Key Factors in the Process of Customer Acquisition for Startups Launching a Platform in a Two-Sided Market.

Abstract

This thesis will present research in the form of a single case study of the bootstrapping startup Dirtybit. When launching their second game, Fun Run, it grew from zero users to acquiring 1 million new users per day within 2 months. A prime example of resource efficient rapid customer acquisition.

Startups with limited resources find it difficult to launch platforms acquiring a critical mass of users. The value of the platform to each of the customer groups is heavily contingent on this critical mass, and must be rapidly driven in the early stages of the platform s launch.

The research in this thesis is based on a theoretical framework found through a preliminary literature review. Empirical data was collected from Dirtybit employees, as well as both customer groups. Interviews, questionnaires and different data archives have been used as sources.

By answering the stated research questions in terms of what are the most resource efficient ways of acquiring customers to a two-sided platform in order to achieve the result of rapidly acquiring a large user base, key factors have been outlined. Platforms are heavily dependent on network effects, and this thesis focuses on this.

Different mechanisms can be used to achieve network effects in the different groups, as well as between them. Key factors leveraging these effects are explained through a model, for a startup launching a platform in a two sided market, and vary from word-of-mouth and the bandwagon effect, to implementing subsidization and trialability.

The model contributes to the field of platform entrepreneurship with key factors that hopefully will equip entrepreneurs with a model that they can use in order to maximise their odds of success when launching a platform in a two-sided market.