Abundance as an Expansion Strategy

It is interesting that most of us thrive for abundance while having the mindset of valuing scarcity more.

But sometimes abundance comes at a cost. A cost that is subsidized as a serious (and risky) expense for an expansion strategy that can pay off later, for example.

Other times it comes as a result of technological improvements that revolutionize the way things are done. An example for this latter situation would be the cost reduction of worldwide communications to almost zero from very expensive in the past.

Gmail Case Study - Free Abundance, at a Cost

A worthwhile case study for this is Gmail, the webmail service from Google.

It's interesting that, when it was first released to the world, Gmail was both scarce and abundant at the same time.

Source

On one end, it included a system of invitations. To create an account on Gmail someone needed to invite you. Apparently, at some point, one of those invitations was sold for as high as 150 USD apiece. That's quite an amount for an account at an email service, right? It's not like Gmail was the only email provider.

True! But it had something other email providers didn't... A great strategy.

Gmail was released publicly in 2004, a few years after Google launched its search engine. So they weren't coming out of nowhere, their search engine was already quite popular.

Then, at the time, their major competitors in the email business were Yahoo and Hotmail. They both had slow webmail interfaces based on HTML, drastic limitations on the free storage capacity offered to users, and basically the impossibility to guarantee an email will be kept for long periods of time.

Gmail was based on AJAX (JavaScript and XML), much quicker, and they offered 1 GB of storage which basically meant emails could be kept forever.

What did Gmail have that the competition didn't?

• limited and high-valued invitation system that triggered our scarcity mindset
• it was much quicker
• something that could be considered almost "infinite" storage at the time
• one year later the storage limit was doubled (2 GB+) and users could send either plain text or HTML emails

The last three points mean abundance that users received at no perceived cost.

While the invitation system was created out of necessity as they grew their infrastructure, it played its role in building the desire to have an account. But once one had an account, Gmail didn't disappoint.

It took almost 3 years for the service to become open to anyone.

There are now reportedly 1.8b active users of Gmail, and Google has around 27% of the market share for email, second to the email solution from Apple iPhone, with 38%. Here are lots of stats you might be interested in.

You Are the Product!

We talked above about abundance as an expansion strategy. When abundance is funded by a company, they expect to make money from the investment, in time.

This is where the adage

if you are not paying for the product, then you are the product!

should be very clear in everyone's mind.

Google offered through Gmail exceptional abundance at the time, at no perceived cost. They had the option to add increased limits and hide certain features behind a premium offer. The payment would have been transparent, but their reach would be a fraction of what it is now.

They chose to apply the same strategy as for searches. To monetize the user data for advertising purposes.

From the stats article I linked above, we find out that the average Gmail account hosts 17k emails. That's a lot of emails to scan for keywords for advertisers, even though interests may shift over time.

The Beginning of the End?

Web 2 is filled of examples of big tech companies that monetize their users by selling their data or patterns or usage to advertisers.

This became a symbiotic relationship where advertisers hold a strong position, one they intend to keep for as long as possible.

When there are social media platforms in the Web 3 space not dependent on advertisers money, they probably don't like that.

When a big social media platform like Twitter goes through transformations of its business model that will make the advertisers' grip on the platform less tight, they are probably losing their minds.

The push-back against treating users as products is growing the more people become aware of the extent of the phenomenon. On the other side, people like "free stuff", so there's going to be a battle here.

Conclusion

Offering abundance is a strategy selected often by companies in their quest to grow their user base and market share.

Even when it's not moral, like selling the user data or patterns of usage to advertisers, these offerings lead to progress through technological progress.

If we only look at the offer Gmail came with when it launched or soon after, that forced the competition to improve their webmail services too.

We are talking about updating the language(s) used to program the interface, updating the infrastructure behind the email servers, forcing improved features for users (HTML emails), and probably more.

Posted Using LeoFinance Alpha