Catching Fyre: Platform Diffusion and the Technology Strategy Toolkit

How hackatons can boost the diffusion of platform technologies.

This month’s blog is co-written by David Clough, Tommy Pan Fang, and Andy Wu.

In 2017, an entrepreneur named Billy McFarland created a successful viral marketing campaign for a bold, new music festival called Fyre Festival. Unfortunately, McFarland’s logistical ability did not live up to his aptitude for spin. The festival itself was a disaster, documented in real time through Instagram posts that morphed into icons of superficial influencer culture. Lost in the legend of the Fyre Festival fiasco is the lesser-known detail about its actual intended purpose: McFarland organized the event to draw attention to Fyre Media, a new technology platform for event organizers to connect with musicians—an “Uber for the performing arts.”

Contrast this with the experience of Twitter, who in 2007 installed a pair of giant flat-panel screens at Austin’s South-by-Southwest (SXSW) festival, an eclectic annual gathering of media, film, and technology professionals. Users could find their tweets broadcast on the giant screens at SXSW by texting a short message to Twitter. As Parker, Van Alstyne, and Choudary (2016:97) describe, this served as a pivotal moment in the launch of Twitter: “seeing the feedback on large screens in real time and watching as thousands of new users jumped into the fray created enormous excitement around Twitter…by the end of SXSW, Twitter usage had tripled, from 20,000 tweets per day to 60,000.”

In their efforts to launch a new platform, Fyre Media and Twitter both sought to exploit what we refer to as a temporary gathering, albeit with radically different outcomes. We set out to investigate when, how, and why new and growing platforms might use temporary gatherings to attract new users and new third-parties—such as App developers—who act as complements to the platform. We chose to study software development hackathons, where technology platforms promote themselves to software developers on a regular basis. Hackathons attract thousands of software developers who share ideas, exchange technical know-how, and focus intensively on creating software. By the end of a hackathon, many attending developers will have built and executed an early version of a new piece of software, and some will have received prizes that recognize their innovations. A software platform business can sponsor these hackathons, providing financial, in-kind, and in-person logistical support to attendees. This sponsorship provides a way for technology companies to educate and encourage developers to adopt their platform.

Our research, which is published in the Strategic Management Journal, supports the idea that sponsoring temporary gatherings helps platform owners seed the spread of a new platform. We undertook a large-scale quantitative study using three years of data from DevPost, a public clearinghouse for information about hackathons around the world. We measured platform adoptions by hackathon participants over time using a novel approach that analyzes the code that software developers post publicly in GitHub, an online repository in which developers upload code for ongoing projects.

We found that hackathons are particularly well suited to spreading platform technologies. Developers often do not have good information about the costs and benefits of joining a particular platform. The social nature of a hackathon can solve a number of problems for developers: helping them overcome the initial obstacle of learning to use a new platform, helping them understand the platform’s use cases, and—perhaps most important—allowing developers to gauge the popularity of a new platform.

The collaborative nature of hackathons allows developers to gather information about whether and how to use a platform by observing and teaching one other. We observed that when developers at the hackathon had used the platform in the past, other developers were more likely to adopt that same platform. At these temporary gatherings, platforms are spreading by word of mouth through informal, face to face interactions between developers, a process sometimes referred to as social learning. Furthermore, we find that software developers pay close attention to prize-winning projects — so if there’s a platform that underlies a project that wins a competition, the prize helps draw attention towards that platform.

But over and above the peer-to-peer learning, we find that temporary gatherings also help align the expectations of attendees over which platforms are becoming fashionable. We refer to this as social coordination. Software developers prefer to adopt widely-used platforms because of network effects, and attendees at a temporary gathering can recognize when a bandwagon is emerging around a new technology and then choose to join it. These events also allow developer sentiment towards a platform to converge. Thus, when executed correctly, sponsorship of temporary gatherings can be a catalyst for technology platform companies to generate positive buzz about a platform’s prospects and accelerate a platform’s growth. 

For a firm or an entrepreneur who is launching a new platform, a central challenge—referred to as the chicken-or-egg dilemma—is how to get an initial set of users or complementors to join the platform in the first place. The Twitter anecdote suggests that perhaps one way to do this could be to sponsor a temporary gathering and use the concentrated mass of attention to get on peoples’ radars. But the Fyre Festival teaches us an important caveat: the sentiment that emerges at a temporary gathering is not always positive! Fortunately, we think that most managers can do better than the Fyre Festival. We anticipate that going forward more savvy entrepreneurs will adeptly use temporary gatherings to help new platforms achieve critical mass, perhaps helping challenge some of the entrenched players that currently dominate the digital space.

This blog is based on David, Tommy, and Andy’s research published in the Strategic Management Journal and is included in the platformpapers reference dashboard.

Fang, T. P., Wu, A., & Clough, D. R. (2021). Platform diffusion at temporary gatherings: Social coordination and ecosystem emergence. Strategic Management Journal, 42(2), 233-272.

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