Building communities, not just markets
Fri, Jun 9 2006

By Jonathan Oxer, IVT Technical Director


The traditional way of thinking about a website is that it's a communications medium that links the site owner to individual customers or prospects: a "one-to-many" relationship. Visualise a bicycle wheel, with the site owner at the center (the hub) and the relationships like spokes that radiate out to each customer individually.

In that scenario the site owner must build the customer base individually, one spoke at a time, and customers don't have any direct contact with each other. For them it's rather like being in a big empty shop with nobody else around - very isolating, and just a little bit spooky.

Something you'll notice about many of the mega-successful sites of the last couple of years is that they don't follow the traditional one-to-many relationship pattern: instead they act as enablers for relationships between end users, providing tools to help them interact rather than keep them separated. Their relationship model would look more like a bowl of spaghetti than a bicycle wheel!

Examples include Ebay, Amazon, LinkedIn, Gmail, Skype, MySpace, YouTube, Blogger, Yahoo!, and Flickr.

All of those sites use the power of community to build an ecosystem around them, very cleverly weaving in elements that cause the site to become more valuable and useful to individual users as more users join it. That provides incentive for users to act as self-appointed personal evangelists for the service, which in turn can cause exponential growth as each new member brings in their friends, family and business associates.

Not making sense yet? No problem, let's start by looking at a simple example. Skype is a service that lets you install a "software telephone" on your computer, and use it to call other Skype users free over the internet. That's not much use if nobody else has the Skype software installed though, so as people start using Skype they naturally tell people to download and install it so they can call them. Then as those people start using Skype they hook in their friends, and so on. It's a classic example of the value of a system increasing as more people join.

Using that approach Skype went from a standing start in 2003 to millions of members today. The exponential growth rate is quite obvious if you look at the figures: Skype hit 50,000 new registered users per day around August 2004, 100,000 per day in December 2004, and 150,000 per day in April 2005. That's over 100 new registered users per minute, sustained week after week! By June 2006 they have now had over 300 million downloads, and on average there are about 4 million Skype users logged in at any one time.

The advantages to signing up your friends to Skype are obvious and it's a natural application to build a community around, but the same principle is applied in different ways by many of the most successful sites in the world. Other obvious examples include social networking sites like LinkedIn, whose sole reason for existence is to put people in touch with other people.

So try to think of ways you can harness the power of your customer base to not just grow a contact database but also build a vibrant community. Give your users opportunities to interact, and give them incentives to get everyone they know also using your service. Do everything possible to make the value of your service proportional to the number of user's friends who are also using it.