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3 Simple Ways to Mobilize The Power of The Network Effect

We crushed our annual goals in only seven months. And you can, too.

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The early days of any online platform are a time for growth. From acquiring the very first user to the millionth, a multitude of factors determine how your company's message will spread and how your customer's behaviors will be adopted into your strategy.


When we launched Leaflink in 2016, we had goals to bring on a certain number of cannabis retailers and brands onto our platform by the end of the year. By the end of summer, we had already brought on three times that number.

Fast forward to today. Our 2018 goal was to break $500M in annualized Gross Merchandise Volume by the end of the year. Again, by July we were projecting over $600M. We surpassed our big goals five months early, and not because of marketing spend.

How did we do it? The network effect.

Related: 10 Ways to Maximize Your Time at the Next Cannabis Conference

What is the Network Effect?

The network effect occurs when each new user on a platform brings additional value to that platform and to other users.

Think about the first few people to own a mobile phone. They had nobody to call, so the platform was useless. As additional people purchased phones for their homes and offices, the telephone network became more and more valuable. Then it took off. This is the same principle that drove early adoption of our platform.

Two years ago, we were only operating in Colorado, and we wanted to prove our concept within that market. As a marketplace business, our small team of seven was focused on getting two unique user groups engaged. The network effect was a solution we used to amplify our sales efforts.

Here are some ways to create the network effect within your own cannabis company.

1. Know the players

To know the cannabis industry, you must understand its players: their day-to-day operations and their unique needs. We shadowed cannabis brands for a number of months prior to our launch, understanding their business inefficiencies and conceptualizing the tools needed to optimize their operations. Those solutions were then built into our own platform.

Because of this hands-on research, when we first approached leading brands in Colorado as launch partners, we already knew we had product-market fit. What we didn’t quite expect, however, was the power of creating true champions for our brand.

Our first clients took it upon themselves to share the platform with their community, helping us bring on even more brands and retailers. With each new retailer added to the platform, LeafLink became more valuable for the brands who were trying to get their products onto store shelves.

Finding true product-market fit and leveraging the network effect with influential launch partners was key to exceeding our goal during our first year in business. The next challenge was figuring out how to scale this process.

Related: 3 Ways Cannabis Brands Can Make a Powerful First Impression

2. Play up the FOMO phenom

For the network effect to truly work and to drive early adoption, there must be some degree of FOMO (fear of missing out) at play. Remember: if everyone you know has a telephone, you're going to wonder, what am I missing out on by not having one?

In our experience, the brands who saw their competitors fulfilling huge wholesale orders through our platform didn’t want to miss out on the hundreds of retailers ordering there. In a short period of time. FOMO let to Inbound leads from cannabis businesses to start pouring in, and the sales cycle shortened.

Word of mouth helped us become known as the standard wholesale ordering platform in our first markets. We were eager to replicate that in emerging markets.

3. Allow your network to help you grow

With our established process and an engaged customer base, we set out to scale across other legal states.

Thanks to the network effect, launching in these new markets was been easier than our first Colorado launch. Many of our initial launch partners expanded operations into new states and brought us with them as part of their SOP for processing orders. In just seven months, the grapevine of the cannabis industry allowed us to launch the platform in six new states, adding hundreds to our roster of active retailers and brands, and processing an estimated 11 percent of all wholesale cannabis transactions in the United States. The network effect is alive and well in these emerging markets. The known benefits of our marketplace in our established states only further sped up new market adoption.

Our new strategy allowed us to focus on additional hiring, adding new features to our product, and expanding into new states as they legalize, supporting the empowerment of growing brands and retailers in the cannabis industry along the way.

Today we are live in 12 states, working with hundreds of brands and thousands of retailers. What could your business achieve in seven months?

Related: The Particulars of Marketing Your Cannabis Business: Experts Share Their Secrets