The Cold Start Problem: Using Network Effects to Scale Your Product

The key insight in the stories of Homobiles or Tinder is—how do you find a problem where the hard side of a network is engaged, but their needs are unaddressed? The answer is to look at hobbies and side hustles.

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

There are big advantages to an in-app wait list experience. For example, Robinhood, the commission-free online brokerage, had a hot and widely anticipated launch, and launched by signing users up to a wait list. On the back end, the team slowly let people in, pacing the growth so servers weren’t overwhelmed. The Robinhood mechanic asked wait list u

Tool, network Create + share with others (Instagram, YouTube, G Suite, LinkedIn) Organize + collaborate with others (Pinterest, Asana, Dropbox) System of record + keep up to date with others (OpenTable, GitHub) Look up + contribute with others (Zillow, Glassdoor, Yelp)

Networked products are fundamentally different from the typical product experience—they facilitate experiences that users have with each other, whereas traditional products emphasize how users interact with the software itself. They grow and succeed by adding more users, which create network effects, whereas traditional products grow by building be

Of course he was talking about getting to product/market fit more generally, but for networked products, I would take this description and infuse it with network goodness—users are inviting other users, and sharing content from your product across the internet. You search on Twitter, Reddit, and other social media and it’s chock full of your loyal

Why is there a hard side at all? Hard sides exist because there are tasks in any networked product that just require more work, whether that’s selling products, organizing projects, or creating content. Users on the hard side have complex workflows, expect status benefits as well as financial outcomes, and will try competitive products to compare.

wanted Zoom to be free, at least for the basic experience, so that people could see why it was so much better. I first thought, maybe it should be limited based on participants. Maybe 3 attendees could join, but once there were 4, you’d have to pay. But that didn’t feel right. I studied Dropbox’s pricing strategy and wondered, why did they start ch

This is the copy-and-paste mechanism in motion—take LinkedIn’s curated initial network, give them invites to join a killer product, and watch the network scale with more like-minded individuals.

Rideshare networks, for example, fundamentally depend on the underutilization of cars, which generally sit idle most of the time besides the daily commute and the occasional errand. Airbnb is built on the underutilization of guest bedrooms and second homes, combined with the time and effort of the hosts. Craigslist and eBay are built on letting peo