The Cold Start Problem: How to Start and Scale Network Effects

It was all text. It had funny commands that started with a “/” because it was based on an old piece of technology, Internet Relay Chat (IRC), originally built by Finnish university employee Jarkko Oikarinen. IRC was first created in 1988, during an earlier phase on the internet, when user-friendliness was not a priority.

Usenet, which are old-school discussion forums; MUDs/MOOs, which are text-based virtual worlds; and of course IRC.

These companies pioneered a new style of “bottom-up” growth, where individual contributors seeded a product’s adoption within a customer company.

For new products, it’s important to have a hypothesis for the size of your network even before you begin. Communication apps can be 1:1, so the network is small, and you can plan accordingly. Contrast that to products that are highly asymmetrical, with content creators and viewers, or marketplaces with buyers and sellers—these are likely to require

Cold Start Theory lays out a series of stages that every product team must traverse to fully harness the power of network effects. The curve represents the value of the network as it builds over time, and is shaped as an S-curve with a droop at the end. There are five primary stages: The Cold Start Problem Tipping Point Escape Velocity Hitting the

The “network” is defined by people who use the product to interact with each other.

One notable example of this is the ever present “People You May Know” or “Friend suggestions” feature. Every social platform at scale has some kind of implementation of it for a reason: it works incredibly well.

“500 of the right people”—Sean

Organization tools begin with new, clever ways to collect links, files, tasks, and forms of content to make them more easily searchable and browsable.