This makes it much easier to get started—because as long as you can get each new user to find a friend that’s already on the network, or to invite a friend, then it’ll work.

Because the hard side is so critical, it is imperative to have hypotheses about how a product will cater to these users from day one. A successful new product should be able to answer detailed questions: Who is the hard side of your network, and how will they use the product? What is the unique value proposition to the hard side? (And in turn, the

It is a top 100 website on the internet, and amazingly, it operates with a staff of only a few dozen people.

The Cold Start Problem Tipping Point Escape Velocity Hitting the Ceiling The Moat

All of the examples in this chapter—coupons, Uber, crypto, Microsoft, etc.—involve the use of up-front efforts to bootstrap the network. One critique of subsidizing networks in this way is that it’s like “selling a dollar for ninety cents.” Yes, it would be ideal to be able to grow a network with positive unit economics from day one, but sometimes

Create + share with others (Instagram, YouTube, G Suite, LinkedIn)

Almost every large marketplace company is built on an underutilized asset, whether that’s unused real estate in the case of Airbnb, a car that’s sitting idle for Uber, or unused time for many labor marketplaces. Marketplaces allow owners of these idle assets the ability to monetize them more efficiently as the network grows larger.

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