So, what Multiply could’ve done to minimise their failure points?
Multiply's success was built on social networking (product version 1). They quickly build on new features and seamlessly position themselves as social commerce by leveraging the value built on top of your users' engagement (product version 2). Unfortunately, they decided to remove the social networking features and rolled out the marketplace without them.
This narrow vision of the founders and the management team shows how badly a company can fail by failing to recognise how their product versions should be structured to support the ecosystem they are building and the market in which they compete.
Remember that not all improvements and additions will be appreciated by the users. When making changes, here are some questions to ask yourself before making them ensure they're necessary:
- Is there a feature that your users use and enjoy that you believe can add significant value?
- Is there a feature that a sizable portion of your users have yet to adopt, and you see some changes that will make it easier for them to do so?
Multiply went through this motion when they recognised that eCommerce activities were taking place among its platform users. To expand those opportunities, the social networking site has introduced a new and improved Marketplace for online sellers and buyers. However, they removed its social networking features later, which most users did not appreciate.
Before you start slicing up your product, make a 'kill list' of items you believe you'd be better off without. Know the cost of upkeep vs. the benefit of keeping a small percentage of your users happy or whatever else you must qualify your decision. Here are some of the warning signs:
- The product version drains resources.
- The product version wastes money.
- The product version's value diminishes.
There are many questions you can ask yourself during this process, but for the sake of simplicity, we've boiled it down to just 3.
- Does this feature/version add to the overall value?
- Is it being used? And how does it affect user success?
- Is the cost of upkeep worth it?
Without a clear vision and plan for how the business should position itself to external stakeholders, the team will face difficulties monetising its efforts. A profitable business's revenue streams are its lifeblood. Without them, your business will die. Multiply overlooked the significance of identifying the paying stakeholders and the payment mechanism (the timing and method).
For instance, Facebook's paying clients are the advertisers, they are paying Facebook their advertising dollars to reach their audience. Facebook understands the importance of focusing its strategies and enhancement of the platform to entice users to spend more time on the site.
Multiply, on the other hand, overlooked the importance of analysing its revenue streams. They should’ve understood how to earn revenue, capture it, and use it to their advantage. For a situation like this, the first step is to identify the stakeholders involved, who are involved in the value chain, what charging mechanism they are willing to accept from you, and test whether the paying stakeholders are willing to pay.
Despite how simple it may seem to set up your revenue model, certain factors are vital to setting up a successful and scalable model in the long run.
- Value Received. What are my customers paying for?
- Price. How much will they pay for it?
- Currency. In what form will they pay?
- Timing. When will they pay?
Shifting the headquarters from the United States to Southeast Asia (Indonesia) is not a simple decision that any management team can make in a single day. Many factors must be considered because such a risky move can destroy the company's years of hard work.
Taking advantage of market opportunities makes perfect sense for Multiply. They must, however, consider the following:
- What are the key decisions/departments that must be transferred to Indonesia?
- Are there any other options to consider? For instance, can Multiply establish a SEA HQ in Indonesia while keeping the US as the primary HQ, or can it be positioned as an R&D HQ?
- What business strategies must be revised when the transition occurs?
- What types of talent acquisition are needed in the host country (Indonesia)?
- Is there a readily available talent pool in Indonesia?
- Is there any talent support from the United States to help with the transition?
- What kinds of knowledge transfer are required?
- Have they established the process and appointed the appropriate key decision makers?
Just getting these procedures set up is a start. Both countries' requirements and support systems must be reviewed regularly. The formation and appointment of an "A" team from the United States is critical to assisting with the transition. The same goes with the management team's commitment to relocate themselves (temporarily) to Indonesia to ensure that issues can be ironed out in the early stages.
Hiring a local CEO and COO will not work unless they have previously supported Multiply in the US. On the other hand, the primary management team, which is well-versed in the US market, may also be unfamiliar with the Southeast Asian market and lack local connections. Onboarding experts with a better understanding of the local dynamics can help with localised execution.
Aside from these, the following factors must be considered:
- Time Difference (between the United States and Indonesia): Determine whether shifts in these two companies or revisions to working hours are required to maximise the overlap of both locations' working hours, making it easier for both companies to cooperate.
- Culture Difference: If you are relocating your business to a country with a different language, you must consider the impact the language barrier may have on the day-to-day operations of your company. The language barrier is one thing, but culture is another matter entirely.
The rebranding or transition of Multiply was a big deal. You should know that the success of transition can be significantly determined by how the public receives it. It can take a long time to build a brand image and even longer to build a great reputation. A lot of care and testing goes into creating successful rebranding efforts because failing to do so can drain your company's hard-earned reputation.
Several fatal issues occurred during Multiply's transition to a pure marketplace:
- The sellers couldn’t receive the payments
- The buyers were difficult to contact
- Product errors in the product listing
Even though they were gaining traction, all this harmed Multiply's reputation. This negative publicity eventually added to foreign investors’ decision to close it down.
Understanding Multiply's requirements and expectations as a marketplace are critical for the team. Multiply should've:
- Addressed the mindset shift of being a social networking site and the expectations of marketplace users.
- Defined the marketplace business models clearly and ensured that the marketplace could capture that revenue.
- Enacted immediate action on the fatal mistakes highlighted above, as they will have a ripple effect on the confidence of various stakeholders, ranging from customers, and retailers to even investors.