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PayPal & Chicken-or-Egg Story, The Heart of Platform Marketing: …
PayPal & Chicken-or-Egg Story
1998:
Confinity was launched
by Thiel, Levchin, and J. B. Powers
Palm Piot & PDAs
Money Transfer/Payment
(via mobile device equipped
with infrared ports)
Oct. 1999:
PayPal
was accepted in an online demo
Internet bubble was looming
Platform development costs was $10 million per month
chicken or egg problem
Reduce barriers
An e-mail and a credit card
New customers
(Sign up - get 10$)
New sellers
Positive feedbacks
Referral fee
New sellers
Active users
New customers
User acquisition
Late 2000:
Confinity was shut down
with only 10,000 accounts
PayPal continued to grow
with 3,000,000 accounts
Early 2000:
100,000 users
Launch a new bot
1,000,000 users
(3 months later)
PayPal vs.
Billpoint
Feb. 2002:
PayPal went public
Oct. 2002:
eBay gave up on Billpoint and acquired PayPal in exchange for $1.4 billion in stock
The Heart of Platform Marketing:
Design for Viral Growth
Pull Strategies
Platform business
(Products/Messages are unlimited)
create awareness differently
Participant incentives connect to
platform interactions
User commitment | Active Usage
but not only
Sign-ups | Accquisition
Push Strategies
Traditional business
(Products/Messages are limited
create awareness directly
Marketing function was divorced from
the product (TV, newspaper, e-mail, event,...)
The Incumbents' advantages:
Reality or Illusion?
Incumbent companies
Existing
partnerships | talents | resources | loyal customers | markets
Competitors were rarely surprised
Market can't changed quickly
Customer expectations change slower
These advantages
can create complacency
New platform companies
New
partnerships | talents | resources | loyal customers | markets
Competitors were usually surprised
Market can change quickly
Customer expectations can change faster
Understand and master
new rules of the game
How to launch a platform
The same platforms
does not mean
the same launch strategies
YouTube
Focus on producers
Anyone can upload videos
Votes and Filter Tool
Producers can bring their customers to the platform
Creating a community that users would not be easily to leave
Luanched in Feb. 2005
Megaupload
Focus on viewers
Launched in Mar. 2005: the late-mover problem
Seeding content in categories
that were policed on YouTube
Viemo
Focus on producers
Launched in Nov. 2004
The same strategy with YouTube
but with higher quality tools
Creating new strategies based on the change in YouTube's strategies
User
commitment