Promoting platform takeoff and self-fulfilling expectations: Field experimental evidence

Abstract

A platform might have the potential to bring enormous value to its users. However, without a well-orchestrated launch strategy that coordinates a sufficient number of users onto the platform, this potential will not be realized. The theoretical literature predicts that one approach to coordinating platform take-off is to influence the market’s subjective focal expectations of the future installed base of users. This paper reports on a field experiment investigating the causal role of subjective expectations in the launch of a new platform venture, in which invitations to join a newly launched platform were sent to 16,349 individuals. The invitations included randomized statements regarding the size of the future expected installed base (along with disclosures of the current installed base). I find that simple, subjective, uncommitted, and relatively costless statements broadcasted by the platform with the goal of influencing market expectations were indeed able to influence platform takeoff and overcome an initial chicken-and-egg problem. These broadcasted subjective statements regarding future installed base had a larger influence on adoption rates than did disclosures of the true current installed base during early adoption. However, these subjective statements of expected future installed base ceased to have any effect once the true current installed base grew large. I discuss implications for the promotion, marketing, and evangelism of new platform ventures.