Viral Growth: How PayPal, YouTube And StumbleUpon Gained Rapid Traction Through Piggybacking Networks grow best on top of other networks.

Sangeet Paul Choudary

ABOUT THE AUTHOR SANGEET PAUL CHOUDARY is the founder of Platformation Labs and the best-selling author of the books Platform Scale and Platform Revolution. He has been ranked as a leading global thinker for two consecutive years by Thinkers50, ranking among the top 30 emerging thinkers globally in 2016 (Thinkers50 Radar) and ranking among the top 50 thinkers of Indian origin in 2015 (Thinkers50 India). He is the co-chair of the MIT Platform Strategy Summit at the MIT Media Labs and an Entrepreneur-in-residence at INSEAD Business School. He is also an empaneled expert on the global advisory council for the World Economic Forum’s initiative on the Digital Transformation of Industries. His work has been featured as the Spotlight article on Harvard Business Review (April 2016 edition) and the themed Business Report of the MIT Technology Review (September 2015). As the founder of Platformation Labs, Sangeet is an advisor to leading executives globally. He is also an empaneled executive educator with Harvard Business School Publishing, and has advised the leadership of Fortune 500 firms, family-owned conglomerates, and key government bodies. He is frequently quoted and published in leading journals and media including the Harvard Business Review, MIT Technology Review, MIT Sloan Management Review.The Economist, The Wall Street Journal, WIRED Magazine, Forbes, Fortune, and others. Sangeet is a frequently sought after advisor to CXOs globally on the topic of digital transformation and also serves as a fellow at the Centre for Global Enterprise in New York. He is a frequent keynote speaker and has been invited to speak at leading global forums including the World Economic Forum’s Annual Meeting of the New Champions (Summer Davos), the WEF ASEAN Summit, and the G20 Summit 2014 events. Sangeet has a bachelors in computer science from IIT Kanpur and a masters in management from IIM Bangalore.

CONTRIBUTING AUTHORS

ABOUT PLATFORMATION LABS

Marshall Van Alstyne and Geoffrey Parker are contributing authors to the research published by Platformation Labs, including the books Platform Revolution (coauthors) and Platform Scale.

Platformation Labs is C-level executive advisory firm and think-tank, focused on the analysis and implementation of platform business models and network effects towards the digital transformation of industries. Platformation Labs has advised governments, Fortune 100 firms and high growth startups in 40+ countries across the Americas, Europe, Africa and Asia-Pacific. Our thought leadership and intellectual capital are commissioned and licensed by leading consulting firms globally and have been featured in leading global forums.

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 •

Make it shareable, not just on Facebook: Sharing has become synonymous with Facebook and Twitter, but the form of sharing that worked for YouTube and Flickr is just as effective today. In fact, users on Facebook are getting desensitized to the many app requests they keep getting bombarded with. Pinterest demonstrated that when it grew rapidly following the introduction of the “Pin It Forward” feature which allowed bloggers to share pins and have it shared further. Depending on the niche your product targets, using general purpose social networks like Facebook/Twitter to get the word out may or may not be a good idea, given the noise. If it isn’t, it pays to ensure that shareability is enabled in other contexts like blogs etc.

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Watch out for synergy: Synergy is critical to piggybacking. The user group that you want to target should be the primary users on the underlying network. The contexts of the two networks should be similar (e.g. it wouldn’t help to try seeding an open network piggybacking over a closed one).When Google launched Buzz, it tried piggybacking on Gmail by algorithmically creating Buzz’s social graph using Gmail’s address book. This was a disaster because the connections on a social graph are very different from the universe of email connections. In the end, Buzz never took off and actually rubbed some of its discredit onto Mail since Mail is a trusted application and Buzz’s auto-inclusion of a user’s contacts was almost seen as a breach of trust by users.

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Add value to the underlying network: Why else would users adopt something new?StumbleUpon helped new browser users discover new content. PayPal helped eBay users with instant payments. YouTube helped bands showcase their videos. Even Zynga and RockYou gave users on Facebook something to do with their friends.

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