Learning from the early days of Facebook.
“The reason [Facebook] went in through college was because college kids were generally not Myspace users, college kids were generally not Friendster users… Nobody actually believed… that you could enter the market through this niche market and gradually through this kind of carefully calculated war against all the other networks become the one network, to rule them all.”
– Sean Parker, on Facebook’s seeding strategy
The odds were stacked against Facebook when it launched. Friendster was already a big social network, and Myspace was growing fast. Of all platform businesses, social networks are probably the most unforgiving on late market entrants. Why would someone, who was already on Myspace or Friendster, get onto Facebook.
In hindsight, Mark Zuckerberg’s micro-universe targeting was a masterstroke that effectively built the biggest online company since Google.
Solve a pain point for an underserved segment
The closed nature of Facebook focusing on ‘underserved’ college students was a masterstroke. Social networks existed and were already finding large scale adoption. But they were flooded with fake profiles, men who posed as women and creepy lurkers. Students, on the other hand, wanted a network with real people, which could possibly improve their dating chances. Facebook solved both these needs, first by focusing on identity (it required signup with a Harvard email address) and then by focusing on the profile picture (a reasonably important input to the dating decision). It solved a clear need which helped it find rapid adoption.
Target a micro-universe where small is good
Harvard students like exclusivity. And Facebook was this cool social network that made them feel more exclusive. In a similar manner, high-end commerce marketplaces build traction relatively fast by catering to an audience that values exclusivity.
Quora users like like-mindedness (which is also often a criticism leveled at the platform). There was no trolling on Quora in its earlier days and as it expanded it created tools (down vote etc.) to effectively curb trolling, which prompted the who’s who of Silicon Valley to come on board and help build an incredible resource.
Choosing a micro-universe where the exclusivity and similarity of users is an added draw can help engage users better.
Choose a true community with existing patterns of interaction
Facebook leveraged a community with strong offline ties. This helped build critical mass rapidly. Online interactions were built on top of offline interactions.
Look for a micro-universe with natural evangelists
Students at Harvard loved networking and self-promotion. Facebook helped them do both. A lot of early evangelism for Facebook was driven by existing users who wanted to get the word out as the platform opened up. Yelp started in San Francisco and targeted lifestyle categories. It was a unique city-category combination which led to early adoption among tech-forward young users who incidentally also travelled a lot, all of which helped spread the word out to other locations as Yelp expanded.
Find a micro-universe which is representative of the universe you ultimately want to build out
The key question when starting small is “Does this scale?”. Will what works here work elsewhere? While user focus is critical, over-catering to the needs of the micro-universe can come in the way of effectively moving on to other adjacent niches.
Secondly, the micro-universe itself should be representative of the larger whole and should not offer advantages that won’t stay relevant to a larger audience. e.g. if your micro-universe is finding rapid growth because of certain geographic (abnormally high population density) or demographic (abnormally skewed gender ratio) anomalies, it might be difficult expanding further using what worked with the smaller audience.
Consider logistical feasibility
Quora and LinkedIn started in Silicon Valley and gained initial traction among the founders’ and employees’ existing network. Both startups snowballed from that small start to get global traction.
A micro-universe may be a use case
What’s as big as Facebook but utterly unknown? Most people outside China have never heard of Tencent. Yet, at nearly 800M users, Tencent QQ is probably the second most popular community product on the interwebs. While there are many factors that led to Tencent’s domination of the Chinese market, their focus on gaming and dating on an otherwise general purpose communication network was a key reason for early growth. Tencent exploited the popularity of gaming and dating among Chinese youth and, in fact, created all the tools required for these use cases. This focus helped the company differentiate its services from competitors who were too busy trying to be everything for everyone.
Finally, stay laser focused on analytics
More often than not, businesses that target micro-universes do not start with a clear micro-universe in mind. In fact, it is quite difficult to effectively determine which micro-universe your product will work best with. Many startups just put out the platform but stay laser focused on analytics. When there is abnormally high uptake from a particular user group, the startup pivots towards exclusively solving the needs of that micro-universe.
What do you think? How did you go about choosing the micro-universe to target for your startup? What does your Harvard look like?
Next up: How to grow beyond your micro-universe
The mechanics of platform businesses is often lost in our quest for features and functionality. This post explores the underlying mechanics.