Signaling as a Service

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

While Path did indeed fail as a distribution provider, I would argue that keeping the network’s size small can still have benefits in line with my signaling theory: Deliberately limiting the number of people who can join a network (e.g. by charging a membership fee) creates scarcity which in turns makes the network more interesting. Network members... See more

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.

The app that comes closest to a luxury service that I can think of is Superhuman, which charges its users $30 a month for an email client (which you could also get for free by just using Gmail).

Signaling does not only explain luxury purchases but also consumption of all sorts of other goods: “Green products” are more about signaling a prosocial attitude than actually helping the environment. Other consumption signals include loyalty to a specific subculture (e.g. band t-shirts), athleticism & health consciousness (athleisure clothing) or ... See more

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.

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

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.