How To Build A Massively Scalable Social Network - Start With a Tool

August 4, 2015 in Essays

One of the most popular posts we wrote for the SparkPage blog was a profile of 5 big social networks that started life as a tool.

It’s a long read, but worth checking out. I thought it would be useful here to summarise the key business insights that entrepreneurs can take from those case studies and apply them to their startup.

Utility First, Network Later

Instagram, Spotify and Imgur were three of the companies we profiled. They all have massive communities and social networks now, but very few of them started with any “social networking” functionality.

Instagram was mostly a tool for adding cool filters to make your amateur photos look professional.

Instagram's reputation system - added years after launch

Instagram’s reputation system - added years after launch

Imgur had no comments, no upvotes, no profiles. But when the founder launched he said that it had “neat things like crop, resize, rotate, and compression from 10–100″

What they did first was offer a tool with a clear value proposition in “single player mode”.

Spotify offered any song in the world at your fingertips and that value was the same whether you were the 1st or the 100th of your friends to sign up.

Piggyback On Existing Networks

But there’s obviously huge advantage in having social elements in your app. What’s the point in taking an awesome food selfie if my friends can’t see it! (“food selfie” is a thing, right?)

So Instagram had “Share on Facebook” “Share on Twitter” options, and they were the key growth drivers. Imgur was built as an image sharing site for Reddit (see “My Gift to Reddit”). Airbnb hijacked the Craigslist network.

Instagram's explosive early growth

Instagram’s explosive early growth

There’s an obvious advantage to leveraging massive social networks, which is the reach they give you. But there’s a less obvious benefit you get in the focus it allows you:

  • It gives you clarity in your targeting. “We are building this tool for audience x” can help focus a lot of your decision making.
  • It lets you focus your resources on building an awesome tool, instead of trying to build a network at the same time.

Heck, even the actual social networks did this. Facebook piggybacked on real life social networks (college campuses) and Linkedin on companies and professional networks.

That’s why you often see so many “social networks for plumbers” type businesses fail, because there’s no underlying social network (whether digital or physical) for them to piggyback on.

Come For The Tool, Stay For The Network

This strategy isn’t just good to get you started, the tool is actually a lasting value proposition for most of these companies.

As Instagram’s Kevin Systrom said:

Photo sharing as a concept is relatively uninteresting as a sell. But processors are so fast now that we can do really cool things to your photos with the tap of a button. We can take that beautiful 5MP camera and turn it into a panoramic camera or a lofi 1980’s Polaroid.

Spotify say that social features like collaborative playlists and following friends are the features that deepen a user’s relationship with the app, but they still use the “tool” as the compelling proposition for new users.

The ability to stream unlimited music is always the thin end of the wedge.

Spotify user growth

Spotify acquires with a tool, upsells with a network

What’s Your Single Player Mode?

Hopefully that’s some good food for thought for those of you trying to build the next massive social platform:

  1. Focus on a single-player tool first
  2. Leverage existing networks
  3. Keep the single-player tool as the lasting value proposition

 

Keep Your Content Simple, Stupid

January 10, 2011 in Essays, Marketing

Gerard O’Neill recently pointed us to the ‘reading level’ feature in Google’s advanced search.

You can now use Google’s Advanced Search option to determine whether the content of a given blog or site has a reading level that is basic, intermediate or advanced. In the Reading Level menu select ‘annotate results with reading level’ and then enter the url of your preferred site in the ‘search within a site or domain’ box.

His post, titled “Where The Smart People Go,” showed a comparison of some of the reading levels of various Irish websites and the results were obvious – the more “high brow” or “niche intellectual” sites had a more advanced reading level than the sites with a more “mass market” audience.

Gerard found this search tool from Christopher Mims, who reviewed even more sites with varying reading levels.

Wired.com is “decidedly middlebrow”, but ieee.org is the “Smartest” of the lot.

The consensus seemed to be that an Advanced reading level made for a “smarter” blog.

I think the opposite is true. If you want to write posts that spread, surely a simpler writing style is better.

I did a few quick searches and the results for Seth Godin confirmed my hunch.

His blog is one of the most popular on the web. He riffs on very intelligent concepts and shares groundbreaking ideas, but less than 1% is at an “advanced” reading level.

He packages powerful ideas in simple, readable and share-able posts.

The lesson from Seth is that simpler content spreads.

And, as we all know – ideas that spread, win.

Charging Extra For 3D Is A Mistake

August 11, 2010 in Business, Economics, Essays

We all know that the music and movie industries have been crippled by the digital revolution of the last 10 years. Some blame piracy and filesharing, others (including me) blame the economics. Regardless of the cause, we can all still agree that these are two giant industries brought to their knees by the internet… right?

Wrong, actually! The recorded music industry has been decimated in the last five years, there’s no doubt about that, but the film industry has actually been booming. Despite all their complaining about piracy (you wouldn’t rob a car, would you?) the industry has been growing remarkably. Take a look at these figures published by the UK Film Council (found via TechDirt):

  • The core UK film industry has grown 50% over the last 10 years
  • UK box office takings at record levels, with growth of over 60% over 10 years
  • They have had a 500% return on their investments in film
  • More films are being released, up over 30% in the last decade
  • Independent films are performing quite well, taking in nearly half the revenue of major studio films

So why has the recorded music industry been decimated while the movie industry is thriving? The answer lies in the economics at work – specifically the economics of scarcity and abundance.

The internet has transformed the distribution of film and music. They were once both limited in supply (there’s only so many plastic discs in the world) but they are now in infinite supply online. One copy of a song or a film can be replicated (copied and pasted) a million times over at practically no cost. When supply becomes abundant like this, price will plummet towards zero.

This has happened across both industries. Independent musicians find it very hard to command any price for an MP3, so too do YouTube with their videos. Larger monopolies (Record labels and Film Studios) are struggling to maintain high prices on mainstream products, but the market is finding ways of bringing the price to it’s natural equilibrium (think Napster, Limwire et al).

So both of these industries have had core products – relatively scarce CDs and DVDs – transformed into infinite, digital goods. The important difference between the two has come from what they’ve done with the remaining scarce products in their arsenal.

If you’ve noticed me using the term “recorded music” instead of just “music industry” it’s for a reason. The music industry as a whole has been booming too, boosted mostly by live performances. Tickets to see your favorite musician live in concert are limited and scarce – so they can still command a price. The experience isn’t something easily replicated and it’s not something you can download on a filesharing network. Better still, the abundance of freely available music online has created more fans listening to more music made by more musicians than ever before, which in turn is creating more demand for live concerts.

I know this seems hard to believe, given all the sky-is-falling talk we hear from the industry – but even the PRS in the UK recently reported (PDF) that 2009 saw a 4.7% rise in the industry’s total revenue.

As for the movie industry, I don’t have any supporting data, but my guess is that this is the same effect we’re seeing in their record numbers. The internet is enabling more film makers to make more movies to be watched by more fans than ever before. The cinema is still providing a scarce, difficult-to-replicate service (big screen & popcorn and all that), and so it’s reaping the rewards of a population more “into” movies than ever before.

And It’s Egg Shaped

So maybe the future is bright for these two industries that seemed doomed since the advent of file sharing? Don’t bet on it!

The music industry, instead of recognizing the value of a scarce concert ticket and nurturing it as a growth industry, are crippling it. They’re treating it as a replacement for CD sales and hiking ticket prices to plug the gap in the numbers. This, it seems, is starting to have pretty disasterous effects. I won’t go into it in much detail, but there are plenty of reports this summer of hundreds of cancelled shows, of a dismal Live Nation investor presentation, and the Ticketmaster CEO blaming piracy for driving up ticket prices.

The movie industry are also faced with the same opportunity. With home theatres becoming more and more affordable, they risk loosing out on a major source of income as the theater experience becomes easily replicated at home. This is why so many people view innovations like 3D and IMAX as important parts of the future of the movie industry – because they help enhance the cinema’s attraction and stop the experience drifting into abundance.

So what are they doing to make sure 3D is as appealing as possible to keep people coming back to the theaters? Jacking up the prices on the tickets AND charging for the glasses, of course!

Eejits.

(P.S. I love terrible puns, so I really wanted to end the post by saying “If only 3D glasses helped stop such short-sitedness”)