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The Cold Start Theory suggests that businesses can manage growth plateaus by focusing on network effects and viral growth. One strategy is to identify and leverage existing networks where the product or service is already being used, as PayPal did with eBay. Another strategy is to create incentives for users to bring in new customers, thereby creating a viral effect. Businesses can also focus on improving their product or service to increase user satisfaction and retention, which can lead to organic growth.
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When a networked product launches, it faces a chicken-and-egg problem: people need to use it for it to be worth anything. So how do you start the very...
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The Acquisition Effect is essentially viral growth via organic use—the network effect that powers the acquisition of new customers. PayPal is a good example of this viral effect. Initially, a company that struggled to envision the 'perfect customer', it eventually latched onto eBay, where PayPal was already used by hundreds of sellers (unbeknownst to the PayPal team). PayPal went with this and created its own 'pay with PayPal' badges to place on eBay items.
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