Interim Executive Tips: Products with Network Effects
Follow interim executive tips to leverage products with network effects just like Facebook, eBay, and Airbnb.
Interim executive tips to grow your platform, product or service.
Understanding network effects
You buy a toothbrush and use it to clean your teeth. Since that’s what you bought it for, you’ve got the value you paid for. Most products are like that. But in the past decade, a new kind is taking over whose value actually increases as the number of people using it grows. Otherwise known as network effects.
Facebook, Airbnb, Uber, and eBay are popular examples of companies that have only gotten more powerful and useful as their user base has grown. It is not to be confused with growth as that does not always translate into a larger network.
Focus on engagement
In the quest to grow quickly, businesses can often lose touch with their existing user base. That isn’t good. Before branching out to new markets and cities, focus on increasing engagement from the people already using your product or service.
“If you didn’t focus on engagement in the early days, you could end up growing too quickly and lose your older user base,” says Anu Hariharan, Partner at Y Combinator’s Continuity Fund. “And therefore you’re not really focusing on product and improvements that help the overall network… It’s very important to focus on as you grow, how strong your engagement is and how much are your existing users willing to use your service more and more.”
Interim executive tips: Have an entry strategy
Sometimes the best way to grow your network is to use other networks. Integration with social media apps and platforms is great for getting your product out there. Focus on what makes users tweet or share your product. That just might be your ‘something-special’.