Startups in the B2C space have three stages* that they need to pass.
Stage one – user traction; the part where users sign up and complete a core action.
Stage two – value loop; where the system develops stickiness the more active the user is.
Stage three – virtuous loop; where network effects kick in and the more the users the more the experience for everyone improves.
Most startups will die before they reach stage 2 or 3. But if you are aware of that, you can think about how to innovate the cycle for 2 and 3 – or maybe the market has evolved now.
Go pick on the bones from the starup graveyard. Find companies that achieved user traction but couldnt solve stickiness.
Google didn’t invent its search engine business model, overture did. Google simply fixed what was wrong with the model that didn’t work.
Techcrunch deadpool section is a goldmine. If you know what to look for.
*Recommended reading : The hierarchy of Engagement deck by Greylock ventures on slideshare
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