들어가기 앞서, 우선 이 책은 비즈니스에 대한 고민이 있을 때마다 다시 꺼내게 된다. 몇 번을 읽어도 무엇을 해야 할지 명확해지지 않으나 그래도 매번 새로운 감을 주는거 같아서 읽는다. 링크: The Cold Start Problem by Andrew Chen

Network Effects

What's a Network Effect, Anyway?

In its classic usage, a network effect describes what happens when products get more valuable as more people use them.

사람이 많아질수록 네트워크 효과가 강해지는 네트워크도 있으나, 사물인터넷과 같이 센서들이 많아질수록 네트워크 효과가 강해지는 경우도 존재한다. 이처럼 "네트워크 효과가 있다"는 것은 네트워크를 이루는 절점(node)이 많아질수록 네트워크가 갖는 힘이 강해지는 것을 의미한다.

A telephone without a connection at the other end of the line is not even a toy or a scientific instrument. It is one of the most useless things in the world.

by Theodore Vail, former President of AT&T

위스퍼도 마찬가지이다. 글을 쓰는 사람 입장에서 보는 사람이 없다면 가치를 못 느낄 것이다. 다만 차이점은 비동기 소통이기에 그런 느낌을 주면 된다는 것이다. 이를 위해 좋아요, 댓글, 답글, 팔로잉 등 다양한 상호작용이 가능하게 만든다.

The "network" is defined by people who use the product to interact with each other. For AT&T's telephone network, it literally consisted of the wiring that spanned between homes.

The "effect" part of the network effect describes how value increases as more people start using the product. Sometimes the increasing value manifests as higher engagement, or faster growth. But another way is to think about it as a contrast---at its beginning. YouTube didn't have any videos, and neither viewers nor creators would find it valuable. But today, YouTube has nearly 2 billion active users watching a billion minutes of video per day, and this in turn creates engagement between creators and viewers, viewers and each other, and so on.

위스퍼에서 네트워크의 가치는 어떤 식으로 증가하는게 맞을까? 네트워크를 이루는 각각의 유저 입장에서 해당 네트워크에 대한 가치를 느끼려면, 자신이 쓴 글이나 댓글 등에 대해서 트래킹이 가능해야 하지 않을까?

... how do you tell if a product has a network effect, and, if yes, how strong is it? The questions to ask are simple: First, does the product have a network? ... And second, does the ability to attract new users, or to become stickier, or to monetize, become even stronger as its networks grows larger?

위스퍼는 네트워크를 가지는가? 그렇다.

유저가 늘어날수록 위스퍼는 끈적해지는가? 글쎄다. 생산자 입장에서 유저가 늘어날수록 도달할 수 있는 관중이 늘어나기에 좋을 것이다. 그러나 그걸 알 수 있는 방법이 없고, 한 곳에 모아서 지표를 확인할 수 없다면 그 또한 말짱도루묵일 것이다. 이러한 측면에서 소비자가 느끼는 끈적함은 생산자에게 의지할 수 밖에 없다. 글이 생산되지 않는다면 소비자는 모두 떠날 것이다.

... it's not a great time to launch a new product. ... competition is fierce, copycats abound, and marketing channels are ineffective.

We are now in a zero-sum era of attention with minimal defensibility for a vast swath of mobile app, software-as-a-service (SaaS) products, and web platforms.

No wonder the top app charts now rarely change, and are mostly dominated by large, established products.

While Instagram might be able to copy Snapchat's features like Stories or ephemeral photo messages in a few months, it's difficult to change the behavior of millions of consumers to switch over.

마찬가지로 에타나 트위터의 기능들을 베낄순 있어도, 그들이 보유한 고객의 행동 변화를 이끌어내는건 어렵다.

Knowledge workers increasingly have the same "it just works" expectations on enterprise software, as they do with the apps they use at home. Increasingly, this means the enterprise is becoming "consumerized" with software that is adopted by individuals, then spread within the company's network---with network effects.

Cold Start Theory

Solving the Cold Start Problem requires getting all the right users and content on the same network at the same time---which is difficult to execute in a launch.

... an approach the focuses on building an "atomic network"---that is , the smallest possible network that is stable an can grow on its own. For example, Zoom's videoconferencing network can work with just two people whereas Airbnb's requires hundreds of active rental listings in a market to become stable. ... who are the first, most important users to get onto a nascent network, and why? And how do you seed the initial network so that it grows in the way you want?

The Cold Start Problem

Tiny Speck

First, I start with a principal dilemma, which I call "Anti-Network Effects". It's a myth that network effects are all powerful and positive forces---quite the opposite. Small, sub-scale networks naturally want to self-destruct, because when people show up to a product and none of their friends or coworkers are using it, they will naturally leave. What solves this? "The Atomic Network"---the smallest network where there are enough people that everyone will stick around.

BeReal을 사용하면서 느낀건데, 나를 제외한 친구 3명이 함께 시작하면서 5개월 전부터 계속해서 사용하는 중이다. 물론 그 이전에도 체험해보기 위해서 가입한 적은 있으나 둘러보곤 곧바로 탈퇴했다. 만약 친구 1명과 사용을 했다면, 사실상 카톡으로 사진을 주고 받는 것 이상의 의미를 갖진 못했을 것이다. 그런 의미에서 BeReal의 atomic network의 크기는 3~4명이 아닐까 싶다.

These networks often have "sides", whether they are buyers and sellers, or content creators and consumers. ... However, the most important part of any early network is attracting and retaining "The Hard Side" of a network---the small percentage of people that typically end up doing most of the work within the community.

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.

When the Cold Start Problem is solved, a product is able to consistently create "Magic Moments." Users open the product and find a network that is built out, meaning they can generally find whoever and whatever they're looking for.

Anti-Network Effects

The reality is that new products are often greeted by a nice initial spike of users, but this falls to a trickle as the novelty wears off. ... People won't use their product unless their friends are on it.

Slack works with just 2 people, but it takes 3 to make it really work. There are long-running 3 person groups that are stable---that's the minimum required to be called a customer.

by Stewart Butterfield, CEO of Slack

Based on our experienc of which companies stuck with us and which didn't, we decided that any team that has exchanged 2,000 messages in its history has tried Slack---really tried it." ... "But it hit us that, regardless of any other factor, after 2,000 messages, 93% of those customers are still using Slack today.

by Stewart Butterfield, CEO of Slack

For new products, it's important to have a hypothesis for the size of your network even before you begin. Communication apps can be 1:1, so the network is small, and you can plan accordingly. Contrast that to products that are highly asymmetrical, with content creators and viewers, or marketplaces with buyers and sellers---these are likely to require a much bigger number to hit the threshold, and require a much bigger effort to get started. The size of an initial network helps determine a launch strategy.

You need the right people on the network. Ten people using Slack all from the same team is better than ten random people in a larger company. Density and interconnectedness is key.

Whiisper도 우리끼리 고해성사를 하는 곳으로 사용하고, 조금씩 친구들한테 고해성사를 하라고 추천해볼까?

The Atomic Network

If you study the launch of products with network effects, you'll see that one of the most common threads is that they often start small, in a single city, college campus, or in small beta tests at individual companies---like Slack's story.

The networked product should be launched in its simplest possible form---not fully featured---so that is has a dead simple value proposition. The target should be on building a tiny, atomic network---the smallest that could possibly make sense---and focus on building density, ignoring the objection of "market size". And finally, the attitude in executing the launch should be "do whatever it takes"---even if it's unscalable or unprofitable--to get momentum, without worrying about how to scale.

Disruptive technologies are dismissed as toys because when they are first launched they "undershoot" user needs. The first telephone could only carry voices a mile or two. ... What they failed to anticipate was how rapidly telephone technology and infrastructure would improve (technology adoption is usually non-linear due to so-called complementary network effects). The same was true of how mainframe companies view the PC (mircocomputer), and how modern telecom companies viewed Skype.

by Chris Dixon, General Partner @ a16z

Underestimating new products in this way is the number one way to make dumb predictions in the tech industry. It's what leads pundits to say a product won't work, isn't interesting, or has a small market size---followed by that product proving them wrong just a few years later.

It's not that product changes are needed---it's that the network needs to fill out to the point where people and content are relevant.

The first step to launching an atomic network is to have a hypothesis about what it might look like. My advice: Your product's first atomic network is probably smaller and more specific than you think. ... It was similar for Uber, whose networks we tend to talk about as "San Francisco" or "New York", but in the earliest days, the focus was on narrow, ephemeral moments---more like "5pm at the Caltrain station at 5th and King St." The general managers and Driver Operations had an internal tool, called Starcraft---referring to the real-time strategy game popular at the time---that allowed them to click on a group of cars, text them "Go to the train, lots of riders!" and direct them in real time.

... because what's easier for you will be easier for your competitors---they just need a few users to get started as well, which is why there are so many messaging apps and chat features inside larger products.

Growing city by city, campus by campus, or team by team is a surprisingly powerful strategy. It leads to dense, organic connections of users that strengthen network effects across multiple dimensions: Engagement goes up, because users are more likely to find other relevant user. Viral growth goes up when prospective users of a product sees that their friends and colleagues are all using the service.

The Hard Side

... there is a minority of users that create diproportionate value and as a result, have diproportionate power.

This is the "hard side" of your network. They do more work and contribute more to your network, but are that much harder to acquire and retain. For social networks, these are often the content creators that generate the media everyone consumes.

You might look at a product and think its network doesn't have sides. Sometimes this is referred to in the industry as one-sided networks, like messaging apps and social networks. But even in these cases, there are active, extroverted users who initiate conversations and organize get-togethers, and there are those who don't. Nearly every network has them, and the hard side must all be happy for the network to function.

It may surprise you to know that all of Wikipedia---with more than 55 million articles---was written by a small group of users. ... there are only 100,000 active contributors per month, and when you look at the small group of writers who make more than 100+ edits in a month, it's about 4,000 people. As a ration, it means that active contributors represent only 0.02% of the total viewer pool.

There are nearly 100 million riders on Uber, but just a few million drivers. There are two billion active users on YouTube, but just a few million upload videos.

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.

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 easy side of the network.) How do they first hear about the app, and in what context? For users on the hard side, as the network grows, why will they come back more frequently and become more engaged? What makes them sticky to your network such that when a new network emerges, they will retain on your product?

Users become addicted to the "social feedback loop"---you publish content, and others see it and engage in the form of likes, shares, and comments. When this feedback is positive, it drives the creator to generate even more content.

Solve a Hard Problem

Usually the hard side will continue to use Airbnb and TikTok because that's where the demand is, and thus, they are locked into the positive network effect on those platforms. However, the trick is to look closer---to segment the hard side of the network and figure out who is being undeserved.

New product 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.

The Killer Product

Yet at the beginning, people didn't get the idea behind Zoom---why? According to Eric, it just seemed too simple, literally.

Zoom's value proposition reinforced the network effects within a team and between companies, by enabling frictionless meetings.

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 effect, whereas traditional products grow by building better features and supporting more use cases.

They're very simple to use, but also easy to describe to your friends and coworkers as well.

New technologies allow for new customer behaviors. There are new interface paradigms, like swiping or tapping with your finger, that allow for new product ideas. ... Sometimes this looks like Microsoft Office's desktop apps evolving into web-based products like Google Suite, Notion, or Airtable. Similarly, dating websites like Match were subsumed by easy-to-use, swipeable interfaces like Tinder, ...

Magic Moments

After working for months on Talkshow, the duo realized that they needed to radically simplify. To make sure the creators had a lightweight experience, it would be ideal to easily create content with people already hanging out in the app---that way, it avoided the coordination problem of getting your friends into an app at the same time.

Great products take time to figure out, and Clubhouse is no different. It was an overnight success that took years.

The Magic Moment is a nice concept, but it would be even more useful if you could measure it. The way to best do this might be surprising---you start with the opposite of magic, the moments where the network has broken down, and you start solving the problem from there.

At Uber. we called these moments Zeroes. A zero at Uber was the worst experience you could have, when a rider opens the Uber app with the intent to pick an address and pick up a ride---but there aren't any drivers in the area! This is a zero.

For Slack, it might be that the user you're hoping to message hasn't yet signed up for the app---that can be demotivating, leading you to go back to email. For a social network, a zero might be when a user joins and none of their friends or favorite content are yet on the service---causing them to spend their precious attention elsewhere.

To consistently ensure that people never experience zeroes, the network needs to be built out substantially, and it needs to be active, too!

User who get "zeroed" often churn and worse, they come to believe the service isn't reliable.

I encourage product teams to develop their own form of this metric, laid out as a dashboard of networks---whether that's divided by geography, product category, or whatever else makes sense. Within each, it can be useful to track the percentage of consumers that are seeing zeroes.

All Magic Moments, with minimal zeroes. This is a function of both the right features and the right network---not just one without the other.

... you can always feel product/market fut when it's happening. ...

by Marc Andreesen, Founder of a16z

... users are inviting other users, and sharing content from your product across the internet.

The Tipping Point

Tinder

Furthermore, online dating is not typically a product that takes advantage of viral growth---although culturally things may be changing, many folks still find it a bit embarassing to tell their friends they're using a dating app.

Tinder는 온라인 데이팅 서비스이다. 온라인으로 누군가를 만났다는거는 쉽게 자랑할 수 없는 이야기거리이다. (물론 Chen처럼 나도 요즘은 어떤지 모르겠다.) 그렇지만 나는 떳떳하게 말하지 못한다. 이런 인식을 뛰어남어서 가장 성공적인 데이팅 서비스가 되기까지 어떤 일을 했을까?

Tinder would work with Justin's younger brother to throw a birthday party for one of his popular, hyperconnected friends on campus, and use it to promote Tinder.

There was one catch with the party: First, you had to download the Tinder app to get in. ... everyone at the party woke up and remembered they had a new app on their phone. There were attractive people they hadn't gotten to talk to, and this was their second chance.

by Sean Rad, Cofounder and former CEO of Tinder

It was a group of the most social, most hyperconnected people on the USC campus, all on Tinder at the same time. ... 95 percent of this initial cohort started to use this app every day for three hours a day.

These growth tactics continued to scale, and the team iterated to make them more effective.

The team scaled by recruiting a large team of ambassadors who were highly connected on campus.

Invite-Only

Why turn down users who want to try your product?

그러게, 진짜 이건 필연적으로 등장하는 의문이긴 하다. 무조건 맞는 방법도 아닐거고.

Yet this constraint is at the heart of the so called "invite-only" strategy for launching a product. And for Gmail, LinkedIn, Facebook, and many other networked products, it has worked. Why?

잘 보면 모두 사람간의 정보(글, 사진, 영상) 교류가 끝인 제품들이다.

There are people like Bill Gates who are at the top of the professional hierarchy. He gets more requests for intros than he can deal with, and everyone who knows Gates will be asked for intros to him. At the launch, LinkedIn wouldn't have made sense for people like Bill Gates. But there's a mid-tier of successfull people who are still building and hustling, who set fewer request for intros but will actually take the meetings. This middle rank of people is where LinkedIn really worked.

by Reid Hoffman, Executive Chairman @ LinkedIn

To seed the initial network of this middle tier of the hierarchy, the product was designed to be invite-only.

On the first week of LinkedIn's launch. employees and investors of the company could invite as many people as they wanted, but you couldn't sign up from just the website. We intentionally seeded the network with the mid-tier of successful professionals that wanted to take time to connect.

by Reid Hoffman, Executive Chairman @ LinkedIn

... LinkedIn never explicitly described itself as a "job seeking" product. THis was a concern because there was a bit of a stigma appearing on a site when your coworkers or boss might see, and thus, it was safer to avoid the label.

It started from the address books of the founding team, but then the members who joined started to invite their own. 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.

특히나 터미널은 이러한 전략을 고수해야 할 필요가 있다. 비슷한 마인드셋을 가지고 있는 사람을 유저가 알아서 초대하게 만들면, 일정한 분위기를 풍기는 사람들이 모이는 네트워크를 만들어낼 수 있기 때문이다. 그렇게 되면 강력한 cohort를 형성해서 다시 방문하고 싶은 네트워크를 만들어낼 수 있을 것이다.

Famously, Facebook initially required a harvard.edu email address to sign up. both defining an atomic network where everyone trusted each other, and also providing an explicit way to think about school-by-school launches.

These are all clever, and while invites-only strategies are often described as taking advantage of the fear of missing out---FOMO---that's not the core driver. 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.

결국 초기에 어떤 네트워크를 세팅하는건지가 제일 핵심이고, 이런 초기 네트워크와 비슷한 결의 사람들을 계속 늘려나감으로써 네트워크를 확장하는 것이 중요하다. FOMO는 그저 이를 촉진시키는 전략 중 하나일 뿐이다.

(To be continued...)