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The network effect playbook: Social products win with utility, not invites

The proverbial chicken and egg problem of building a new social product is well understood among tech startups, and it’s been commonplace to follow two contrasting mechanisms for getting traction.

Traditionally, startups have solved this problem by racing to connect users with each other, essentially providing them the pipes to interact with each other. Twitter, Facebook and LinkedIn have grown big with this connection-first model.

However, a new breed of networks is gaining ground with the content-first model. They provide users with tools to create a corpus of content, and then enable conversations around that content. Behance, Pinterest, Instagram, Dribble, Scoop.It have all gained traction by building a corpus of content before building a social network.

The two contrasting approaches are summarized below:

The rules of building a social product are changing. It’s important to understand this shift to build social products that can effectively gain traction on the internet today.The connection-first model is no longer as effective as it used to be. As the social web grows, and a larger number of social products compete for our attention, we are seeing a dramatic shift towards the content-first model. If you’re still getting users to send out Facebook invites, you’re adding to the noise, instead of standing out and getting noticed.

The Connections-first Social Product

Traditionally, the playbook for building network effects has been the following: Get users on board, connect them to each other and have them create content and conversations.

Social networks like Bebo, Facebook and Twitter used this playbook to create their respective networks leveraging address-book integrations and other hacks to rapidly build a large number of network connections.

The importance of building connections, in this model, cannot be emphasized enough. In fact, the growth teams at Facebook, Twitter and LinkedIn specifically aim for ‘X connections for a user within Y days of sign-up’ to activate the user.

Since a critical mass of connections is required before users experience value, the key to building a successful network is minimizing the friction in creating connections. Contact-list integration helped social networks like Facebook and LinkedIn gain initial traction through the removal of sign-up friction.

In spite of growth hacks like contact-list integration, there is always a lead time in getting users on board and reaching critical mass. This is the ‘gap’ where it becomes very difficult to demonstrate value in using the product.

Frictionless sign-up + Virality = Network Effects? Or not!
Startups often believe that removing friction in sign-up and creating some form of viral acquisition are the two key elements to reaching critical mass. In fact, with the rise of Facebook Connect and the social graph, a large number of social products have sprung up on the promise of frictionless sign-up and viral growth. However, users on the internet have limited time and attention. As more startups leverage the social graph and flood users with invitations to join their networks, users have started to develop invite fatigue.

Clearly, frictionless sign-up and virality are not the one-stop solutions we were hoping they would be.

The secret to network value
Startups often fail to appreciate the gap between technology and value proposition. For products like Evernote, technology serves the entire value proposition. However, for social products, the value proposition is a combination of technology and the content that users create on top of it. YouTube’s value lies in its hosting and streaming capability, but more importantly in its vast repository of videos.

The secret to creating a social product that demonstrates immediate value is to enable content before creating the network.

Content created on the network is the new source of competitive advantage. The videos on YouTube, the pictures on Instagram, the answers on Quora are the primary source of value for users and the key driver of competitive advantage for these platforms.

The Content-first Social Product

Today’s social startups don’t start off as networks. They start off as standalone apps. These products enable users to create a corpus of content first. They then connect the users with each other as a consequence of sharing that content.

Instagram started out as a photo-taking tool and built itself out into a social network subsequently. The initial focus was entirely on the creation of content and the connections were formed over time leveraging other social networks. It is unlikely that Facebook would have considered Instagram a direct competitor in its early days, largely owing to its model of deferring network creation.

How to create a network in stealth mode
Instagram started off as a standalone tool. In doing so, the product provides ‘single-user’ utilityto the user even when other users aren’t around on the network. There are two aspects to building single-user utility:

1. The single-user utility should allow creation of content that will ultimately form the core of the network. The core of Instagram is pictures. Discussions are centered around pictures. Hence, the single-user tool needs to allow creation of pictures. This is an extension of the OpenTable model, where a restaurant first manages its real-time seating inventory on a single-user tool, before that very inventory is exposed to consumers on a network, to allow them to reserve tables. Curation-as-creation products like ScoopIt and Storify also use this model to curate content which will serve as the core for network interactions.

2. The product should deliver greater value when users share their content with their friends. The product builds out the network at the backend as more content is shared. Hence, the social network gets created, effectively solving the chicken and egg problem. A new breed of curation-as-creation startups (Scoop.It, Paper.Li etc.) is gaining traction on a similar model.

The new playbook for creating social products is essentially the following:

  1. Have a vision for creating the network but do not start executing on network creation
  2. Enable a single-user tool that creates content that is core to social interactions
  3. Share this content on external networks (social networks, email, blogosphere)
  4. Capture interactions around the content to build network linkages at the backend
  5. Open out the network once a critical mass of linkages have been built

The rise of the content portfolio
Instagram demonstrates how a network is created around a portfolio of user-generated content. Behance and Dribbble have followed similar strategies by providing a portfolio for hosting designs, before adding value through the creation of a peer-review community. Initially, Pinterest appealed to the designer community as a tool to ‘bookmark’ their favorite designs, before it built out the network. Early adopters found enough value in the ability to store designs and pictures, to use the product before the network became active.

The new success factors
Frictionless sign-up and virality are important but they are no longer the key to building social products. The following are key to building content-first social products:

  1. Removal of barriers to the creation of content: Startups like Instagram, which succeeded in simplifying the creation process and in enabling users to spread the word, succeeded in eventually building the connections between users.
  2. Growing the creator base, not just the user base: Since value for the overall networks is scaled by scaling content creation, the platform needs to focus on incentivizing and increasing the percentage of users who create content.
  3. Strong curation models: Content-first social products scale well only when there is a strong curation model in place to separate the signal from the noise. Without strong curation, greater content can actually lead to a poorer user experience leading to reverse network effects.
  4. Incentives: The platform needs to encourage users to build out the connections. This works best when the platform encourages an innate motivation (self-expression or self-promotion) in the user to spread the word about her content. In doing so, the users build the necessary connections that set up the network.

The new growth hacks
In the connections-first model, the one hack that minimized friction in building connections was the contact list integration. In the content-first model, the hack that minimizes friction in creating content is the creation widget. Creation widgets have grown in popularity in recent times, spreading across the internet in the form of browser add-ons and one-click buttons. Several curation-as-creation startups like Pinterest and Scoop.it have used widgets to enable users to create content easily.

The future
This new model of building networks allows a social product to gain traction while value is being created by users. Once enough content is created, the users are connected and the network builds out. Social products that win will focus on enabling users to create content first and generate conversations around it. The creation of the actual social network will be a final step, as a consequence.

Note: This article was first featured on Sangeet’s blog, Platform Thinking (http://platformed.info). Platform Thinking has been ranked among the top blogs for startups, globally, by the Harvard Business School Centre for Entrepreneurship. 

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A Platform Thinking Approach to Building a Business

Every business is an engine. It needs to do a certain set of things repeatedly to create value. If you haven’t figured out that set of repeated operations, you probably haven’t created a scalable business yet.

Ford needs to repeatedly assemble cars, Google needs to repeatedly run its crawler, Facebook needs to repeatedly get users to interact with other users.

THE BUSINESS ENGINE AND REPEATABLE OPERATIONS

Every business goes through three stages:

Creating the engine: Early stage, figuring out the set of repeatable operations it needs to do to create value.

Oiling the engine: Rapid testing and iterating to refine and optimize the repeatable operations

Stepping on the gas: Scaling by repeating the repeatable operations

THREE APPROACHES TO BUILDING A BUSINESS

So this is the formula for building a business. You figure out how you are creating value. You identify a set of operations that repeatedly create value. You figure out a way to efficiently conduct these operations repeatedly.

There are three broad ways that businesses conduct these operations repeatedly and get things done:

  1. Get employees to do the work
  2. Get algorithms to do the work
  3. Get users to do the work

Let’s think through the problem of navigating the web for the most relevant information for the day. Three companies try to solve this in three very different ways:

Yahoo: A bunch of editors decide the best content for the day

Google News: Algorithms decide the top news of the day

Twitter: Users’ tweets and retweets decide the top news of the day.

For those of us who read the earlier article on the three broad models for problem-solving, here’s the interesting part. These three approaches correspond exactly with the three models for problem solving.

A brief recap of the three approaches to problem solving

The ‘stuff’ approach: How can we create more stuff whenever the problem crops up?

The ‘optimization’ approach: How can we better distribute the stuff already created to minimize waste?

The ‘platform’ approach: How can we redefine ‘stuff’ and find new ways of solving the same problem?

Essentially, the three approaches to building a business now are:

The ‘stuff’ approach: Get employees to do the work

The ‘optimization’ approach: Get algorithms to do the work

The ‘platform’ approach: Get users to do the work

Depending on which approach you take, the way you build your company could vary significantly.

A platform thinking approach to building a business involves figuring out ways by which an external ecosystem of developers and users can be leveraged to create value. The iPhone app store does this, YouTube does this, and so does Wikipedia.

UNDERSTANDING REPEATABLE OPERATIONS

It’s important to note that we are talking about repeatable operations. Writing code is not a repeatable operation. It is a one-time infrastructural activity, similar to building out the assembly line or setting up the factory. The operations that the code automates (e.g. login management) are the repeatable operations.

WHY ECOSYSTEMS, NOT ALGORITHMS, ARE YOUR COMPETITIVE ADVANTAGE

Most problems that could be fully automated are already automated today. The next level of scale will come not by automating alone (and letting algorithms alone do the work) but by leveraging an ecosystem ( and letting algorithms synchronize disparate actions).

There are very few companies that compete purely on the strength of algorithms. Google is a rare example of a company whose competitive advantage lies in a set of very complex algorithms that it fiercely protects. Facebook, Twitter, YouTube etc. compete not on the strength of their algorithms but on the strength of their ecosystems. The algorithms are easily replicable but the ecosystems aren’t. Hence, building a business where the ecosystem scales the value creating operations is quite different from building a technology-only company.

PLATFORM THINKING AND SCALE CONSIDERATIONS

Scale is achieved by making repeatable processes more efficient (faster/cheaper) and effective (accurate).

One of the ways to infuse platform thinking into your business is to look at a problem that is being solved manually, and repeatedly, and see if it can be solved by external users instead.

Facebook realized that it would have to translate its interface for every new foreign language. The norm was to do it with an in-house or outsourced translation team. Facebook chose to crowdsource it, building not just a more scalable model, but in many cases, better translations as well.

This is also demonstrated in the evolution of an online community. Quora started off with employees asking questions and answering them. Over time, it transitioned both these activities from the employees to the users.

The problem that comes with this, of course, is that you let out control and with that you need to build in checks and balances to ensure that no one is gaming the system. Quora and Reddit offer good examples of bringing in these checks and balances and scaling them along with the community.

THE THREE QUESTIONS FRAMEWORK

What are the repeated chunks of work in my business?

The first part involves identifying the activities that need to be repeated to scale and expand the business.

Who is doing the work today? 

Secondly, is the work being done manually or algorithmically? If so, can we bring in greater efficiencies (speed) or effectiveness (accuracy) by leveraging an ecosystem?

How can we get someone else to do that work? 

Finally, users,  like employees, need incentives. Fitting in the right organic and inorganic incentives forms an important part of relying on an external ecosystem to build value.

This article was originally published on Sangeet Paul Choudary’s personal blog Platform Thinking – A blog about building early stage ventures from an idea to a business, and mitigating execution risk.

Image source: Flickr/Creative Commons

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Growth = Engagement: A product design principle you can’t ignore

Newly launched startups love to see their traffic and sign-up stats grow. Growth, after all, is opium for a startup fresh out of the door, and frequent refreshes of the sign-up logs are the happiest pastime for entrepreneurs.

Startups often tend to think of growth and engagement as two unrelated divorced concepts. In reality, nothing could be farther from the truth.

Startups that focus on growth, completely divorced of engagement, are often the invite-spam startups. With number of signed up users as the only metric for success, these startups pursue growth single-mindedly, get their k-factor and viral cycle time in order and hit the desired user numbers.

However, they often fail to focus adequately on engagement and in an age where there is no dearth of choice, lose all (or most of) the users that they acquired in the first place.

A PLATFORM THINKING APPROACH TO GROWTH

In the age of social products, every engaged user is a potential distributor of the product.

Growth and engagement feed each other. Startups that focus on engagement, invariably, realize that good engagement leads to good growth.

Every time a user engages with your platform, she is offering to be an evangelist for it. The onus is on the startup to leverage the user’s engagement on the platform for its growth needs.

In this context, I’ve written earlier about how producers/creators drive organic growth for user-contribution platforms. I’ve also written about how users are your new SEO team.

A SIMPLE HACK AS AN EXAMPLE A.K.A. GROWTH = ENGAGEMENT (Tweet This)

Here’s a screenshot of the answer creation box on Quora. Notice anything interesting?

In case you didn’t, the one after it offers another clue, a much easier one this time around.

It’s a screenshot from Quibb, an invite-only social network.

 

Well, here’s the thing, and the Quibb screenshot demonstrates this well. Every time a user clicks on Save, she creates something and that potentially starts off an engagement loop on the product.

But if the user also checks the ‘Tweet’ box, she’s potentially starting a growth loop as well.

If you just post, you’re feeding engagement. If you click that box, you’re entering the growth loop as well.

There, that was simple enough! Growth can, in many ways, be just one click away from engagement.

The power of platform thinking is in the fact that users are now the new product marketers. The more you engage them, the more growth opportunities they present you with.The more you con them into sending out ‘frictionless’ invites, the less likely are they to bring you any sustainable growth.

DESIGN PRINCIPLES FOR GROWTH = ENGAGEMENT

(Tweet This)

Here’s a quick and dirty framework to think through growth in the context of building engagement.

1. FOR EVERY USER ACTION, IS THERE A MOTIVATION TO SPREAD THE WORD ON EXTERNAL NETWORKS?

In the case of Quora and Quibb above, the user is likely to want a broader audience (and especially her immediate network) for the content she created. Motivation is key here. Motivation works especially well for self-promotion platforms like KickStarter and Change.Org. But even platforms that are not solely for self-promotion can play on a user’s interest in getting the word out.

2. HOW CAN WE PROVIDE USERS WITH THE TOOLS TO MAKE THIS A ONE-CLICK EXPERIENCE?

One-click is key here. The engagement to growth transition should be as seamless as possible. The user should be required to invest minimum effort. This is exactly the reason I showcase the examples above. The user doesn’t have to go through a new follow, it is not an afterthought to the content creation, there is no additional pitch to the user to get the word out. It is all incorporated seamlessly in one action. One-click is a very powerful design principle in general.

3. HOW CAN WE ENCOURAGE SUCH BEHAVIOR FOR USERS?

For all the motivation that users may have, they may not start doing this right away. It is unto the platform owner to encourage the user to start doing this. Quibb ‘encourages’ users by often retweeting the tweets that users send from Quibb and giving them a bigger audience. Slideshare actually ties the success of your uploaded presentation to your ability to have it be shared on different networks.

4. IF GROWTH IS A PRIORITY, REMOVE THE CLUTTER!

This is where Quibb, in the screenshot above, does a better job than Quora. The interface on Quora is too cluttered and one is likely to miss the checkboxes in the middle of everything else. On Quibb, it’s fairly simple: You can feed engagement, but we also give you the option of feeding growth! Up and center!

Engagement is the most sustainable growth strategy. Creating real engagement and creating opportunities for engaged users to get the word out is the best way to sustainable growth.

This blog was first published at Plaformed.info

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A Platform Thinking Approach to Problem Solving

Business is about solving customer problems. It’s been claimed that business is primarily about beating the competition or about maximizing shareholder returns but if the successes (and failures) of the past decade are anything to go by, the primary goal of business is solving customer problems. If you think about the approach that businesses take to solving these problems, three broad patterns emerge.

THE ‘STUFF’ APPROACH

The approach of the industrial age to solving customer problems has been to create more stuff. If there’s a customer problem out there, you set up factories and build some stuff. And once consumers have got their needs satisfied but you’ve still got all this excess production capacity, you put in some marketing and convince consumers that they want more stuff. The default model for solving business problems has been the ‘stuff’ approach. If you’re dealing with goods, you’re churning out more goods while if you’re a services-based company, you’re putting more people on the job. The approach to scaling a solution has been creating more.

Most problems do not need to be solved by throwing stuff at them. Most problems are, actually, information problems. In reality, most problems are currently solved inefficiently because of a lack of information needed to make a decision. We’ve been solving problems by creating more stuff largely because we didn’t optimize distribution and access to the stuff that already existed.

THE ‘OPTIMIZATION’ APPROACH

Enter algorithms. You have stuff out there which is sub-optimally distributed. Here’s a two-step approach to solving the problem:

1. Aggregate all the information on the stuff out there

2. Leverage algorithms to optimally match the right stuff with a consumer’s desire

Google built one of the fastest growing companies of all time applying the optimization approach to the world’s information problem. Most internet businesses create value through optimization. Computer science, as a field of study, is itself based on solving optimization problems.

THE ‘PLATFORM’ APPROACH

Platform Thinking adds one more step to the optimization approach. Instead of merely aggregating information on stuff out there (Step 1 above), it enables creation of more inventory without creating more stuff. That sounds paradoxical but that is exactly what Twitter does to news. The media industry has a limited number of journalists. Twitter enables anyone out there to become a source of news without having to become a journalist. YouTube increases the inventory of content without setting up new media houses. eLance allows companies to get work done without having to hire people to do the job.

The ‘stuff’ approach creates supply, the ‘platform’ approach uncovers new sources of supply. The goal in this case is not only to optimize but also to redefine the input (inventory) that you are optimizing.

IN ESSENCE…

Every consumer problem out there can be solved in one of three ways:

The ‘stuff’ approach: How can we create more stuff whenever the problem crops up?

The ‘optimization’ approach: How can we better distribute the stuff already created to minimize waste?

The ‘platform’ approach: How can we redefine ‘stuff’ and find new ways of solving the same problem?

THE ACCOMMODATION PROBLEM

Problem: I’m traveling to city X and I need to end myself some accommodation.

The ‘stuff’ approach (Sheraton): Create more stuff. Build more hotels, set up more BnBs. If there are fewer rooms than tourists, buy some land, put up a  hotel and create more rooms.

The ‘optimization’ approach (Kayak): There are a lot of hotels out there but travelers do not necessarily have all the information to make the choice they want to. Let’s aggregate this inventory and create a reliable search engine. Let’s build review sites to help make the right decision.

The ‘platform’ approach (AirBnB): How can we redefine travelers’ accommodation? How about enabling anyone with a spare room and mattress to run their own BnB?

THE TRANSPORTATION PROBLEM

Problem: I need to figure out a reliable and safe way of getting from point A to point B whenever I want to.

The ‘stuff’ approach (GM, Toyota): Create more cars. The greater the number of people with this problem, the more cars you need to create.

The ‘optimization’ approach (Avis, Cab Aggregators): There are many taxi operators but consumers aren’t aware of all the choices. Let’s create a search engine and help them figure the best route to their destination and the modes of public transport that will take them there.

The ‘platform’ approach (Lyft, ZipCar, ZipRide): Let’s redefine the problem space. What if we drastically expand the number of cars available to choose from for commuting from point A to point B?

Interesting aside: Avis is acquiring ZipCar, announced a few minutes back.

THE COMPUTING PROBLEM

Problem: I need a mobile phone with all the bells and whistles but every mobile phone has a different feature set and I can’t figure the best one for myself.

The ‘stuff’ approach (Nokia): Create more phones and more models. Conduct your market research, figure out what consumers want, bucket them into groups and design new models for these groups.

The ‘optimization’ approach (Comparison shopping): There are a lot of phones out there. Why don’t you enter your parameters and we will spew out the best phone models that satisfy your needs.

The ‘platform’ approach (Apple): Let’s rethink the phone. We can’t build everything. What if we just built out the tools that others could use to build apps that consumers could then use to extend the functionality of their phone?

THE NEWS PROBLEM

Problem: I need to know about what’s happening around the world.

The ‘stuff’ approach (NY Times): Put more journalists on the job, churn out more content and get the news out to more channels.

The ‘optimization’ approach (Google News): Rank news stories and serve readers with the matches closest to what they’re looking for.

The ‘platform’ approach (Twitter): Redefine the journalist. Everyone can create and distribute news now.

CHALLENGES

The platform approach is new. Much of this problem solving has come up only in the last five years and few solutions have demonstrated the kind of success that the ‘stuff’ approach and the ‘optimization’ approach have. Hence, one might be tempted to dismiss this as a fad.

While execution challenges continue to exist, they are, by all means, solvable.

Inventory: When you redefine inventory as AirBnB or oDesk does, you need to ensure you have a clear strategy for encouraging users to create the inventory. This often leads to a chicken and egg problem as producers won’t create inventory unless there’s a ready market of consumers and consumers won’t participate without inventory to consume. I’ve written a lot about how to solve this problem in earlier posts.

Quality: When an entirely new set of producers gets created, quality control can be a problem. Platforms need to have robust quality control mechanisms to separate the good from the bad.

External forces: We need new regulations for these new models. Über has already had problems with regulations. We need to solve for trust in the virtual world. Airbnb has already come under the scanner on this count.

Platforms, though, are here to stay and redefine the way business is conducted.

Wish you all a successful 2013! More power to you and your business as you leverage the power of platforms to change the world!

This blog was first published at Plaformed.info

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Destination Vs. Distribution: Why your Product should be where your users are!

User acquisition is a prerequisite to startup success. Startups often see user acquisition as an act of sourcing traffic to a destination and converting traffic to users.

Almost every web business has a destination: a website, an app etc. The destination is often seen as the product in its entirety. Talk to a startup about their product and they will often think of it as a website or an app that the user goes to.

However, the destination is just one manifestation of the product.

DESTINATION VS. DISTRIBUTION

An internet service can be delivered to users in two broad ways. It’s often important to think through both the routes to figure out how your user will best interact with your service. The two modes are characterized as follows:

Destination: How do the users get to where the product is?

Distribution: How does the product get to where the users are?

Any service can be delivered as a combination of these two.

DESTINATIONS

What are they? 

Destinations are the online address of the product that users remember and visit.

Manifestations?

Most common forms of destinations are websites, mobile apps and downloaded software (that syncs with the cloud).

Important because…

This is the go-to place for users to interact with the product. Whenever you think of Facebook, you have a site or an app to go to to use the product.

But…

  • Destinations are not always available in the context of the users. For example, Flickr is a great photo hosting service but it wasn’t available at the point of photo capture for a long time. A user had to click a picture and then undertake another series of actions to upload the picture on to Flickr.com. In contrast, Instagram’s service could be accessed right at the time of photo capture.
  • Destinations, by definition, require users to come to where the product is and this brings with it the challenge of user acquisition.

DISTRIBUTION

What are they? 

Distribution delivers product functionalities in the context of the user making it easy for the user to interact with the product.

Manifestations?

Most common forms of distribution include widgets (Yelp), code embeds (Quora, YouTube), API provisioning , browser extensions as well as apps (especially apps that deliver you a feed from a product, for consumption).

Important because…

  • The product is available where the users are. Hence, it helps direct traffic back to the destination. Yelp used widgets very effectively to gain users by allowing users to showcase widgets on their blog. YouTube gained traction by allowing users to embed videos on their MySpace profile and directing traffic back to the destination. Flickr, similarly, gained traction by allowing users to embed pictures in their blog posts.
  • The product is available in the context of the user. This is especially true in the case of ‘curation as creation’ tools like ScoopIt. ScoopIt allows anyone to create a magazine by combining a set of links. The creator can either create the magazine by visiting the ScoopIt destination and manually adding all the links to the magazine or she can install a browser extension that plucks the web page she is visiting and adds it to the magazine. In the second case, the user never needs to leave her context to use the product. Evernote uses a similar extension. Social sharing buttons work on a similar dynamic and allow the user to share content without having to visit the actual social media destination.
  • Distribution helps engage the user and encourage repeat visits. Email updates have been used since the early days of the web to bring back users to the destination. In recent times, this tactic worked especially well for Groupon.

But…

More often than not, distribution is limited to certain functionalities. A news feed delivered to the user or a browser extension to capture a web page exhibit only a slice of the functionality that the product offers. However, that is the exact slice of functionality that is needed in the context of the user.

THE OVERLAP

Ultimately, destination and distribution are determined not by their physical manifestations (although that helps understand the difference) but by the use case.

Destination requires the user to move into the context of the product. Distribution enables the user to use the product in his active context.

While the two are different, there is an overlap between the two as well. For example, the Instagram app acts as a destination in consumption mode where a user can view photos and participate in discussions but it also fits into the context of the user (using the phone as a camera) in production mode. An offline downloaded software (e.g. Dropbox, Evernote)  that syncs with the cloud serves as a destination (user specifically opens a software and uses the product within that context) as well as distribution (the native context of the product is geared towards online usage but the offline piece fits into the user context who might not have access to the internet at that point.

As shown by these examples, the manifestations overlap but the use cases are different. Hence, it is important to think through possible use cases and identify usage contexts where a destination makes more sense than distribution or vice versa.

In summary, when planning an internet product, it is important to consider the mix of Distribution and Destination that it requires:

  1. List out the use cases. How will the user use it in production mode? How will she use it in consumption mode? It helps to separate the production and consumption modes because user contexts are very different in the two modes.
  2. Are any of the use cases best satisfied in the existing context of the user?
  3. For every action, are you making the user do extra work by coming to a destination?
  4. Can Distribution direct traffic to Destination?

Often, distribution can be the difference between a product that is convenient and engaging and a product that is difficult to use.

How have you split your product across distribution and destination? If you haven’t do you feel some distribution touch points could help improve product usage?

The post first appeared on platformed.info
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How to Build a Great Product by Removing Barriers to Usage

Product creators often tend to think of products in terms of features. I’m not talking about the traditional myth of “more features is better” that got debunked a long time back. Product creators still think of features because they try to deliver a certain functionality. Instead, a product should actually be visualized as an answer to a pain point. Users don’t use products because they need certain features. Users use products because they have been trying to do something but were facing a barrier while doing it so far and the product helps lower the barrier.

A pain point can often be stated in the following terms:

I am a <USER DESCRIPTION>

Trying to <DO XYZ>

But I’m unable to do so because of <A BARRIER>

Products that lower (or completely remove) the barrier to getting something done tend to create entirely new market segments that had never existed earlier.

The Skill Barrier

Lack of skills is one of the biggest barriers to getting something done. We hire the carpenter, plumber etc. to get stuff sorted owing to the skill barrier. Products that help ‘unskilled’ users do something they couldn’t have done before break the skill barrier and open up a new segment of users.

WYSIWYG website creators and editors enable creation of landing pages and websites without the need to know HTML. WYSIWYG editors help non-coders launch landing pages with little effort and create a new market in the process.

Instagram lowers the skill barrier required to create arty pictures that earlier required photoshop prowess.

In all such cases, the lower barriers lead to greater adoption than would have come through direct competition. A me-too Photoshop competitor, even if it was free, would never have gained the adoption that Instagram did.

The Time/Effort Barrier

People are strapped for time. A value proposition based around time savings or lower effort is an attractive one. Bloggers needed to invest time and effort to write posts that would stand out. Twitter brings down that barrier and allows publishing with very low investment of time and effort. Since everyone has the 140 character limit and given how democratic the real time feed is, there is no humungous effort required to stand out anymore.

Another common theme that disrupts the time/effort barrier is aggregation. Platforms that aggregate multiple providers often provide a compelling value proposition as a one-stop entry point. In the early days of the web, Yahoo provided value as the home page of the web. As the web grew and portal-based navigation grew clumsier, Google emerged as the one-stop solution to accessing anything on the web. Meta search engines (e.g. Adioso) act as the one-stop entry point and allow a user to search across multiple providers, thus drastically reducing the time to get her job done.


The Money Barrier

Online services are increasingly trying Freemium offering a basic level for free to the more amateur producers with limited needs. These tools were only available for a fee earlier. Having them available for free creates an entirely new market. Users from the existing market also deflect towards a free alternative. Over time, some of them migrate to a paid tier. While lower price has never been a sustainable competitive advantage, completely free has the potential to disrupt an existing market.

Unbundling is another way the internet brings down the money barrier. Music was traditionally sold as albums. Users would have to buy an entire album even though they liked only 1-2 songs in it. iTunes disrupted this market by allowing per-song billing. In doing so, it made the market a lot more efficient and consumers who would ordinarily not have purchased an entire album to get a particular song also ended up buying the song.

The Resource Barrier

Let’s take an example closer home. Entrepreneurship has become mainstream like never before. There are several reasons that contribute to this phenomenon but one of the most important is the drastic reduction in the resources required to get a company up and running. One of the many contributors to this change is the rise of Amazon Web Services which lowered the resources and upfront investment required to get your service up and running. While a startup would have had to get a minimum level of infrastructure upfront earlier, it can now dip into Amazon’s vast resources on-demand.

The Access Barrier

Platforms often disrupt gatekeepers by allowing producers direct access to potential consumers.

Most media businesses (publishing, performing arts etc.) are industries with gatekeepers determining which producers get market access. Platforms like Amazon Kindle Publishing, YouTube, CDBaby disrupted these industries to varying degrees by allowing producers direct access to a market of consumers tho whom they could market themselves.

This applies equally well to marketplaces. The long tail of sellers on online marketplaces wouldn’t have existed in the real world as they wouldn’t have had access to the niche market that would be interested in their product. eBay created a large segment of sellers which never existed previously by lowering he access barrier.

The investment community (angel investors, VCs etc.) is not necessarily an equal-access community and the right connections and introductions can open many doors that would otherwise not have existed. Kickstarter seeks to democratize access to investment by allowing anyone to set up a project, state funding requirements and raise money online.

These examples repeatedly demonstrate the fact that lowering barriers to get something done creates new markets for the product. Competition on the internet is no longer about fighting tooth and nail over price or features as was the case with traditional businesses. In today’s age, competition is about offering a value proposition that is offered by no one else and creating an entirely new market of consumers who had a latent need but no readily available solution to solve that need. Companies that do this effectively win.

The post first appeared on platformed.info