Signaling as a Service

A positive feedback loop of views, likes and comments helps you to quantify how successful your signal distribution has been.

I believe that this is the main reason why consumer software companies have a harder time monetizing than their physical counterparts.

Here’s another example: eBooks have never caught up with paper books despite being more convenient.

Another point of evidence is the lack of luxury software products. People spend absurd amounts of money on jewellery, handbags and cars, but I can’t think of a piece of software with an even remotely similar price tag. Sure, people have tried to sell $999 apps but those never took off.

But there’s a difference to other software products: Superhuman has signal distribution built in. Every time you send an email via Superhuman, your recipient will notice a little “Sent via Superhuman” in your signature.

If membership isn’t scarce, the membership loses its signal message. The same applies to physical products: Apple will never offer a cheap iPhone to compete with low-end Android devices – it would destroy the company’s signal message that the iPhone is a luxury product.

Digital products have one crucial disadvantage over atom-based products and services: Intangibility. Apps live on your phone or computer. No one can see them except for you.

You would think that going to school is about learning and acquiring skills, but then why do students pay tens of thousands of dollars for Ivy League schools when all of the learning material is effectively available online for free? Why do we use grading systems when we know that students learn worse when being graded? The answer, again, is signal... See more

The financially most lucrative strategy for software companies is to provide distribution for free and instead monetize users who want to stand out of the crowd with paid signal amplification.