Everything is Social

That's right, and you have to find out how to capitalize on the power of social information to make your company a major success like Facebook, LinkedIn, and Foursquare. This idea comes from a pervasive underlying assumption I found at Disrupt NYC 2011 that information generated socially carries such value that users will engage in a product or application. What this means is that many start-ups face a major problem...

How in the world does a start-up company attract a large social group or user base to engage in its product?

Without a social group, many products or websites lack value. You can go with the typical plea: "Oh, pretty please, won't you share our product on Facebook or Twitter?." But, you have to rely on your idea "going viral." The interesting thing that social start-ups are doing is using Twitter, Facebook, iTunes, or other existing services with large user-bases to create a social group. The idea of using existing networks to create your start-up's social group is so prevalent that it needs a jargon-y term. Introducing appropriation--the use of an existing social network as the social network for your product or service. Here are some examples of appropriation from top start-ups from the TechCrunch Disrupt NYC 2011:

Sonar: Uses Foursquare and Twitter data to tell you who is in close proximity to you.

Rexly: Uses iTunes data, (through the use of a covert program on your computer) to track what songs you've downloaded on iTunes, so that you can share it with your friends and talk about awesome music.

SpotOn: Uses Facebook data to create customized "actionable" recommendations about what you should do.

CCLoop: All you have to do is CC someone in an email, and they become members of a "loop"--a news and content aggregation featuring instant messaging capability on a subject of your choice.

But what if you can incentivize people to participate in your product or service, and thereby create a large group of users?

Incentives are the beauty of Craigslist, eBay, GroupOn – and the ultimate strategy behind Foursquare's check-ins and badges. And, there are two basic ways to get people engaged with your network. One is to provide a valuable service, such as the listings on Craiglist. Another is to provide a reward or incentive that may be extraneous to your service but engaging such as badges or discounts.

Two of the top three TechCrunch Battlefield finalists do a great job of providing incentives for users to participate in their service:

Billguard is a service that helps users detect fraud by registering a credit card or bank account to Billguard's fraud detecting computer algorithms. The incentive for you to join, and the reason Billguard is such a good idea, is that you can stop fraud from happening to you and keep the money you earned. While BillGuard can be effective with a small social group, with an aggregate of users its fraud detecting services will be stronger, and it will allow users to take collective action against a bank or scammer. Additionally, BillGuard can profit by creating subscription fees and advertisements. BillGuard has the foundation of monetary incentives in place to build a large user base that will lead to a bill-protecting service that is more powerful by being informed by a large social group.

Getaround, the winner of the TechCrunch Battlefield Competition and $50,000, possibly was the company that did the best job of giving incentives for users to use its product. Getaround allows people to rent out their cars to other people. You can rent out your car for a few hours, or a few days, and Getaround takes 40% of the cut while you take 60%. Talk about incentive. The risk, of course, is that someone might total your car. You can feel safe knowing that Berkshire Hathaway, owner of Geico, the most secure insurer in the country according to the company's press materials, is insuring the car. Since its launch a week ago, Getaround has already registered 1,600 cars according to its founder--that is approximately 20% of what Zipcar, the popular car-sharing service, has in its stock of cars.

Here’s the bottom line: In the effort to build a large social group, start-ups are appropriating* from large existing social networks. A select few start-ups, including Getaround the winner of the TechCrunch Disrupt’s start-up competition, are impressive in large part because they can build a large social network through strong incentives to use their product or service.

By the way, TechCrunch Disrupt is coming to San Francisco, September 12-14, 2011 at the San Francisco Design Center. Hope to see you there.

Ori Nagel is an Account Manager for PRx Communication Strategists. You can track his personal Twitter feed by following @OriNagel