To attract the hard side, you need to “Solve a Hard Problem”—design a product that is sufficiently compelling to the key subset of your network.

Thus the order of operations, at least for most consumer-facing marketplaces, is “supply, demand, supply, supply, supply.” While supply might be easy to get onto the network early on through subsidies, eventually it will become the bottleneck.

This is where the classical definition of a “network effect” is wrong. I redefine it so that it’s not one singular effect, but rather, three distinct, underlying forces: the Acquisition Effect, which lets products tap into the network to drive low-cost, highly efficient user acquisition via viral growth; the Engagement Effect, which increases inter

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

While establishing an initial network, it usually doesn’t make sense for an underresourced startup to throw a lot of money around to get started. Instead, teams are often better to focus on basics, like figuring out the right target market, and creating the initial product features. You need to nail the killer product, and prove that you can gain a

For networked products, the curation of the network—who’s on it, why they’re there, and how they interact with each other—is as important as its product design. Starting with a deliberate point of view on who’s best for your network will define its magnetism, culture, and ultimate trajectory.

Users who come in with more friends have higher retention, so you want to maximize it, at least up to a point of diminishing returns. Do enough of these analyses, and some interesting patterns will show up—you’ll find the kink in the curve that tells you how much network density is needed to really spike up usage. Every product has this threshold,

might seem silly to fight for early access, but there are permanent benefits for getting on in the first few months. Earlier users could grab the username that they wanted. An address like frank@gmail.com might be claimed right away, whereas a late-comer might have to be happy with frankthetank2000@gmail.com. Social networks have a similar incentiv

1% of the user population might start a group (or a thread within a group) 10% of the user population might participate actively, and actually author content whether starting a thread or responding to a thread-in-progress 100% of the user population benefits from the activities of the above groups (lurkers)19 This is often called the “1/10/100” rul