As a developer I’m something of a product nut. I don’t want to call myself a serial entrepreneur as would be in vogue right now, since that implies that I execute on all of these ideas. I have a notebook and from front to back I use it for my day to day notes on the products I am executing on. When I flip it over I write back to front all of the ideas that could be.
When thinking about any idea involving some kind of social networking it almost always has what is described as the cold start problem. This is most prevalent when your network is designed to bring two types of people together. For example LinkedIn needs to have job listings and recruiters in order for professionals to find it valuable. Organizations and recruiters need to see that there are real candidates using the platform before they find it useful. It’s a classic chicken or egg problem that plagues many a founder.
The prevailing wisdom here is in order to solve this issue you need to focus on a small subset of your market. The product needs to cater to a niche market which will become the tinder for the eventual growth you seek. This involves creating a product that is valuable for one side individually. Using LinkedIn as an example again, by creating a great platform for young technology professionals to connect they were eventually able to get the recruiters and organizations and the larger community they sought.
Word of Mouth vs. Network Effects
So once we decide on a niche market for our product, how is it that we can get that product to spread within that niche. It would be easy to say well if one friend tells another friend tells another colleague we’ll have growth. This is what we commonly refer to as word of mouth and while it is one component of a great product, it does not ensure it’s survival or longevity. Think of how many products friends tell you about vs. how many you actually go out and use. People are making recommendations all the time to us but only a small percentage of those actually become products we love and recommend ourselves.
A far stronger method of spread is the network effect. These products are not just talked about, they actually get better as more people in a given niche use them. Think about the one friend that isn’t on facebook and misses all the house-warming invites. They always find out last minute and get mad that they are seemingly never invited to anything. Think about how Yelp works better the more people leave honest feedback. LinkedIn works better when you are connecting to other professionals in your industry. The product makes people’s lives better in some way, and gets even better the more people that use it. This is a powerful type of connection that transcends word of mouth and can create true viral growth.