If you've ever Googled stock information, you've probably heard the name Seeking Alpha. It's an independent company that provides investment insights based on crowd-sourced information. The company is profitable, and hasn't raised capital in over a decade--all with no marketing team.
There's a common issue with crowd-sourcing: If your startup depends on public input, you have a problem. You need people for your platform to have any value, but without value, guess what you won't have any of? People.
No one is going to join a platform that's a ghost town. Without anyone joining, it won't stop being a ghost town. Catch 22.
Every single social startup experiences this. If you're crowd-sourcing maps, then you need people to join the app for there to be any navigation. If there's no navigation, why would anyone join? Same goes for photos. Nothing to view, no reason to join. No reason to join, nothing to view.
I want to use Seeking Alpha as a case study, because it's one of the rare companies that's been able to crack the code--and it can be a blueprint for your own startup. If you analyze its growth, you'll find a few ingredients that together make up a recipe for success: out-of-the-box value so users are not dependent on other users in order to join, a built-in incentive to keep users happy and engaged, and networks effects to ensure that the platform reaches critical mass.
Let's take the maps example. Yes, if there are no users, there is no navigation, which means no one is joining. But what if the app gives you some basic turn-by-turn navigation even without users?
That would attract some users, which would add another layer of crowd-sourced data, which would then bring more users. If the app gives some real value out of the box, which is only magnified when more users join, you can break the cycle.
Seeking Alpha began by curating investment insights--not from industry analysts or journalists, but from investors who were actually buying and selling stocks. The traders got more distribution for their content, Seeking Alpha got its out-of-the box value, and readers gained access to non-traditional insights.
Once you have initial value, you can prompt a never-ending cycle. The more users you have, the more people will want to join.
In Seeking Alpha's case, the company brought the people and their content to the platform by incentivizing them, which then brought in more traders, which ultimately brought in more readers, which then brought in more contributors.
But it goes even deeper than that. At the time, there was plenty of stock advice elsewhere on the internet--mostly in blog form--but it wasn't getting read, because it wasn't being tagged and organized effectively. Seeking Alpha's platform gave these bloggers a natural leg up without additional exposure--a built-in incentive.
Any trader or analyst who joined the platform found a huge spike in both readers and engagement. That kept them around.
Once you figure out a way to bring in the initial users, the next question is scale. How do you bring in more, many more, and eventually hit critical mass?
I talked with Seeking Alpha's founder, David Jackson, who told me that as his platform took off, traders started closing their own blogs and only posting on his website. There was more engagement on the bigger platform.
As the platform gained readers, more traders felt incentive to contribute--and each new contributor brought his or her already-existing audience to the table. The users became ambassadors--which is something you can do with your startup, too.
By providing real tangible value to your user base, you increase their delight, which then means they bring their friends, and everyone wins. You've created a network effect.
Replicating the Strategy for Your Own Startup
The most important lesson for you, as an entrepreneur, is to examine the pattern, adopt the strategy, and implement the tactics of cracking the issue of users depending on value and value depending on users.
Ask yourself: Why would any users join my platform? What is that out-of-the-box value for them? If there is none, create some.
Once you come up with a reason for people to join, the next question is: How do you keep them around by building an incentive into the product? What's the gain for users if they stick around?
Finally, once you have the solution to getting users and retaining them, the million dollar question is: How do you provide those users so much goodness, that they are inclined to do your job for you, and bring their friends along for the ride?
If you can answer all three questions, you'll be well on your way to success.