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

Description

A startup executive and investor draws on expertise developed at the premier venture capital firm Andreessen Horowitz and as an executive at Uber to address how tech’s most successful products have solved the dreaded "cold start problem”—by leveraging network effects to launch and scale toward billions of users. Although software has become easier to build, launching and scaling new products and services remains difficult. Startups face daunting challenges entering the technology ecosystem, including stiff competition, copycats, and ineffective marketing channels. Teams launching new products must consider the advantages of “the network effect,” where a product or service’s value increases as more users engage with it. Apple, Google, Microsoft, and other tech giants utilize network effects, and most tech products incorporate them, whether they’re messaging apps, workplace collaboration tools, or marketplaces. Network effects provide a path for fledgling products to break through, attracting new users through viral growth and word of mouth. Yet most entrepreneurs lack the vocabulary and context to describe them—much less understand the fundamental principles that drive the effect. What exactly are network effects? How do teams create and build them into their products? How do products compete in a market where every player has them? Andrew Chen draws on his experience and on interviews with the CEOs and founding teams of LinkedIn, Twitch, Zoom, Dropbox, Tinder, Uber, Airbnb, and Pinterest to offer unique insights in answering these questions. Chen also provides practical frameworks and principles that can be applied across products and industries.  The Cold Start Problem reveals what makes winning networks thrive, why some startups fail to successfully scale, and, most crucially, why products that create and compete using the network effect are vitally important today. Title Page Contents Introduction Part I: Network Effects 1. What’s a Network Effect, Anyway? 2. A Brief History 3. Cold Start Theory Part II: The Cold Start Problem 4. Tiny Speck 5. Anti-Network Effects 6. The Atomic Network—Credit Cards 7. The Hard Side—Wikipedia 8. Solve a Hard Problem—Tinder 9. The Killer Product—Zoom 10. Magic Moments—Clubhouse Part III: The Tipping Point 11. Tinder 12. Invite-Only—Linkedin 13. Come for the Tool, Stay for the Network—Instagram 14. Paying Up for Launch—Coupons 15. Flintstoning—Reddit 16. Always Be Hustlin’—Uber Part IV: Escape Velocity 17. Dropbox 18. The Trio of Forces 19. The Engagement Effect—Scurvy 20. The Acquisition Effect—PayPal 21. The Economic Effect—Credit Bureaus Part V: The Ceiling 22. Twitch 23. Rocketship Growth—T2D3 24. Saturation—eBay 25. The Law of Shitty Clickthroughs—Banner Ads 26. When the Network Revolts—Uber 27. Eternal September—Usenet 28. Overcrowding—YouTube Part VI: The Moat 29. Wimdu versus Airbnb 30. Vicious Cycle, Virtuous Cycle 31. Cherry Picking—Craigslist 32. Big Bang Failures—Google+ 33. Competing over the Hard Side—Uber 34. Bundling—Microsoft Conclusion: The Future of Network Effects Acknowledgments Notes About the Author Copyright About the Publisher