Building network density is key to viability

For subscription businesses based on the Network Model that have a physical or geographical component, achieving a high density of users in a small area is critical to success. A network that is spread too thin offers little value to its members and will struggle to gain traction.

The "chicken-or-egg" problem is a major hurdle for these businesses: you need a network to attract subscribers, but you need subscribers to build the network. The solution is to focus limited resources on a small, tightly defined area first, achieve critical mass there, and then expand.

Zipcar's turnaround strategy is a classic example of this "density model":

1. Identify a Small Zone: Instead of trying to cover an entire city, they broke it down into smaller neighborhoods or zones.
2. Tailor the Offering: They customized the fleet of cars in each zone to match the specific demographics and usage patterns of that neighborhood (e.g., Priuses in a left-leaning area, larger cars in a neighborhood where people take weekend trips).
3. Blitz the Zone: They concentrated their marketing efforts on that single zone to sign up as many subscribers as possible in a small area.
4. Create a Positive Experience: With a high density of cars and members, the service became highly convenient and reliable for users in that zone.
5. Fuel Word-of-Mouth: Happy users in the dense zone told their friends, creating positive word-of-mouth that helped the network grow organically.
6. Expand to the Next Zone: Once one zone was successful and profitable, they could then replicate the model in the next zone.

This strategy solves the chicken-or-egg problem by creating a viable, valuable micro-network first, which then serves as the foundation for broader expansion.