The Cold Start problem


한줄 요약: 개쩌는 프로덕트를 만들더라도 atomic network 가 없으면 아무것도 아니다.

1. Network effects (A driving force for tech’s success)

What is network effects?
You can build an app, you can have all the right features.
But if you don’t actually have the right people in the product at the same time with you, then it’s just not going to be useful at all.


And you’re just not going to use a product like some of the products such as airbnb/figma/github/Uber/Tinder unless other people are also using it in the same way.

This is the Cold Start Problem.

When you don’t have any users, the product won’t work. And if you don’t solve it, it’ll kill your startup - whether it’s a marketplace, social network, workplace collaboration app, multilplayer game, etc.

Stage

1) Cold start problem 


strategy

-using atomic networks
-forming atomic networks
-easy&hard side of a network and where to focus

2) Tipping Point


All of a sudden, you should get in to the tipping point which is when you’re able to create these networks on demand, and you’re able to start building the 2nd and the 3rd … 10th one and then off you go.



3) Escape velocity

where you start to really professionalize your growth marketing approaches and really amplify your network effects.



4)The Ceiling


And then inevitably, as all of these products become really successful, there’s various ceilings that you hit. Ex)trolls, spammers

You just have overcrowded.


5)The Moat

how do you ultimately build the defensibility in your product such that you can compete against new startups and new entrants in to the market?


2. Atomic network


What is that’s so special about Silicon Valley companies that has cause them to make such a big impact in the world?

-atomic network-

How may people need to be connected at the same time doing the same thing in order for that product to be valuable.
Zoom = Need only 2 or 3 people.

Slack = 5~ 10 people on the same team
Airbnb & Uber = need hundreds of drivers & listings (city)
tinder = 2-3? no, hundres of people (Think of swipe features)

Knowing or having a theory what that threshold actually looks like is really important.
You start small, and the reason why you start small is so that you can build that density of the network. (*Large companies so bad at this)


why if you’re a huge company, just blasting everything to PR and putting links on your home page and doing all of that doesn’t let you build highly dense network to highly dense network and it goes strength to strength. As a result, we’ve seen that much less effective.

3. Cold start problem strategy

“Sometimes you actually have all the right features, You just don’t have the right network.”
(operationalizing)

“Do Things that Don’t Scale.”

“The most common unscalable thing founders have to do at the start is to recruit users manually. You can’t wait for users to come to you. You have to go out and get them.”-



At the very beginning , to get your first hundred users or customers, it actually tends to be very manual.

ex)Tinder strategy = Using atomic networks

A birthday party,They were going to go and sponsor this birthday party from one of the really popular people on the USC campus.
They required you to install Tinder show it to the bouncer in order to get to the party.

The very next day saw from across the room that you didn’t have a chance to talk to, and so they would just check the app and off they went. They could take over the whole USC campus. And by demonstrating that to themselves, then they were able to then pick another school and another school and another school. Go to the top fraternities and sororities and sell into there and then build it. It seeps into LA -> New York -> San Francisco.

ex) Linkedin strategy = easy&hard side of a network and where to focus-

Linkedin was identified the set of the folks who are still in the grind. (Middle range Professional hierarchy, Not Top career & Breaking in) Linkedin using that base of users and get them going. After they get them going, it’ll attract everybody else, because once you get enough of those people, then some of the top folks will be very interested just to see them. And then some of the people who are breaking in will aspiration really want to speak with and connect with some of the folks in the middle. And they literally manually just told everyone in the company,” let’s all just send links.”

ex) Reddit strategy = Forming atomic networks (a.k.a Flint-stoning)

Bootstrapping methods in order to solve the cold start problem.
And you only use it for a while, and then eventually you get enough users, and the product gets far enough along, then you can let go and your community takes it over for you.

4. What if you start with a product that has no network effects?

ex)Airbnb = using atomic networks(credit) + already-existed platform


The good new is lodging(하숙) is just an existing market, people just know that it’s a thing. The issue is that there’s a huge opportunity, in particular, if you could build hotels anywhere. But you often can’t.

Airbnb solved the cold start problem for themselves. It was a combination of taking things like SXSW conferences + let’s get enough inventory just at this one point in time (because we know all the guests are going to be there / We can get all the hosts / We can get this block of time / Let’s just get it off the ground that way).

A lot of the early employees and team they would just Airbnb all the time. There was a credit, and so you had kind of this Flint-stoning aspect of people just doing that.

Airbnb listing just post it on Craigslist(already-existed).
They could really supercharge a lot of their early growth by growing on top of Craigslist.

Wimdu vs Airbnb

Airbnb survives.


Quality of Airbnb’s network / Density of connections matters a lot.