Tinder used this phenomenon to turn college hookups into $1.4B in sales:

Network Effects

What they are & how to use them: 🧵

In 2012 there was a need for an easy-to-use "dating" app for millennials.

The large players (Match, eHarmony, etc.) had ignored the college market.

But 18-24 year olds were craving a mobile-first option that didn't require an annoying questionnaire to get started.

Tinder created the solution that the market wanted but faced a challenge.

Early users.

No one would use a dating app that had few eligible candidates on the platform.

Traction is an issue that every platform business must overcome.

It's a classic "chicken or egg" problem.

But if the problem is solved it unlocks a powerful law of growth called network effects:

It's when the utility of the platform becomes greater with each new user.

As the user base gets larger each user receives additional benefit (more dating options) leading to rapid growth.

Conventional wisdom would suggest: target ads at college students and watch the registrations roll in.

But tapping a network effect is much more nuanced than that.

There needs to be:

A high degree of trust, common interests, and incentive to tell others about the platform.