Networks grow best on top of other networks.
One of the key challenges of creating a two-sided network is deciding how to get both sides on board. Does a marketplace get the consumers first or the merchants first? And why would either side join without the other? Platforms face this Double Company Problem often during the initial stages of seeding.The best solution, of course, is to get them both together. Since that is not always logistically feasible when starting from scratch, a great way to seed a network is to leverage another. Piggyback on a thriving network as long as your platform is contextual and complementary to that network.
Try to be one of the first on the underlying network
StumbleUpon benefited a lot from being one of the first plug-ins on the Firefox browser. It was a natural complement to a browser which is essentially used to find information. As a serendipity add-on, it was one level of abstraction above Google’s “I’m feeling Lucky” if I could put it that way. Firefox initially ranked plug-ins by downloads and being one of the first add-ons gave StumbleUpon an unfair advantage. SU essentially rode on Firefox’s growth.
Solve a pain point on another network
Quite simply, the best way to leverage the growth of another network is to solve a pain point for users on that network.
PayPal got almost all its traction by piggybacking on eBay and offering a much superior payment method than the painful check-over-mail. PayPal solved all the payments pain points on eBay providing instant payments without the hassle of credit cards. Moreover, while credit card companies scrambled to figure out how they’d manage online fraud, PayPal simply did away with the problem by taking the risk upon itself (a classic case of how a high burn rate company changed an industry). PayPal soon became the predominant mode of payments on eBay and essentially rode its growth to become synonymous with online payments.
YouTube rode the Myspace wave
It’s ironical that YouTube has never stopped growing and MySpace is little more than interesting trivia in The-Big-Book-Of-The-World’s-Worst-Acquisitions. Engagement on MySpace was built around indie bands and musicians who needed a way to showcase their talent. Online video was broken. YouTube fixed that with its flash-based one-click video experience and Myspace users finally had n answer to their problems. Once on the social network, YouTube adoption grew virally (Hey, how did he put up that video on his page?) exposing it to millions of people. By 2006, YouTube’s reach grew past Myspace’s, and the graphs have only diverged from then on.
Photobucket, in a similar vein, solved the problem of posting pictures on Myspace. By late 2006, 60% Myspace pages connected to Photobucket, which eventually sold out to Myspace for $250M.
Just as YouTube grew solving the pain of video sharing on Myspace, Flickr solved the pain of sharing pictures on the blogosphere. Every blogger putting up a picture on his blog helped showcase the service to others. Flickr rapidly grew to become the fifth most visited website on the internet by the time Yahoo lapped it up.
The key with YouTube as well as Flickr was shareability or widgetization. Shareability is critical to content going viral, which in turn spurs adoption on the platform. More recently, DailyMotion, a distant #2 on the video sharing scene gathered fast traction after releasing a video sharing app on Facebook, the one platform where it did not have to directly compete with Youtube as an app. Of course, the total number of Youtube videos hosted on Facebook continues to be much larger than the DailyMotion videos.
Bit.ly saw similar growth riding the success of TweetDeck, and more fundamentally, Twitter. Twitter needed a URL shortening service given the 140 character limit, and Bitly provided that. The fact that TweetDeck, a service already finding rapid adoption by Twitter users, chose Bitly as a URL shortening service gave it that extra edge to gain traction when so many other shorteners failed.
IE, riding Windows, defeated Netscape in a story that is infamously quoted in many antitrust cases. The web was growing rapidly, and computer users needed a browser. Bundling IE with Windows was a master-stroke on Microsoft’s part.
Piggybacking works on a rich-get-richer dynamic: There is a strong first mover advantage when piggybacking an underlying network.
The Piggybacking of Today
With Facebook implementing the social graph, riding another network has become a lot more common. Zynga and BranchOut gained rapid traction as Facebook apps. RockYou gained brief fame by cracking viral adoption on the social network. Facebook Connect, in satisfying the need for Single Sign On on the internet, has also led to third party platforms gaining rapid traction leveraging the social graph.
Making the most of piggybacking
What do you think?
A unifying framework for digital business models
Feature creep is the surest way to kill your startup.