Understand and implement strategies that can help you deliver value to each user and member of the community leading to network effects that unlock exponential growth and scale for your venture irrespective of the industry.

You have read multiple that achieving product-market fit (PMF) is often considered the holy grail. But then what? How do you unlock the next phase where you are growing exponentially and more creating an eco-system that allows you to do so sustainably?

The answer lies in incorporating community-led models in your growth initiatives. I sat with Nipun Goyal, CEO of LikeMinds to understand in detail the three-step framework that he designed that was a key component in the creation of India's biggest platform for Doctors. The framework had the following steps:

• Defined Single User Value Proposition
• Closed Loop Systems
• Virality and Network Effects.

Let's dive deep into each of these steps, utilizing real-world examples to illustrate their significance and execution.

Defined Single User Value Proposition

At the heart of every successful product lies a compelling value proposition that resonates with individual users. This proposition is the foundational layer upon which everything else is built. It answers a simple question: "What does this product offer me as an individual user?"

Single-user value is the value a user can experience without ever having to interact with another user while solving a problem or improving efficiency.

Dropbox exemplifies this principle brilliantly. In its early days, Dropbox solved a pressing problem for individual users: the need for a simple, reliable way to store files in the cloud and access them from anywhere. This convenience and reliability were enough to attract users, independent of any network effects.

Spotify took a similar approach but in the realm of music. It offered users an unparalleled music library with personalized discovery and playlists, catering to individual tastes from day one. This personalization made Spotify a must-have for music lovers, even without considering its social features.

These examples underscore the importance of a strong single-user value proposition. It's the hook that draws users in, based on the intrinsic value the product offers to them as individuals.

Closed Loop Systems

With a compelling value proposition in place, the next step is to enhance user engagement by creating a closed-loop system. This system encourages interaction and engagement with other users, expanding each user's social footprint within the platform. It's at this stage that the seeds of a community are sown.

Closed loop systems are the point in the journey of a product where a user while experiencing single-user value also gets to interact and engage with other users to increase their social footprint and interact with others to experience even more value from the product.

LinkedIn shines in this aspect. Beyond offering individual professionals a platform to showcase their skills and search for opportunities, LinkedIn incentivizes users to connect, engage in discussions, and join groups. This not only enriches the user's experience but also fosters a robust professional network.

Strava operates on a similar principle but targets athletes and fitness enthusiasts. It provides tools for users to track and analyze their workouts, set goals, and, crucially, share these achievements with others on the platform. The social aspects of Strava, such as competing on segments and participating in challenges, create a vibrant community of users motivating each other.

These platforms demonstrate how closed-loop systems can amplify the value a user derives from a product, not just from its core features but from engagement and interactions with others.

Virality and Network Effect

The pinnacle of the framework is achieved when the product's value proposition and the community's strength trigger a virality and network effect. This effect occurs when users, convinced of the product's value and engaged by its community, begin to bring in new users from their networks. The growth becomes organic and self-sustaining.

Virality and Network effects when in full motion, lead to users bringing in more users for the product itself with or without any kind of rewards or benefits to them. This is a user who absolutely loves the product and wants others to use it too.

Dropbox's referral program is a classic example of this phenomenon in action. Dropbox turned its user base into a powerful marketing force by offering extra storage space to both the referrer and the referee. The more people used Dropbox, the more useful and indispensable it became.

Spotify's collaborative playlists and social sharing features served a similar purpose, encouraging users to bring their friends onto the platform. As the user base grew, so did Spotify's data on listening habits, further refining its music recommendations for everyone.

These examples underscore the transformative power of virality and network effects. A product that reaches this stage has not only proven its value but has also cultivated a vibrant community that contributes to its growth.

How to Implement The Framework For Your Use Case?

While the framework is clear and comprehensive, we are breaking it down into further, more actionable steps to make the implementation easier. Let’s dig deeper and understand it with the example of Airbnb:

Step 1: Defined Single User Value Proposition

The single-user value proposition is the cornerstone of a product's appeal. It must be compelling enough to attract users based on its standalone features or benefits. To achieve this:

Identify a Clear Need: Understand the specific problems or needs your target users face. Airbnb identified a need for more personal, affordable lodging options compared to traditional hotels.

Offer a Unique Solution: Provide a solution that is distinct from existing offerings. Airbnb offers the ability to rent personal spaces like homes and apartments, providing a unique travel experience.

Ensure Ease of Use: The product should be accessible and easy to use from the outset. Airbnb focused on a simple, user-friendly interface that made browsing and booking spaces straightforward.

Step 2: Closed Loop Systems

After establishing a value proposition, the next step is to create systems that encourage ongoing engagement and interaction among users. This involves:

Encourage User Interaction: Implement features that promote user-to-user interaction within your platform. Airbnb introduced features like user reviews and host-guest messaging to build trust and engagement.

Personalize The Experience: Use data to tailor the user experience based on individual preferences and behaviors. Airbnb uses search history and previous bookings to recommend listings.

Foster a Sense of Community: Create avenues for users to feel part of a broader community. Airbnb’s experiences feature allows locals to host and share unique activities, further engaging travelers in the local culture.

Step 3: Virality and Network Effect

The ultimate goal is to reach a point where your product's growth is propelled by users themselves, through virality and network effects. This can be encouraged by:

Implement Referral Programs: Create incentives for users to invite others to the platform. Airbnb offers travel credits to both the referrer and the new user upon a completed booking.

Showcase Social Proof: Highlight user testimonials, reviews, and success stories to build trust and encourage new users to join. Airbnb prominently features reviews of hosts and listings.

Leverage Social Media: Encourage users to share their experiences on social media, effectively turning them into brand ambassadors. Airbnb users often share their unique lodging experiences, attracting attention from their networks.

Let's apply the same detailed breakdown to another successful business, Canva, to understand its journey through these steps.

1. Defined Single User Value Proposition

Identify a Clear Need: Canva recognized the need for an easy-to-use design tool that didn't require professional skills.

Offer a Unique Solution: It provided a drag-and-drop interface with access to thousands of templates, making graphic design accessible to everyone.

Ensure Ease of Use: The platform's intuitive design and tutorial content make it easy for new users to start creating designs immediately.

2. Closed Loop Systems

Encourage User Interaction: Canva enables collaboration by allowing users to share their designs with others and work on projects together in real time.

Personalize the Experience: The platform suggests templates and designs based on user activity and preferences.

Foster a Sense of Community: Canva has created a community platform where users can share their designs, offer feedback, and attend workshops to improve their skills.

3. Virality and Network Effect

Implement Referral Programs: Canva offers credits for free premium elements when users refer friends who sign up.

Showcase Social Proof: The site features designs created by users to showcase what’s possible with Canva, encouraging new users to try it for themselves.

Leverage Social Media: Users often share their Canva designs on social media, serving as organic endorsements for the platform’s capabilities.

By crafting each step of this framework, both Airbnb and Canva have not only met their users' needs but have also created self-sustaining ecosystems that continue to grow through the strength of their communities and the inherent value of their offerings. This detailed breakdown showcases the importance of a methodical approach in building a successful business model that can withstand the test of time and changing market dynamics.

Additional Examples

The three-step framework is not exclusive to tech giants; it's applicable across various sectors and scales. Here are more examples:

Instagram: Began as a simple photo-sharing app with appealing filters (single-user value proposition), then introduced features like Stories and direct messaging to deepen user interactions (closed loop systems), ultimately becoming a platform where users' sharing habits bring in new users (virality and network effect).

Slack: Started by offering teams a powerful communication tool (single-user value proposition), then utilized channels and integrations to make users' work lives simpler and more productive (closed loop systems), growing predominantly through word-of-mouth as teams invited other teams and individuals (virality and network effect).

Conclusion

The journey from a single-user value proposition through closed-loop systems to virality and network effects is a blueprint for building a successful and sustainable business. It emphasizes the importance of delivering undeniable value to individual users, fostering a community around this value, and then leveraging this community to fuel growth.

Dropbox, Spotify, LinkedIn, and Strava exemplify this approach, but they're far from the only ones. By understanding and applying this framework, startups can set themselves on a path to achieving product-market fit and beyond, creating products that users not only love but are eager to share.

If you are ready to start building communities in your app and unlock a similar level of growth, reach out to us to understand how we can help you launch communities with our Chat and Feed SDks in under 15 minutes.