The Cold Start Problem by Andrew Chen

The other question to ask is, if a user wants to reactivate, how hard is it? At Uber, we had a staggering statistic where several million users were failing their password recovery per week—how do you make this much easier, and treat reactivation with the same seriousness as the sign-up process? While reactivation is typically not a concern for new... See more

Traditional products that lack networks often struggle with this, because they rely on spammy emails, discounts, and push notifications to entice users back. This usually doesn’t work, and company-sent communications rank among the lowest clickthrough rate messages. Networked products, on the other hand, have the unique capability to reactivate the... See more

A successful network effect requires both a product and its network, and that was true in the age of the American Telephone & Telegraph Company, and true today. For Uber, the “product” is the app that people run on their phones, and the “network” refers to all the active users at any given time who are connecting with Uber to drive or ride.

Success comes with an inevitable problem: market saturation. New products initially grow just by adding more customers—to grow a network, add more nodes. Eventually this stops working because nearly everyone in the target market has joined the network, and there are not enough potential customers left. From here, the focus has to shift from adding ... See more

Similarly, Slack’s pricing allows users to upgrade for a number of collaborative features: better voice calling, searchable message history for all your coworkers, and more. Each of these features becomes more useful as organizations adopt Slack as the standard way to communicate, which in turn drives more conversions from free accounts into paid. ... See more

A telephone without a connection at the other end of the line is not even a toy or a scientific instrument. It is one of the most useless things in the world. Its value depends on the connection with the other telephone and increases with the number of connections

First, does the product have a network? Does it connect people with each other, whether for commerce, collaboration, communication, or something else at the core of the experience? And second, does the ability to attract new users, or to become stickier, or to monetize, become even stronger as its network grows larger?

Zoom’s simplicity is a strength when it comes to the company’s ability to grow its network. When the product concept and value is simple to describe, it makes them easier to spread from user to user, much like the “meme” coined by noted biologist Richard Dawkins in one of my favorite books, The Selfish Gene. You can copy and paste a Zoom link—it’s ... See more