More on this book
Community
Kindle Notes & Highlights
New products often disrupt markets by starting on the low end, providing “good enough” functionality, and growing from there into the medium, and eventually into the core market of the incumbents. Recently, the opposite trend has emerged—products like Uber and email company Superhuman, have started at the top of the market as a luxury product, and worked their way down.
Yet I observe that it’s a distinctive quality of networked products that they often do one thing well.
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.
This is a concept missing from traditional software products, where the richness and complexity of the experience depends on who’s on the network rather than the feature set.
It’s no surprise that compelling networked products often sound like a meme. The idea seems to be really basic, as it allows you to take one or two main actions. The entire product experience exists on just a handful of screens, with a small set of focused features.
The commonality between all these networked products is that they offered novel ways for people to interact, and over time, the network became the defensibility.
The product idea itself should be as simple as possible—easily understandable by anyone as soon as they encounter it. And at the same time, it should simultaneously bring together a rich, complex, infinite network of users that is impossible to copy by competitors.
why did they start charging at 2 gigabytes instead of 1? As I thought about it, I realized, it gave you time to use Dropbox more, and the more you used it more likely you will hit the cap and starting paying.
If Zoom charged every user with no free tier, it might have generated more revenue in the short run, but would likely have needed to spend more on marketing and sales to compensate.
In other words, when there’s a new platform shift, the companies that build the killer products often create some of the most valuable companies in the industry.
New ideas could be implemented that took advantage of the unique technology of the phone: cameras, location, notifications, and so on. You couldn’t just translate your website into a mobile app; you had to think mobile-first.
It took a lot of setup and a lot of work to get to anything that felt like a Magic Moment.
After working for months on Talkshow, the duo realized that they needed to radically simplify.
Great products take time to figure out, and Clubhouse is no different. It was an overnight success that took years.
When the point of the product is to interact with other participants in the network, a zero means that its value can’t be fulfilled, which means users will bounce and possibly never come back again.
Users who get “zeroed” often churn and worse, they come to believe the service isn’t reliable.
new networks default to having many zeroes. Until this destructive force is dealt with, the network can’t get off the ground.
Within each, it can be useful to track the percentage of consumers that are seeing zeroes. If it’s too high a number, that category of users is experiencing anti-network effects, and it will never break through.
When a networked product nails its launch, its users can have consistently great experiences whenever they use the app. All Magic Moments, with minimal zeroes.
But the same would have happened if the company picked the wrong network, starting with an inappropriate audience in a faraway geography. Both the right product and the right network are needed.
you can always feel product/market fit when it’s happening. The customers are buying the product just as fast as you can make it—or usage is growing just as fast as you can add more servers. Money from customers is piling up in your company checking account. You’re hiring sales and customer support staff as fast as you can. Reporters are calling because they’ve heard about your hot new thing and they want to talk to you about it. You start getting entrepreneur of the year awards from Harvard Business School.26
Later, the team would come to believe that upon getting 20,000 users in a single market, the app would fully hit Escape Velocity and grow to take on that region completely.
“Come for the Tool, Stay for the Network” strategy. Take Dropbox, for instance, which is initially adopted by many people for file backup and keeping files synced up between work and home computers—this is the tool. But eventually, a more advanced and stickier use case emerges to share folders with colleagues—this is the network.
Invite mechanics work like a copy-and-paste feature—if you start with a curated network, and give them invites, that network will copy itself over and over automatically.
LinkedIn’s curated initial network, give them invites to join a killer product, and watch the network scale with more like-minded individuals. This is superior to a centralized PR-based launch, which can fizzle out and become diluted by different geographies, industries, and demographics.
When a new product carefully curates a network, followed by implementing invites so that it can copy and paste similar networks, then it can grow to take over the market.
For products like Slack or Zoom where you only need a few people to make it useful, having the guarantee of at least one connection is a giant step toward solving the Cold Start Problem.
However, invite-only launches have been a key feature of many products precisely because for networked products, there are huge advantages. It allows the early network to gel as a community, develop a high density of connections, and grow organically via virality.
The Robinhood mechanic asked wait list users to tweet or post to social media in order to jump ahead, ultimately bringing a million users in before a widespread release.
creators of networked products have an additional task: curating the right people so that the experience of a new member joining the community, marketplace, or other network is just right.
Had Tinder begun somewhere besides USC—let’s say in a small rural town—it wouldn’t have been able to build campus to campus, and then large cities and then on from there. It would have changed the whole strategy.
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.
an article on Techcrunch by analytics firm RJ Metrics analyzed data from Instagram’s APIs and concluded that 65 percent of users were not yet following other people on the network.
Eight years after its initial launch, network effects had fully taken over for the utility of photo editing—it’s more network, and less tool.
that’s a video, photos, resumes, or documents. The tool is combined with a network that allows people to interact with the content and by extension, other people.
In B2B, you could think of a freemium business model as a way to lower the friction for content creators and organizers within a workplace, who then spread it among their colleagues.
You need to nail the killer product, and prove that you can gain an atomic network, before reaching for the financial lever.
The argument from cryptocurrency advocates is that, in contrast to traditional currencies issued by governments, it is impervious to inflation—no one party can just print more, for example, when the economy is doing badly.
You could also think of cryptocurrency as a bet toward more economic and government instability, nationalism, and closed economies, which are all unfortunate trends happening now globally.
Developers preferred to build applications for the Microsoft platform because it had the most users, the best tools, and well-established distribution.
This is the reason why lack of profitability—while controversial—is often a smart way to accelerate a network past the Tipping Point.
What looks like unprofitability in the short term might lead to dominance in the long term, if the market reaches a Tipping Point in your favor.
Once these initial networks are formed, the Flintstoning techniques evolve toward automation as the momentum builds. The goal is just to manually fill in critical parts of the network, until it can stand on its own.
Reddit’s use of Flintstoning is similar to the strategy used by companies like Yelp and Quora—to fill in the hard side of the network, which were also content creators.
High-tech upstarts often employ Flintstoning by throwing employees at it—acting as a traditional brokerage—while slowly automating the most repetitive tasks.
In cases like these, customers might initially interface with a thin layer of software, but in the back end, there’s a rapid flurry of running legs to make the prehistoric car go.
While this isn’t a common strategy for social networks, it’s also not crazy. In recent years, we’ve seen players like YouTube in video and Spotify in podcasts begin to license and create more first-party content to accelerate their services.
Uber’s global offices would all fly into Las Vegas, as discreetly as possible given the number. It was in celebration for a major milestone: hitting $10 billion in gross revenue, just six years after the company had been founded.
They grew riders and drivers the hard way—coordinating street teams that handed out discount cards next to train stations—and reacted to the constant treats of regulation and competition.
As a result, Uber saw itself as an “ops-led” company, and it was this team that best embodied the startup’s entrepreneurial and creative culture. The hustle within the Ops team was renowned, and one of the foundational elements of Uber’s success.
