LinkedIn has on professionals, the better it can build trust and encourage interactions.)
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Airbnb algorithmically blocks messages between hosts and guests that include the words “Western Union.” If a certain host and guest repeatedly book rooms with one another, they may be identified as a scam to build a reputation based on fake reviews. The platform leverages different forms of signals to manage interactions algorithmically.
growth faking
The in-house team acts as a substitute for the producer side of the platform. First-time consumers get the impression that the platform is already in business, and continue participating.
quora both supply and demand, paypal only demand, reddit only supply
Platforms that try to create entirely new consumption behaviors may benefit from faking production initially. Platforms that require new consumption behaviors will often find it difficult to attract producers. Producers will likely be skeptical of participating in an interaction without a proven consumption behavior.
Interaction failure
With many platforms operating and defensibility low, interaction failure becomes a key factor in determining long-term winners.