The Cold Start Problem: Using Network Effects to Scale Your Product – A Review

Hi Yodon, yes this is my second blog post. I'v been one of those people who reads and watches for years and decided its time to post as well.

Oh awesome! I didn't know about that, thanks.

It's likely because they're both indirect and comparatively expensive.

Direct & laser-focused is far more cost-effective in the early days.

Paying for users (he calls it "subsidies") is mentioned but Chen talks about the fact that if you do it at the wrong time and you don't have hard side users or value and you're k-factor is too low, those users just churn. Theres a whole section dedicated to the strategic use of subsidies which have been used to great effect once you have a system of cyclic value generation.

Oh wow thats a cool pattern.

Didn't we already have The Last Network with email and/or websites, and megacorps captured it anyway?

Can you give specifics as to the LinkedIn 'spam'?

All you're doing is listing that they utilized different strategies to grow faster. Which they all have in common with normal businesses.

PayPal grew by incentivizing usage. You say "bribe" to give it a negative connotation when it's not at all. Like a store giving away free samples. Or a freemium service plan. It's no different, the business is eating a cost to grow, and that technique is used a zillion times over across all commerce. PayPal was de facto spending money on marketing.

Your Clubhouse example isn't even a negative example, you're just trashing on them.

Slack grew by leveraging an advantage, like all businesses do and without exception. You might as well disqualify all founders of all businesses because they have any number of advantages, including being born with a superior mental capability (Joe Smith is a genius at math, it's totally unfair). The Slack founder advantage was earned, he had every right to leverage it. Before that he built Flickr with others and he wasn't nearly so famous then and Flickr was also a network example.

The premise you're floating is: guy that started a convenience store was able to get a loan/investment or otherwise had capital. It's unrealistic because he used an advantage someone else didn't have. Therefore not a valid business strategy.

Hotmail put a promo at the bottom of each email. Totally unrealistic that they leveraged their existing scale to grow even faster. What normal businesses can do that? (answer: most of them)

I think theres value in the books analysis of the early Cold Start strategies, which to me are reminiscent of the excellent blog post from Paul Graham https://paulgraham.com/startupideas.html

In fact you could read that and get a lot of the same value, particularly around "solving hard problems" and single-player / come for the tool, stay for the network.

But I do think his assessment that the whole thing is a paradox is true, and perhaps lends some credence to your point which is that, you kind of can't entirely engineer (or predict) success because the outcome is often different to how it started.

Yeah, there are so many examples. I’ll never forget when I heard the tactics from the second stage Facebook growth team (100m - 1bn users). They were super shady.