How To Make Your Social Network Succeed

You launched your network and nobody's sticking what?

Growing Your Network

Growing a network reliant on network effects is extraordinarily difficult. This graph helps illustrate the “self-fulfilling prophecy” phenomena of growing a network reliant on network effects.

The orange line here is the expectation of users a potential newcomer has when joining the network. The blue line is the actual number of users. If the actual is less than their expectations, they will be disappointed and leave the network. If the reality surpasses their expectations, then they stay! The arrows denote “pressure zones”, or how the actual number of users will be affected in that area.

As an example of this graph in action, let’s say we’re starting a new social network. We have a huge advertising campaign, the product is great, launch day is a huge success. Users hop on to your social network day one and find… that none of their friends are on the network. Not just that, nobody they even know is on the network. But what about the expensive marketing campaign? The messages? The hype!? This was supposed to be the next big thing! That user may try again a few days later, but the results will probably be the same. The user is disappointed, and leaves the network forever. Sound familiar to something you've built?

Multiply this effect by a thousand people and a thousand dollars and… the network still fails. People still get disappointed and the total number of users can’t seem to get off the ground. This is that “downwards pressure zone” you see in the graph, in action. That first hill is extremely difficult to climb, and users need to quickly see and experience the network’s benefit before deciding to stay. This is why you don’t see any successful private social networks. I know this because I built one. Without a focus on discovery, without users having a feeling of how many people are on the network, without a clear benefit screaming in the user’s face, the platform will ultimately fail, because new users have no incentive to stay! Only by reaching that tipping point on the graph do we start to see success. Climbing that hill is hard, and I’ll show you how to beat it.

How To Win The Uphill Battle

Now there are strategies for overcoming this initial downwards pressure zone and that's something I'd like to get a little bit more into. This is often called the chicken or the egg problem, and there are quite a bit of strategies for overcoming it. But if we're talking about network effects, we have to talk about how we're going to apply this to our product and do it successfully.

Get There First

I don’t want to understate how important this is. Being the first network to reach the tipping point is crucial to a platform’s success in a volatile market. In a market of products with network effects, there isn’t room for second place. It’s either sink or swim. The success of one network will make using the competitor’s network much less attractive. Reaching this tipping point is more important than being the “best”.

Every network has to start somewhere. There was day one for Facebook. There was day one for Twitter, a day one for YouTube. Every platform has its day one. And how you approach that day one is going to separate the winners from the losers.

Now, if your product has benefits other than just users, it’s a different story. So Figma, Venmo, and other services don’t fall victim to the ruthless downwards pressure zone as much. It becomes much easier to surmount that upwards hill if you also provide a service that benefits users without network effects.

The following strategies focus on facilitating a “surprise effect”. The goal is to beat the expectations of the user when they first enter the platform and surprise them with either direct benefits. Remember, if they become disappointed with what they see on the network, they’re going to leave and the total number of users will trend back to zero. You need to beat the downwards pressure.

There’s certainly psychology at play here, and I’d argue it’s working against us. Unfortunately, today’s users have a high-expectation of what a network will be. We’re used to being able to find anyone we’ve ever met on Facebook, any celebrity on Twitter, and any colleague on LinkedIn. We’re spoiled with diverse networks, and will make that initial user-disappointment phase hard to overcome.

The first, most absolute worst thing you can do is launch your network to the world with no initial content and no pre-existing users. Do not do this. You’ll be cursed to the realms of downwards pressure forever as your network suffocates from stagnant growth. It will fail. No amount of marketing will convince a user to stay on an empty network.

Convince Large Initial Group 

The first real strategy is to convince a large initial group to join your network. By getting a large, connected group on the network, you can create a network with strong ties between them. Facebook unintentionally used this tactic to its benefit. Zuckerberg targeted students that went to Harvard, and users quickly hopped on to see their peers on the network. Within the college, Facebook went viral, with that virality serving as a catalyst for the large initial group. And by the way, virality is not network effects.

Tinder, the location-based dating app, did something similar by targeting sororities and fraternities at local colleges and onboarding several users at once. Users would log on and be shocked (that's the goal!) to find all those girls or guys they knew from the other sorority or fraternity. With several users joining at once, the network would become sustainable among them, and be able to support further growth from solo newcomers.

A similar strategy can be employed by influencers and having their followers join the network together.

Low Prices

By setting a low price, or even free, users will be more inclined to try the product. This is less tactical than the other approaches, but helps get that large initial group of users at once. Pricing drastically affects adoption, as “small changes in the properties of the market can cause enormous changes in the size of the equilibrium audience that is reached, starting from zero”. While you may be discouraged from lowering prices for various reasons, it may be worth it to beat your competitor. Once market dominance is achieved, the rewards are yours to keep for a long time:  “This price below the cost of producing the good will result in early losses, but if the product catches on — if it gets over the tipping point — then your firm can raise the price and perhaps make enough profit to overcome the initial losses”. Remember: improvements to the product can always be made after. Reaching the tipping point first is most important.

Velvet Rope

Now, another thing to consider here is the velvet rope effect. Gabby Goldberg recently wrote an article explaining how startups are using a “velvet rope” to create a hype cycle around their products before launch. In short, the velvet rope strategy is essentially creating a waitlist, then choosing which users you let into your platform. These are usually industry-leaders, influencers, or other notable figures.

The hype, while great for publicity and marketing, is a double-edged sword. On one side, it allows you to control the network effects of your product. That is, you decide who is “in” the exclusive network and who gets to create the content that others will later be able to consume. The downside, however, is that with hype comes expectations, and with higher expectations comes a higher chance for disappointment. If new users wait months to access this network, constantly listening to the founders and other evangelists tell us how great it is, the content better be good. Because if it’s not, the disappointment will be very real and the user will promptly exit. Your hype has worked against you, and perhaps even sunk a ship that could’ve floated without it.

If you’re using the velvet rope strategy, you need to ensure the users you let in are planting their roots. New users need to be seeding exceptional content, and seeding the network with desirable information. Imagine finally getting access to YouTube after being told it’s the best network ever! It’s so useful! … and seeing there are only three videos published. No amount of hype will fix a disappointing network. But if the network is good, the hype will create a list of users that can form the aforementioned large initial group. The content and its newly active users will push the network out of the downwards pressure zone and towards its stability point.

Disguise The Size Of The Network

Bots, fake users, paid users, etc. Make it seem like more people are using the network than are actually using it. When Reddit first started, the founders were using several different accounts to post links and comments. They pretended to be several users, and by doing so, forced the perception that the network had more people on it than the actual. New users would be surprised by how much content was being posted, and saw the benefit of the network. They’d stay around for a while, and soon those fake accounts would become useless, replaced by now-active users. The network became sustainable on its own without those initial false accounts.

Now, this specific strategy is only possible for anonymous networks. But the point remains. Making it seem like more people are on the network will force your real user-base past the tipping point and towards success.

When I co-founded a product called HotTub, it was anonymous and we planned to incorporate a feature where users could like a post an unlimited amount of times. The app Citizen does this too.

Now, if you think about a feed with those two features, it's going to be impossible to tell whether it's one person creating all this content or 10,000 people creating this content. With unlimited likes, you could sit there and spin the like counter 400 times. A new user will be shocked to see this small app has such an active network, and will decide to stay around. With this combination, the founders control the “actual” users line on the graph, forcing it beyond expectations, and towards its stability point.

Region Locking And Reputation Preservation

For localized services, like Lyft, Citizen, or Grubhub, it may be best to limit the availability of the network. At first, it sounds counterintuitive to lock the network down to a certain region and limit its growth, but with a locked region, we lower the burden of providing an active community to a fixed area. Within this area, the evangelists of the app (most likely the developers and close friends) can populate the network with community-building in mind. A more focused attempt can be made at strengthening the engagement on a smaller network, while also preserving reputation elsewhere. Essentially shrinking the size of the network will make what users see, how they interact, and what they perceive, easier to control.

With locked regions, you now control the expectations of users in certain areas. For example, if Lyft becomes active throughout the whole country, but there are no drivers in one area, a user in that inactive location will become disappointed when trying to use Lyft for the first time. This perception of an empty network will lead the potential user to disregard the app in the future, possibly losing a customer for life. Repeat this several times as the user base grows, the network’s success will hurt its growth when trying to capture these users in the future; a victim of its own success. With region-locking, the network will be able to reduce these negative first-impressions with a coordinated roll-out and focused efforts, populating each new region with its valuable service, riding one success to another. In this example, Lyft would recruit drivers prior to opening the network in that area. Especially with limited resources, the company will be able to dedicate full attention to the upcoming rollouts, ensuring a beneficial adoption. Instead of becoming turned-off by the empty network, future users will become excited and look forward to when the network is released to their area.

Time to win

The moment your users begin to feel not disappointed, but surprised by the content on a network, you’ll start to surpass the tipping point. Users will begin to feel like they’ve been missing out, they’ll spread the word about your platform, and become a regular user, hopefully contributing back as well. Multiply this by a thousand users and a thousand dollars, and you hit a point of explosive growth. That feeling of surprise drives the user to be a consistent one. This is where you enter the upwards pressure zone. It’s going to catapult you to a point where your network is sustainable and successful. This is where the bandwagon effect of something new comes into play and thrives. Users realize the value of being on your network, and decide to stay around a while. That’s when you reach the stability point. Your growth has become automatic, and you’ve become a major player in the market.

At this point in your network’s growth, you’ve become nearly immovable. You are now the big fish. It will be very difficult for a competitor to take your place as king. As long as you continue to capture the network effects of these users, your business isn’t going anywhere. Remember, network effects is about defensibility. Your company, your business, your network, has become defensible, and now you’re ready to reap the rewards.

You can see now how it doesn’t matter if you have an inferior product. It doesn’t matter if you’re the biggest fish or the smallest fish. You can turn market instability into market predictability, and you can lock in the market big time. With network effects, you become king. Your network becomes the defining aspect of a market, and there’s no way to stop your growth. Monetization possibilities become endless, and your time to figure that out only lengthens as more users join your network. And if, one day, you have to stop using the phrase network effects because of antitrust investigations, pop a bottle of champagne for me.