Critical mass

With practically all Web based businesses, the key to being successful is to achieve critical mass. This has many definitions but they all boil down to the following:

Critical mass is the point at which there are sufficient users or customers for the business to be profitable, self running and self maintaining

Perversely, many of the failed dotcoms relentlessly pursued the goal of attracting as many visitors to their Web sites as possible in the mistaken belief that this would lead automatically to commercial success. It doesn't. This is not what critical mass is about. The only people who count toward critical mass are those who are benefiting from the site and also adding to the profitability of the business. It is the need to achieve this double goal with all visitors that makes it so hard to reach critical mass.

The only way this double goal - of both visitors and the e-business benefiting - can be achieved is by building a system that creates wealth, i.e., developing a non zero sum game situation where everyone can gain.

In the design of a Web based business, the primary consideration should be that the visitors, customers or clients should benefit substantially and directly. If this condition is fully satisfied, stability of the business can be assured. Only after this condition is fully satisfied can the business owners then start to consider how they might benefit themselves.

If the system is creating sufficient benefit or wealth, there is bound to be some way in which the business can find some way of profiting. After all, if someone creates a wealth creating situation it is only right and fair that they have a share. If there is not sufficient wealth created for both customers and the business to substantially benefit, then critical mass cannot be achieved. A point often ignored by those who create Web sites whose main objective is to attract eyeballs.

Benefit for customers or clients must be immediate, but, the benefit for the business often comes later - once the conditions for critical mass have been fulfilled. This will involve an initial capital expenditure, which will be needed to cover the burn rate (excess of outgoings over income) while attempting to reach critical mass. A prudent strategist would see this as the most important area to concentrate upon: even taking precedence over the technical aspects of the solution. This suggests a strategy of starting simple and leaving as much of the complexity as possible until after critical mass has been achieved.

Achievement of critical mass with systems like the living database is particularly difficult because it depends upon self fulfilment for success: a "chicken and egg" situation. Obviously, a business based upon a living database would have a great chance of success if the people who used the system could click their way to a meeting place and be guaranteed to find a useful group of contacts waiting for them when they arrived. However, the first people to arrive at a meeting place will be disappointed because there won't be many there.

Clearly, a strategy has to be devised such that in the beginning a sufficiently large number of people arrive at a meeting place at the same time. In other words, every meeting place will have an individual critical mass that has to be achieved and maintained before it can be deemed successful.

This again points to the advantage of starting with a very small niche grouping where marketing can be narrowly targeted and timing more easily controlled. Having successfully achieved one synchronised start for a meeting place, others can be added - one at a time - to gradually increase the number of meeting places which have exceeded the point of critical mass.

The necessity for every meeting place to have critical mass means having to wait until the number at a meeting place reaches some multiple of critical mass before it can be sub divided to create new categories or levels. Consequentially, the treelike structures within a people space must be grown rather than be predetermined or planned. This requires a bottom up strategy, which is fundamentally different from the top down way in which conventional databases are designed: where the branching and categories are mostly planned in advance of data being entered.

This makes sense because if one hundred categories were pre-planned to create one hundred meeting places the average attendance will be only one percent of the people using the system. This might see the first hundred people using the database all going to different areas and finding themselves being the only person there. Even a thousand people visiting a living database would find the meeting places they chose to visit being fairly empty and might conclude that the system wasn't worth bothering with.

A similar but slightly different problem occurs when an e-business tries to be too clever. Many e-businesses have failed to achieve critical mass because their system offers too many features, or, too many options, which confuses the users. A complex system that makes perfect sense to the designers, might be totally unfathomable to the intended clients. It is fair to conclude, therefore, that any Web based business has to be as simple as possible to use with all the technology completely transparent. Anything more complicated than clicking a mouse on easy to understand buttons is likely to put users off and lessen the chances of achieving critical mass.

This leads to the most crucial challenge for all e-businesses: getting potential customers actively involved. Or, to put it another way, why should any customer or client be motivated to use whatever service or product is offered? And, even before that, how do you get customers or clients to become aware of the service or product in the first place? These are not questions to be dealt with after a product or service has been developed. These will be critical issues that have to be included in the strategy right from the very beginning.

There is much to learn from the failures of the early dotcoms. Many of them developed an e-business solution and then spent heavily on advertising only to discover that the system they'd so expensively developed wasn't customer friendly, or, was so full of flaws that customers soon gave up on it. Many of them, in desperation, threw good money after bad by increasing their advertising or tried to patch up a system that was fundamentally wrong.

The living database concept described above offers an important advantage in this respect because it allows business systems to grow from a small base - a bottom up strategy. If you look back at figure 10.1, it can be seen to consist of many routes that lead to different areas of interest. This suggests that small sections can be isolated and developed independently of all the others.

A good strategy therefore would be to start very simply with one small section and develop this to a state of satisfaction before moving on to add others. This would allow concentration of marketing effort to be initially confined to one small niche area, which could be strategically chosen as being a group that is highly motivated to take part and is not expensive to contact.

When several meeting places have been established, more sophistication can be introduced. Experimental trials, of improvements or added facilities, can be tried out on single meeting places before using them on a wider scale. This, again, is a bottom up strategy of system development, which ensures that if intended improvements do not work out as expected, the success of the whole project isn't jeopardised.