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

by Andrew Chen

The “Engagement Effect” describes how a denser network creates higher stickiness and usage from its users—it is a more specific form of the classic description of network effects that I covered at the beginning of the book, “the more users that join the network, the more useful it gets.” However, the classic definition can be refined to include the underlying system that drives the value—use cases and “loops” that define how users derive value when engaging with a product—as well as the specific metrics that increase with a denser network. For example, Twitter is a lot more interesting to use, now with media outlets, celebrities, and politicians on it, than in the early days when you might just have a nerdy friend or two on the platform. Because there’s more types of content creators in the network, what might have felt like an app to stay in touch with friends in the early days might eventually evolve into a diverse set of use cases: tracking political news, keeping abreast of what’s happening in your industry, keeping up with your favorite celebrities, and so on.