Status Games: Engineering Scarcity in a World of Abundance

Social media, ultimately, is mostly just about entertainment, not utility. And that’s just more precarious ground to be on than say, if you were truly a utility-based network. Like if you have a network like Uber or Lyft, I mean, you’re ultimately about getting someone from point A to point B. That’s not really an entertainment-based product. So yo... See more

That’s where status comes in.

There’s a broader lesson to learn from that about the products that we offer to the world in tech: Many people think that their products are very utilitarian. But I’d argue that a lot of products that people build are actually entertainment-based products.

A lot of networks that have achieved super scale had some sort of status incentives or status games built in, very early on. It helped them to get that kinetic energy that you need in order to achieve scale that then increases your utility. Those networks were paying you to develop the network — paying with ego, with status, with a sort of an emoti... See more

A funny example is: in LA you have these social clubs, like the Soho Club, which are elite. Only now there are actually newer clubs that are even more elite. The San Vicente Bungalows — it’s even harder to be a member than it is for the Soho Club.

I think it’s the same with social networks like Facebook and Instagram, everything. At the level of scale that they’re at now, the status game and the sense of progression is going to be way different than it was when they were just starting out.

So I think it’s very critical if you’re doing a startup to understand if you are going to be offering a product that is actually an entertainment-based product — because that really widens your competitive set.

Offering a utility to your user base is the most stable sort of long-term competitive advantage that you can have.

So the question is, how do you get to that scale? There are a million networks that died out before they ever achieved that scale.