The other day I had lunch with my friend Phineas Barnes and we chatted about Carbonmade, startups, and other things. One topic that got us excited was the idea of building a service that captures users for one thing then to build out multiple verticals for those same users. Therefore — regardless of initial exponential growth — when you combine the verticals down the road, all the layers stacked on top of each other stimulate exponential growth. (Note: Phineas wrote a follow up piece entitled "Building Blocks (and customer love)".)
Getting Out The Door
If you try and do too much and extend your service across all its potential verticals from the start, then you're going to be mediocre at a lot of what you're doing and best at none. That's a bad way to get your foot in the door. It's a lot harder to market a suite of services than it is to market one. With Carbonmade we're able to tout ourselves as the best (and recently biggest) online portfolio service for creatives. That's a simple and sweet message that is aligned with our slogan: "Show off your work." If we tried to tackle, say, building five things for creatives from the start, then our message would get jumbled, our service would be confusing, and marketing would be a lot more difficult.
When you have a successful product to springboard from, you can then start to explore other verticals around the same market where your users (most likely) have multiple interests. GoDaddy exemplifies this, with their aggressive up sell process. They've used this springboard approach to make them astonishingly successful. While GoDaddy started off being simply a domain registrar, you can now buy web hosting, SSL certificates, domain monitoring, DNS management, etc. Those are all products that complement the domain you initially set out to buy.
Expanding to Multiple Verticals
To be successful, you should take the approach of building a basic product, but with multiple verticals in mind as you go along. I'd be lying if I said that Carbonmade was started with anything but building a kickass portfolio in mind. However, as you begin to develop out the product, you can see other places to take it and other up sells your users may be interested in. You only have to look at a few of our competitors to see where they took things.
If I were starting a company from scratch, I'd try and come up with an interesting service that could successfully offer other things to its users as soon as possible after the initial build. It's tough, I know, because you want to be focused on building a great product, but at the same time there's only so much you can do around that product to continue to improve it. A vertical that Flickr got into after launching their initial product was offering a printing service — a perfect complement to their photo-sharing app.
Together We've Got Killer Exponential Growth
Now that we've got multiple verticals to build out, creating a simple service such as Carbonmade is even more attractive. If you can somehow successfully execute a handful of verticals that your users are interested in, you can build an amazingly successful company. Added together, you'll be growing at exponential growth rather than linear growth. You've got, say, 100,000 users using your main product, then say 25,000 using each of the five verticals you've built out, then you've got 225,000 users instead of 100,000. If you're growing at 10,000 new users a month and if you count each vertical a user dabbles in as a new user, you can look at it as growing at 22,500 users a month and not just 10,000.
Of course it's better yet if each of your verticals has a fee attached. Users that pay you for one thing are less likely to shop elsewhere if they already trust you and your brand. That's why I get my SSL certificates from GoDaddy along with my domains. You can really start making some serious money if you funnel your paying users into other for-a-fee parts of your app.
Oh, the opportunities!