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AGLOCO - Aiming for the Tipping Point - 3 Things to keep in mind

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The first thought that came to my mind when I saw a mail from AGLOCO in my mail box today about their target to reach 10 Mn users on their network by end June 2007 was the 'Netork Effect'.

Wikipedia defines Network Effect as,

The network effect is a characteristic that causes a good or service to have a value to a potential customer dependent on the number of customers already owning that good or using that service. One consequence of a network effect is that the purchase of a good by one individual indirectly benefits others who own the good - for example by purchasing a telephone a person makes other telephones more useful. This type of side-effect in a transaction is known as an externality in economics, and externalities arising from network effects are known as network externalities. The resulting bandwagon effect is an example of a positive feedback

If I were to summarize the key points of Network Effects, they would be
  1. The service or product that the members of the network use must be dependent on each other for the effect to be most pronounced. For example a person entering a network of mobile users will be benefited (possibly by lower call rates) if his network is large enough.
  2. In some instances the effect is true is not visible very clearly. For example if you consider a software product/platform like say Linux, the more the number of users enter the system the better the products and more the value to the entire network - which is probably the reason for it to lag behind Windows.
  3. In any case one of the important drivers of the network effect is the entry of a new subscriber into a network inherently adding to the 'value' of the network. This is probably also one of the main motivators for a new entrant into the network.
  4. If the network grows it would reach a point where the sheer size of the network (proxy for the value of the network elements) will influence decisions of both persons on and off the network one can say it has probably reached its tipping point

Now if you try to apply this theory to AGLOCO it appears to me that the value of the network today is purely notional. The 'n' number of users of AGLOCO literally dont have any value to offer to me as a new entrant. Yes when the ViewBar is ready, the 'advertisers' would see it as an opportunity to reach out to these 'n' users. Once this happens the users start seeing a value in joining the network as they can make money out of it.

With the ViewBar taking 7-10 weeks to come out, I believe that it might be very difficult for AGLOCO to reach its aggressive target unless they keep an eye on the following,
  1. There might be a initial rush of subscribers into the network, which is normal in any new offering but I firmly believe that AGLOCO should not forget to retain the enthusiasm and momentum going of the people who are already on the network.
  2. The network in its initial stages (with a lot of silent subscribers - AGLOCO could only list 2 in its entire list in its email !) and no amount of external marketing is equivalent to coupling it with marketing the growth story to the current subscribers.
  3. Give me something different for supporting you in your Beta efforts - getting the first million is always the toughest - be it hard cash or subscribers

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