If you’re building a developer product, it’s not enough to simply be loved by individual users and contributors. In a year already marred by layoffs and spending cuts, it’s more important than ever for early startups to get to the “economic buyer”, in other words, the person with broad departmental purchasing power.
But closing customers in an age of competitive platform wars and a winner-take-all market is easier said than done. Developer companies need to both scale their user base and their revenue in order to survive. One way to do that is to lean on network-effect.
What Do I Mean By Network Effect?
Quite simply, it is where the value of your product is increased by the number of users contributing and using it. So StackOverflow is better with a vibrant community answering questions. Github is better with a vibrant community sharing and forking code. Heroku is better with a vibrant community of plug-in providers and application developers.
One goal of network effect is to be able to build developer traction and parlay that traction into significant revenue. Developers adopt a tool in their personal projects, carry that tool into their professional lives, and purchase that tool to use with other team members. Before long, a CTO, COO or purchasing officer notices multiple purchases have been made from the same developer tool provider. This is where a formal agreement becomes a more viable option and where most inside sales teams inject themselves.
Particle IO offers an IoT platform that includes open source prototyping tools and device management software for products at scale. The company sees some of its most creative IoT applications coming from its large community of developers. From sous vides, to cat trackers, to music devices, the Particle project pages highlight the community’s inventions and the true capabilities of the OS itself. The company also uses Kickstarter to validate the need for specific developer tools including Wifi, cellular developer kits, etc. Recently, 5,564 backers backers pledged $578,478 to help bring cellular development kit with a SIM card and affordable data plan to life.
Gradle is a build automation platform that only gets better the more a company standardizes their build infrastructure. For example, LinkedIn has standardized on Gradle across 42 programming languages and currently executes over 300,000 builds per week. The resulting data allows the organization to enhance developer productivity, speed delivery of features to users, and decrease feedback loops and time spent on deployment.
To run customer tests, Rainforest QA uses a different kind of network effect - the immense volume of data generated by a remote crowd of over 50,000 QA testers. Rainforest takes about 30 minutes to run 100 tests in multiple browsers. Over 13 million tests have been run and on average there are over 4,000 testers online in any 24 hour period. This 50,000 person QA team doesn’t require human managers, instead Rainforest leverages machine learning and algorithms, getting smarter and smarter with each test.
At Heavybit, we work with developer companies to help them build their sales playbooks while still maintaining the integrity of a great developer experience and community. While the sales funnel is always important (particularly in a bad market where fundraising is tough), other advantages of network-driven product strategy include better product feedback or third party contributions, advocacy from super users, and higher defensibility in the face of competitors with similar products.