Lesson: Consumer Growth with Jim Scheinman

Step #10 Ecosystem: Context is a source of growth

One of the ways that companies have been successful, especially since the birth of social networking and massive consumer growth companies, is building your business on the back of another business or another platform. That's been going on before social networking. For example, PayPal built their business on the back of eBay to the extent where it was so powerful that eBay had to pay a lot of money to acquire PayPal. And it was a great fit. And now PayPal is one of the main reasons why eBay is so successful today.

Another example of something I lived through. We knew that we wanted to have video features on Friendster. But back in 2002 it was a very difficult, very expensive proposition. So we, like Myspace, partnered with a small little company called YouTube. So YouTube, by the way, not a coincidence, people from the PayPal experience used the new social networking platforms to build their business early on. And it was great. Google used Yahoo! to build their initial traction. Yahoo! cut a deal with Google, which was quite lucrative for Yahoo! at the time. But it essentially brought to life Google, which would never have gotten that kind of distribution and gave them their search early on.

So, this is something that's been going on for a while and will continue to go on. I would advise companies now to think about, how can we use fast-growing mobile companies, if we're a mobile app for example, to bring value to them so it's not just a one way value proposition, that they'll let us utilize their large consumer base to grow our business while we're adding some value there.

Clearly in the last years a lot of people have built their business on Facebook and, to some extent, Twitter and LinkedIn. Though you have to be careful with that because it's a double-edged sword. There's a certain point where Zynga was so embedded into Facebook that they had to carve out their own identity and their own business otherwise they were going to be 100% reliant on Facebook. I think they're still living through some of that pain today. On the other hand, Zynga would not exist today but for Facebook. So there's no easy answer there, but there's definitely a big piece of a growth strategy.