[HN Gopher] The Cold Start Problem: Using Network Effects to Sca...
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The Cold Start Problem: Using Network Effects to Scale Your Product
- A Review
Author : williamtrask
Score : 67 points
Date : 2025-04-22 13:24 UTC (9 hours ago)
(HTM) web link (madhavajay.com)
(TXT) w3m dump (madhavajay.com)
| yodon wrote:
| Am I right in thinking this is only the second blog post by this
| author? If so, wow - way to start with excellence.
| llamavore wrote:
| Hi Yodon, yes this is my second blog post. I'v been one of
| those people who reads and watches for years and decided its
| time to post as well.
| pluto_modadic wrote:
| this reminds me - fediverse apps can build a network effect that
| incentivizes more fediverse apps to be activitypub compatible:
| https://www.augment.ink/bridges-the-last-network-effect/
| garrickvanburen wrote:
| I originally read The Cold Start when I was inside a startup
| studio with an abundance of marketplace ideas.
|
| This book helped clarify for me that no successful marketplace
| starts out as a marketplace - simply because you need to start
| out with ready access to one side (likely the supply side as in
| the Uber & AirBnB examples) and build demand.
|
| The marketplace/network then emerges strategically as more
| suppliers are onboarded.
|
| This insight helped quickly focus and filter the marketplace
| ideas we didn't have any business pursuing.
| ilrwbwrkhv wrote:
| yeah this was actually a horrible book because it gives the vibe
| of greater discovery on how these work but as usual with most of
| these things it badly hides either by choice or by stupidity the
| real way these network effects came into being.
|
| So for example, Uber and Airbnb started by breaking laws and
| helping people make money. If you are okay breaking laws, you can
| get many networks started.
|
| PayPal grew by bribing people with money.
|
| LinkedIn grew with massive amounts of spam, maybe the spammiest
| company in history of tech.
|
| Clubhouse tried to be cool for a while with a few Silicon Valley
| famous names, but is dead.
|
| Slack grew because the founder was very famous and could seed a
| large amount of initial customers based on his profile.
|
| I can go on and on.
|
| Out of these reddit might be the only one that actually broke the
| cold start problem with some light levels of seeding and
| pretending to be different users and also digg collapsing.
|
| I actually hate these kind of books written by VCs who are
| purposely hiding the truth about a lot of these businesses.
| handfuloflight wrote:
| Can you give specifics as to the LinkedIn 'spam'?
| Rzor wrote:
| >The professional networking site LinkedIn has agreed to a
| $13 million out of court settlement in a class action lawsuit
| that claims reputations may have been damaged by multiple
| emails the company sent on behalf of users.
|
| >The suit originated in California in 2013, when LinkedIn
| users sued the company claiming its "Add Connections" feature
| hurt their professional reputation by relentlessly messaging
| their email contacts with requests to connect on LinkedIn,
| Fortune reports. In the complaint, users described being
| embarrassed by the emails and complained that it was very
| difficult to stop LinkedIn from sending more emails once the
| barrage had begun. The settlement affects users who signed up
| for LinkedIn's "Add Connections" feature between September
| 2011 and October 2014.
|
| https://time.com/4062519/linkedn-spam-settlement/
| adventured wrote:
| All you're doing is listing that they utilized different
| strategies to grow faster. Which they all have in common with
| normal businesses.
|
| PayPal grew by incentivizing usage. You say "bribe" to give it
| a negative connotation when it's not at all. Like a store
| giving away free samples. Or a freemium service plan. It's no
| different, the business is eating a cost to grow, and that
| technique is used a zillion times over across all commerce.
| PayPal was de facto spending money on marketing.
|
| Your Clubhouse example isn't even a negative example, you're
| just trashing on them.
|
| Slack grew by leveraging an advantage, like all businesses do
| and without exception. You might as well disqualify all
| founders of all businesses because they have any number of
| advantages, including being born with a superior mental
| capability (Joe Smith is a genius at math, it's totally
| unfair). The Slack founder advantage was earned, he had every
| right to leverage it. Before that he built Flickr with others
| and he wasn't nearly so famous then and Flickr was also a
| network example.
|
| The premise you're floating is: guy that started a convenience
| store was able to get a loan/investment or otherwise had
| capital. It's unrealistic because he used an advantage someone
| else didn't have. Therefore not a valid business strategy.
|
| Hotmail put a promo at the bottom of each email. Totally
| unrealistic that they leveraged their existing scale to grow
| even faster. What normal businesses can do that? (answer: most
| of them)
| ilrwbwrkhv wrote:
| What I am saying is that these "incentives" are what books
| like these do not mention.
|
| Hotmail is also interesting because they had two of these:
| the free email clickable link and a strategic partnership
| with Four11.
|
| This book is a class of books I classify as "bullshit books"
| to my mentees. It is inspired by the bullshit jobs idea.
|
| Makes all the right noises, but tells none of the actual
| tactics.
| tough wrote:
| Also PayPal famously started doing funny things forcing
| sellers to use it once it bought out Ebay.
|
| But yeah you have always to have in mind who is writing
| what you read and what the unsaid things are, great points
| tough wrote:
| http://nfx.com/ was always a good source on Network Effects on
| Digital Products.
|
| I always also liked Andrew's Chen blog posts, he ended up hired
| by a16z
| game_the0ry wrote:
| I am kind of surprised that two obvious solutions to the cold
| start problem are not mentioned:
|
| 1. affiliate marketing
|
| 2. paid ads
|
| I am not a marketer, but I would certainly consider those 2
| options for growth.
| garrickvanburen wrote:
| It's likely because they're both indirect and comparatively
| expensive.
|
| Direct & laser-focused is far more cost-effective in the early
| days.
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