Empirical cases

Six successful digital service ecosystem emergence processes are investigated – Amazon, eBay, Facebook, Google, Salesforce, Wikipedia. Each of these cases is a well-known digital service. See Table 4 for an overview of each case.

Table 4 – Case overviews Wikipedia 2001 1999 – 2008 Jimmy Wales Bank trader Free access to the world’s knowledge Encyclopaedias Founder Not Applicable Not Applicable Open source Word of mouth Quality Not applicable Users, editors, bot developers, add-on developers

Salesforce 1999 1996 – 2006 Marc Benioff Software executive Free the business from enterprise software None Founder & angel investors 2003 2002 Subscription Guerrilla Technology failure Mid; cash-flow issue solved through fee Customer, consultancies, solution developers, AppExchange developers, software

Google 1998 1996 – 2005 Sergei Brin & Larry Page Doctoral students Make all the world’s information freely accessible and available Yahoo!; Altavista; Excite Founder 2004 TBD Search advertising Word of mouth Privacy None Customer, advertisers, advertising affiliates, search affiliates, app developers

Facebook 2004 2002 - 2009 Mark Zuckerberg Undergraduate student Make the world more open MySpace.com; Friendster.com; Founders 2012 TBD Social advertising Word of mouth Privacy Not Applicable User, app developers, advertisers, Connect enabled websites, ‘Like’ enabled websites

eBay 1995 1994 – 2001 Pierre Omidyar Software engineer Create the perfect market None Founder 1998 1995 Brokerage Word of mouth Technology failure Minor; slump in listings Customer, escrow services, insurance services, information services, software, packaging materials,

Amazon 1994 1994 - 2003 Jeff Bezos Hedge Fund executive Commercial success Books.com; clbooks.com Founder & Family 1997 2001 Retail Word of mouth Dotcom crash Major; potential for bankruptcy Customer, wholesaler suppliers, distributors, partner websites, associate websites, marketplace vendors

Year founded Years of study Founder Founder background Founding ideal Competitors at founding Initial Funding IPO Year became profitable Business Model Marketing Approach Major Crisis Event Effect of dotcom crash Ecosystem participants

These six cases are heterogeneous within the context of digital services. They illuminate the phenomenon of interest and cover a range of polar types (Pettigrew, 1990; Yin, 1984). More specifically, each digital service case has a different logic of value co-creation, and the cases collectively exemplify the main logics of value co-creation in digital service contexts. Amazon is an online retailer, eBay an online auction service, Facebook a social networking service, Google a search engine, Salesforce an online customer relationship management service, and Wikipedia an open source encyclopaedia. A second source of heterogeneity are the participants in each ecosystem; Amazon is business to consumer service, while the services of eBay and Wikipedia link consumers. Facebook and Google link businesses to consumers through advertising (and Facebook consumers to consumers for socially motivated reasons) and Salesforce is a business to business service.

Further sources of heterogeneity include the effect of the dot-com crash, major crisis events, founder backgrounds and motivations, and early stage funding activities. The dot-com crash had a major impact on the business of Amazon, leading to lay-offs and a reduction in scope of strategic ambition, and also caused severe cash flow difficulties at Salesforce. eBay had a slump in listings, but as the digital service had been profitable from the beginning, the dot-com crash had little effect on its operation. Google was at too nascent a stage to be affected by the dot-com crash; both Facebook and Wikipedia had not yet been founded. In terms of major crisis events, all cases experienced an event which shook their ecosystem’s confidence in the viability of the digital service and ecosystem, with corresponding widespread media coverage. Both Facebook and Google suffered significant issues with privacy, eBay and Salesforce issues with service availability, Amazon the dot-com crash, and Wikipedia the quality of the articles.

The founders and their motivations in each of the cases also vary widely. Jeff Bezos, originally a hedge fund executive, founded Amazon with the explicit goal of commercial success. In contrast Pierre Omidyar was a software engineer who founded eBay with the idealistic goal of creating the perfect market after experiencing what he felt were unfair practices in the stock market. Facebook, Google, Salesforce, and Wikipedia all adopted founding ideals which reflected the altruistic and open nature of the internet. Mark Zuckerberg was an undergraduate student at the founding of Facebook, and founded the digital service with the goal of making the world more open through enabling easier connections and communication between people. Sergei Brin and Larry Page of Google were both doctoral students who founded the digital service to make the world’s information freely accessible and available. Marc Benioff was a senior software executive at Oracle, and founded Salesforce to free the business from the travails of enterprise software. Jimmy Wales, the founder of a moderately successful early web company that, among other things, sold access to soft-core porn, founded Wikipedia to enable free access to the world’s knowledge after being influenced by the open source movement.

The early stage funding of these digital services is also heterogeneous. Prior to venture capital (VC) investment, all empirical cases were initially seeded by their founders, although Salesforce was

also seeded by some angel investors, and Amazon and Facebook acquired early capital from the families of the founders. eBay, uniquely, was profitable from the very beginning and only acquired VC funds as a means of signalling viability. In contrast to all the other cases, Wikipedia has always been supported by philanthropic means, either from Bomis which initially established the service, or through direct outreach to corporate and individual donors after their establishment as a foundation.

Together, these six cases are heterogeneous along a number of different dimensions within the context of digital services. As well as illustrating the phenomenon of interest, this should potentially provide a level of generalisability beyond their context (Leonard-Barton, 1990).