Is it with users as with money? The first million is the hardest
Some people say earning the first million is the hardest. Is that also true in attracting the first million users to a digital platform? Attracting users to your app and platform is hard work, but its vital for a successful commercialization. But how do you entice users to exactly your platform, without having to spend every penny of your scarce funds on marketing? This is what we aim to learn entrepreneurial spirits in the seventh StartupTalk at PreSeed Academy. Heini Zachariassen will share how he and his co-founders at Vivino managed to reach 32M users worldwide. On the contrary Morten Møgelmose, CEO and co-founder of Zliide, is where Vivino was 7–8 years ago. He will let us in on what you do at the very early days, when you’re still in the process of finding an effective approach to getting users on board.
Behold the power of the users
It’s rather easy to name-drop a few successful platforms with millions, some even billions, of users in a heartbeat. Vivino is one. To many Facebook, Tinder, Airbnb or YouTube are maybe even more obvious examples. Common for those platforms are that they gain their strength in their massive userbase. The platforms are worth nothing more than a second-page search result on Google, if we subtract the numerous users from the equation.
The issue isn’t building a useful platform, maybe linked with an app. That can pretty much be done overnight. Obviously, the features are important, but the traction and number of users hold the greatest power in building and successfully scaling a platform business. In that matter building a platform doesn’t differ radically from any other startup — as Thor Angelo, CEO at OrderYOYO (former co-founder in LanguageWire) previously said at PreSeed Academy about starting a business:“Go get five customers”. Their feedback is crucial for a startup to test, adjust, pivot and build the business until the ‘suddenly’ nail it. And they’ll know they nailed it when they not only have customers, but can also retain them. Actually, retention is all startups need to care about for a long time according to co-founder at Roger.Ai Cathrine Andersen (former co-founder of Canvasdropr).
Yet in building a platform there is additionally layers to the crucial role of users or customers. One thing is especially key in gaining that competitive edge — the network effect: With a critical mass of users a platform tends to gain organic popularity and more importantly integrity along with a growing userbase. The reliability of a wine review on Vivino grows correspondingly to the number of independent reviews. It’s significantly more attractive to book accommodation on Airbnb when there is a wide range of users renting out their place and the trust in them relies heavily on the number of (positive) reviews. Just as there is no fun in a social platform if there’s no user to generate content and interaction.
Is it only a numbers game?
However, startups need to be on the tip of their toes to keep the users coming and not least coming back to their apps and platforms. Otherwise the commercial potential is pretty much zero. Yet that edge is about more than quantity. We all know data is an unavoidable topic these days. The knowledge you can gain from users is key to a great commercialization potential in startups building a platform (with all due respect to GDPR). The pain is that it comes back to the buildup of a critical mass. Data from five users hold little business potential in itself. But you got to start somewhere, which is exactly where the young and promising startup Zliide is at right now.
CEO Morten Møgelmose have created a technology that can put some present-day data into the good old bricks-and-mortar of conventional retail-clothing stores. And God knows they need it with Amazon and the entire e-commerce business taking over the market. Up until now, physical stores have lacked the competitive advantages of web shops, where customers can buy the newest must-have items the second, they see them on e.g. Instagram. Simultaneously the webshops have access to data about their customers’ shopping behavior in a way physical stores have had no opportunity of gaining. With Zliide’s technology the customer is able to pay for an item through the Zliide app, which releases the Zliide alarm tag on the piece of clothing and the customer can leave the shop without waiting in line at the register. Equally important users can make wish-lists and follow friends or influencers to be inspired by their choices. Finally, they get recommendations based on users with similar shopping behavior. Finally, if customers change their mind on an item they didn’t buy, the app saves what they’ve looked at so they can still buy it back home on the couch. Meanwhile the store is able to see not only what the customer has purchased, and what their purchase history is, but also what other items the customer dream of having in their closet. That way the team at Zliide aims to bridge the physical and online shopping experience both for the customers and the conventional clothing stores. To succeed in that, they’re building a solution where they have to juggle quite a few products and features all at once — a new type of alarm tag to attach on clothing in stores, an app and a platform in the center of it all. They are currently running their first big test in an actual store and getting their very first chunk of users on board, which is exactly where the real business potential is. The more users they can show off, the better chance they have for successfully securing the absolute necessary partnerships with retailers. Without retailers there isn’t really any platform, but without users there isn’t really any business for the retailers.
The big question of the hen and the egg
That limbo of needing users to get retailers and needing retailers to get users is a challenge Vivino found their own clever way of tackling. Heini Zachariassen and his co-founder Theis Søndergaard started off launching a wine app, where users through photo recognition could scan wine labels and rate the wine, see how others rated it, find out where to buy it and gain knowledge about the producer. They managed to create a solution that actual attracted users establishing a wide global network of wine lovers. And because of the mass of users, they could subsequently leverage the power of the user data to attract wine merchants to a market platform connected to the app. The users could then actually buy the wines they liked directly through Vivino, and wine merchants could access users in a whole new way. Vivino is the world’s biggest online wine community with more than 32M users, which makes it quite an attractive business case for wine merchants. With Vivino, wine lovers can get recommendations suited to their personal taste profile due to Vivino’s access to their data and use of machine learning. Just as wine merchants can push their wines in a much more targeted way. Vivino brought the previously ‘handheld’ wine market into a new technological era. Traditionally wine lovers were entirely dependent on recommendations from sommeliers, salespersons or professional ratings in e.g. magazines.
As such, Vivino and Zliide is at opposite ends of the same journey empowering a ‘handheld’ retail business to enter a new technological era. At either end it’s evident that reaching a critical mass of users is important for success, just as it is to maintain an updated and interesting platform for securing user retention. Succeeding in both are easier said than done. While it can be inspiring as well as enlightening to learn from a founder like Heini Zachariassen who’ve managed to build a platform with millions of users from the ground up, it can also be intimidating how to reach that point. Therefore, Morten Møgelmose, co-founder and CEO at Zliide will join Heini on stage at PreSeed Academy November 5th to let us in on what you do when you’ve only just set sails and how do you even get started, in order to attract the first users to your platform. If you’re curious to hear what the two gentleman has to say, make sure to secure a seat now, as seats are limited.