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【Platform Revolution】Chapter 5, GROUP 1, (pipelines rely heavily on push),…
【Platform Revolution】Chapter 5
LAUNCH
The Heart of Platform Marketing: Designing For Viral Growth
pull strategies
rather than push strategies are most effective and important
this model of marketing breaks down in the networked world, where access to marketing and
communication channels is
democratized
both products and the messages about them are virtually unlimited
user commitment and active usage
are the true indicators of customer adoption, and this is why platforms must attract users by structuring incentives for participation
marketing needs to be baked into the platform
The Incumbents' Advantage: Reality or Illusion?
large enterprises' advantages
existing value chains
powerful alliances and partnerships with other companies
can create complacency
pools of talent to draw upon
vast arsenals of resources
incumbent companies reinvent themselves for the world of platforms, they will find themselves on the same playing field as
lithe, fast-moving startup companies
There Are Many Ways to Launch a Platform
Case YouTube
the first democratic video hosting platform
focusing entirely on content creators
It allowed content creators to embed their videos off-platform
YouTube’s unrelenting focus on producers helped in four ways
seeded the platform with content
created a curation dynamic on the platform to identify quality content by letting viewers vote up or down on the videos they watched
leveraged producers to bring in consumers
let creators had a user followings
Case Vimeo
late entrant but succeeded with a producer-first strategy that competed directly with YouTube
s creating a set of higher-quality tools that appealed to a particular set of users who felt neglected by YouTube
PayPal
Background
Thiel and Levchin launched
Cofinty
, a startup aimed at enabling money transfers on Palm Pilots and other PDAs equipped with infrared ports.
Confinity attracted only few users
but they figure out a way to accept payments via email
This allowed anyone in the world to receive an online payments from anyone else without needing to use the unwieldy system for transferring funds from one bank account to another
Due to pressures(Internet Bubble, decline in the NASDAQ index), Thiel and Levchin would need to make PayPal successful fast
SHUT DOWN
Challenges
chicken-or-egg problem
Without
sellers
who are willing to accept the new form of payment, buyers won’t adopt it.
If
buyers
don’t adopt the new form of payment, sellers won’t invest time, effort, and money in accepting it.
SOLVING TROUGH A SERIES OF STRATEGIES
reduced the friction
involved in accepting online payments
simplicity
all users need were a email address and a credit card
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user commitment
was more important than user acquisition
the incentive payments make joining PayPal feel riskless and attractive
guaranteed that new users would start
participating in transactions—if only to spend the $10 they’d been gifted in their accounts
introduced a referral fee for sellers, incentivizing them to bring in still more sellers and buyers.
PayPal’s explosive growth triggered a number of positive feedback loops. Through this feedback loops, the PayPal network went to work on its own behalf, it served the needs of users while spurring its own growth
PayPal's marketing team opportunistically refocused its efforts toward enabling
payments on eBay
made PayPal even more
visible and attractive
to consumers
sellers began posting PayPal icons on their site, enabling buyers to access the payment system with just a single click (reducing friction!!)
Eight Strategies
for Beating the Chicken-or-Egg Dilemma
other 7 strategies
the piggyback strategy
Connect with an existing user base from a different platform and stage the creation of value units
to recruit those users to participate in your platform.
classic strategy
case Paypal
the seeding strategy
Create value units relevant to at least one set of potential users.
When these users are attracted to the platform,
other sets of users who want to engage in
interactions with them will follow.
3 types
the platform company takes the task of value creation upon itself
by acting as the first producer
in order to
kickstarting the platform
allow the platform owner todefine the kind and
quality of value units they want to see on the platform
thereby encouraging aculture of high-quality contributions among subsequent producers
case Google/Android
the value units may be “borrowed” from another source rather than created by the platform developer from scratch
case Adobe/PDF
seeding is done through simulated (“fake”) value units.
case Reddit & Quora
combinations of 3 techniques
designing the platform to attract one set of users
attracts one set of users
either consumers or porducers
a critical mass of users
attracts users on the other side
set up a positive feedback loop
leading to continuing growth
Simultaneous on-boarding
creates conditions that
value units can be created
stimulate a burst of activity that will
simutaneously attract consumers and producers
staging value creation
arrange for the creation of value units
initial users create more value units
attract sill other users
the marquee strategy
Provide incentives to attract members of a key user set onto your platform.
either through a cash payment
or other special benefits
vital player-producers
The dominant sports game developer
case Electronic Arts (EA)
Microsoft, Sony, and Nintendo have all been willing to provide especially sweet partnership deals
to entice EA to develop or adapt games
vital player-consumers
case the Swiss postal service
To attract those customers who were more comfortable with traditional mail delivery, Swiss Post gave away thousands of iPads to households in remote neighborhoods.
encouraged these rural Swiss families to switch from physical mail to electronic messaging
become the country’s largest retailer of Apple products
the big-bang adoption strategy
Use one or more traditional push marketing strategies to
attract a high volume of interest and attention to your platform.
triggers on-boarding effect
creating an almost fully-developed network virtually instantaneously.
example: Tinder
launched during a frat party
achieved critical mass during a live party in a
small, contained location.
the single-side strategy
first step: Create a business around products or services that benefit a single set of users
second step: convert the business into a platform business by attracting a second set of users who want to engage in interactions with the first set.
examples:
OpenTable
First step: distributing booking management software that
restaurants could use to manage their seating inventory
second step: they built out the consumer side
redBus
first step: set up seating inventory management system
second step : open the platform to consumers
6.the producer evangelism strategy
: Design your platform to attract producers,
who can induce their customers to become users of the platform
Platforms that provide businesses with tools for CRM can
solve the chicken-or-egg problem by:
attracting producers
producers attract customer from their own customer base
helps the producers cater to their existing set of consumers
the producers benefit from data-driven cross-pollination
example: crowdfunding platforms
targeting creators who need
funding
providing them with the infrastructure to host and manage the funding campaign
connect effectively with their customer base
example: education platforms
They sign up influential teachers
allowing them to easily host online courses
prompting them to get their students on board.
the micromarket strategy
Start by targeting a tiny market that comprises members who are already engaging in interactions.
provide the effective matchmaking
characteristic of a large market even in the earliest stages of growth.
example: Facebook
launched in the closed community of Harvard University
Attracting an initial five hundred users in the geographically and socially concentrated community of Harvard University
creation of an active community at launch
Facebook leveraged Harvard as an existing micromarket
gained traction by improving the quality of
interactions among its members
advantage:
reduces the critical mass required to start
interactions
makes matchmaking much easier
the follow-the-rabbit strategy
use a non-platform demonstration project to model success
(like an existing pipeline or product business)
attracting both users and producers to a new platform
erected on your project's proven infrastructure.
case Amazon
an effective pipeline business
that used online product listings
to attract consumers
converted itself into
a platform business
by opening its system to external producers
Viral Growth: The User-to-User Launch Mechanism
Viral Growth
The sender
The value unit
The external network
The recipient
Recipient
Epidemic
The user get intrigued by the picture and visits Instagram
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Design rules and tools that will jumpstart the cycle
Design an ecosystem
When the user of platform sends a value unit to a friend or acquaintance
Respond if they find it relevant
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managers of platform have limited control
Provide tool or encourages users
Connect the value unit to a call to action
Hotmail bottom message
Medium
Facebook
Craigslist
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Many Platforms grow on top of other networks
Instagram
Twitter
Zynga
Facebook
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Slide
Airbnb
Craigslist
OpenTable
email
2003
most social
integrating with new user's Hotmail or Yahoo contact list
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LinkeIn
integrate with Microsoft Outlook
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Germs
The picture that user shares with friend
Offerings(rooms)
Share their dinner reservations
The fundamental unit of virality
An embodiment of platform usage
can spread on an external network
demonstrate the platform's value
Proprietary documents among company partners :red_cross:
Spreadable value unit
Instagram photos
Question on Quora
Fresh survey on SurveyMonkey
Host
User on Instagram
Users with rooms to rent
Diners
Getting senders to spread value units
spreading their own creations
indirectly generating awareness of and interest in your platform
users spread self-created value units
Get social feedback
fun
fame
fulfillment
fortune
Youtube
SurveyMonkey
Kickstarter
word of mouth
a tactic in traditional marketing
like the platform and talk about the platform
Incentives for users to share
Natural
Avoid discouraging the spread of value units
The units onto an external network should fit into the workflow of the platform
Artificial
Dropbox
Cash payment :red_cross:
Free storage space
Sender
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Recipient
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GROUP 1
Thera
Winnie
Vivianna
Felline
(pipelines rely heavily on push)
Disease
Instagram
Airbnb
OpenTable