Scale Matters

by Vincent Chan on Jun 5, 2009

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Imagine that Facebook only has 100 members who don’t know each other, don’t have any common friends and don’t go to the same school. Or Twitter is only used by 50 random people who don’t have any common interests and none of them are celebrities. Will these sites still be so valuable as they are now?

So what makes them so special today? Their users. A tremendous amount of users. Without them, Twitter is only a page with a text box and an update button. Generating 20M unique visitors per month? Impossible.

However, people always underestimate the way scale can change the game.

In this blog post, Chris Anderson, editor-in-chief of Wired Magazine and the author of the famous book The Long Tail, talked about why Sergey Brin, co-founder of Google, didn’t believe that Wikipedia could work. Just like no one ever thought that FMyLife could be a hit. Because in the real physical world, most people do not tend to contribute. The contribution rate is just so low. Therefore, it’s very difficult for people to understand why people answer questions on Yahoo Answers, why people broadcast TV channels on Justin.tv, or why people work on Open Source projects.

Like Chris Anderson said, more is different. The Internet enable you to run a business under an extremely low response or participation rates. Wikipedia becomes a top 10 web site by the contribution of 75,000 active members, which is 0.01% of their user base.

If you want your business to reach customers at the largest scale, it’s only possible to do it on the Internet because it gives you near-zero marginal costs, zero-cost distribution method and zero-cost marketing.

Entrepreneurs always love to say they can make a fortune if they can get 1% of the market share in a huge population, like China. It seems that they finally are able to do so. And the fastest and only possible way will be using the Internet which works best at a huge scale.

Do you know any other sites that rely on a small fraction of their users to contribute? Let us know in the comment area.

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