Ruoyu Sun's

Thoughts on design, code and venture capital

Early-bird Dividend

04 Jan 2015

When the “next big thing” is at its initial growing stage, they will usually provide very good terms to attract third party developers / marketers to its “ecosystem”. At that time, acquiring users is very easy because of the loose control and generous API. That’s early bird dividend. However, this will not last forever — when the platform matures, starts to exert control over its ecosystem, or even cashes it, it will become more and more difficult for external entities to benefit.

We’ve seen this many times, other than “never put all your eggs in one basket”, there is another interesting implication: if you are bootstrapping your startup and looking for seed users on social network. It will be easier to do it on a rising star, rather than a mature giant. Your opportunity cost to acquire new users will be much lower without ridiculous rules, rate limit, anti-spam. By the time these mechanisms comes to the ecosystem, you should already get your seed users. If not, go to another rising star.

It sounds like “hit and run” but that’s true in lots of cases. Free lunch comes with a catch, and you need to get out before you get caught.

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