Podcast Summary
Overcoming the cold start problem in tech startups: Entrepreneurs Alexis Ohanian and Paul Davison discuss their experiences in attracting users before network effects kicked in, with tactics like leveraging existing communities, faking user accounts, and creating exclusive, invite-only models.
Network effects are a crucial factor in the success of many tech companies, making them more powerful as more users join. However, for startups, the cold start problem arises when trying to attract users before everyone else is on the platform. In this podcast episode from a16z, entrepreneurs Alexis Ohanian of Reddit and Paul Davison of Clubhouse discuss their experiences in overcoming this challenge. Alexis shares how he leveraged his existing community from a PHP BB forum to gain initial users for Reddit in 2005 when social media was still in its infancy. He also admits to faking some user accounts to create the illusion of an active user base. Paul, on the other hand, mentions that Clubhouse's early growth was fueled by its exclusivity and the viral nature of its invite-only model. Both entrepreneurs emphasize the importance of building a foundation of community and creating content to attract early adopters. Network effects can be a double-edged sword, but understanding their power and how to harness them can lead to the growth and success of a startup.
Creating a welcoming environment and fostering organic growth in online communities: Personal touch, small and organic growth, and recognizing the importance of sequencing and scaling are crucial for building a successful online community.
Building a successful online community requires intentional efforts to create a welcoming environment and foster organic growth. In the early days of Clubhouse, the team focused on getting their first 100 users by engaging them personally and creating a sense of community. They utilized a single room format with no audience, ensuring every new user was greeted and welcomed. This personal touch helped keep users engaged and attracted more people to join. The team also recognized the importance of sequencing and scaling, as smaller communities naturally form within larger ones. This approach led to the growth of the creator ecosystem within Clubhouse. Andrew also agrees with this model, emphasizing the recurring pattern of successful tech products starting small and growing organically.
Building a minimum viable community is crucial for networked products: Networked products require a minimum viable community for growth, setting the tone for user interaction and engagement.
For networked products, building a minimum viable community is just as important as designing a great product. The curation of the network, including who's in it and how they interact, plays a crucial role in the success of the product. This can be compared to being a party host, where the behavior you model sets the tone for the community. For networked products, reaching a minimum viable community is more important than having a minimum viable product, as building a community of engaged users is a human act that sets the foundation for growth. Examples like Reddit and web 3 projects demonstrate this concept, where the community is the main value proposition, even if the product itself is simple.
Authenticity and ownership crucial in web 3 community building: To build successful web 3 communities, founders must embrace authenticity and user ownership, understand web 2 tactics, and genuinely believe in the community environment.
The authenticity and ownership of users are crucial elements in building successful communities, especially in the context of web 3. The trend towards networks and user ownership in web 3 presents a massive opportunity for growth. However, it's essential to understand the tactics of community building from the web 2 era while embracing the unique characteristics of the new generation. These young people, who naturally think of themselves as content creators, seek genuine and authentic relationships. To appeal to them, founders must genuinely believe in and embody the environment they want to create. While tactics are important, the "vibes" or authenticity of a community cannot be faked. In response to a question about faking users or authenticity, Alexis confirmed that she would not take that approach today, as the lack of comments in the early days of Reddit allowed for a different level of deception. Now, there's no excuse for faking conversations.
Creatively filling the gap in early stages: Balance creator control with platform structure, use employees or unofficial users to build community, and maintain progress in the absence of a large user base
In the early stages of building a product or platform, it's important to find creative ways to fill the gap when you don't have a large user base. This can involve using the employees of the company or even allowing unofficial users to participate, as seen with early versions of Reddit and food delivery apps like Instacart and DoorDash. However, it's crucial to balance this approach with allowing creators to maintain control over their own communities and norms. This creator-first mindset allows for the formation of unique and autonomous groups, while still ensuring that the platform as a whole remains structured and effective. The Flintstones analogy used in the discussion highlights the idea that, in the absence of a fully functional car (a large user base), you can still make progress by using your own feet (creative solutions) to move forward.
Navigating the creator economy on Reddit: Balancing community autonomy and creator involvement: Reddit's approach to the creator economy created an authentic community but alienated potential contributors and limited engagement. Balancing community autonomy and creator involvement is crucial for a healthy ecosystem.
As a startup grows and its community takes hold, the relationship with creators can shift, leading to new challenges. For instance, Reddit unintentionally granted a disproportionate amount of power to a small group of moderators, creating an unhealthy dynamic. Creators were often unable to control their own subreddits or engage with their fans directly. While this approach created an authentic community, it came at the cost of alienating potential contributors and limiting engagement. The creator economy goes beyond just monetizing content; it's about building tribes and communities. As platforms like Reddit navigate the creator economy and the increasing power of crypto, it's crucial to remember that creators are the primary drivers of value. As a startup grows, the way communication with the community evolves, and finding a balance between community autonomy and creator involvement is essential.
Scaling community engagement and catering to user needs: To build a successful community around a product, businesses need to scale engagement and develop tools/features tailored to various user groups. Understanding and catering to unique needs of key user groups fosters a thriving community that grows and adapts over time.
Building and maintaining a successful community around a product requires a scalable approach to engagement and a recognition of the evolving needs of different user groups. In the early days of live group audio, Rohan and I spent countless hours directly interacting with users to address bugs and build relationships. However, as the community grew, we needed to scale our approach and develop tools and features tailored to the needs of various user groups, from new users seeking community to professional creators looking to monetize their audiences. This trend of users evolving and professionalizing over time is a recurring theme in various types of networks, from social media to marketplaces. As Paul mentioned, these dedicated users often perform the hard work that benefits the entire platform. By understanding and catering to the unique needs of these key user groups, businesses can foster a thriving community that grows and adapts with time.
Investing in Creators for Platform Success: Prioritizing creators' needs with professional tools, analytics, and monetization opportunities leads to their engagement and sets the platform apart. Creator success is now crucial for growth, with web 3 platforms built-in to support this shift.
To retain and grow a successful social media or content platform, it's essential to prioritize creators' needs and provide them with professional tools, analytics, and monetization opportunities. This not only keeps them engaged but also sets the platform apart from competitors. Additionally, the business model for creator-focused platforms has evolved, with growth now dependent on individual creator success. With the rise of web 3, this creator-centric business model will be built-in from the start, marking a significant departure from the past when platforms prioritized scale over creator support. The importance of this shift is evident in the success stories of platforms like YouTube, TikTok, and even early social media sites like Reddit. Creators are a valuable asset, and investing in them can lead to long-term growth and success for the platform.
Web 3's shift from centralized to decentralized business models: Web 3's success stories focus on economic incentives, games, and decentralized revenue models, differentiating from traditional Web 2 expansion strategies and models.
The shift from Web 2 to Web 3 represents a significant change in the way businesses are built and communities are engaged. The success stories in Web 3, such as NFT drops and crypto games, are not just about creating fun experiences but also about designing economic incentives and games. The centralized and global nature of Web 3 means that traditional expansion strategies, like college-by-college programs, may not be as effective. Moreover, the revenue models in Web 3 are more aligned with creators, and the financial use cases are just the tip of the iceberg. The intersection of games, NFTs, and virtual goods is a popular area of excitement, and the playbook for building successful Web 3 companies is different from what worked in Web 2. The conversation also highlighted the importance of understanding the unique aspects of Web 3 and avoiding the temptation to simply transfer successful Web 2 models to the new platform.
Understanding the Intersection of Mobile and Web: Founders must decide between crypto-native or hybrid solutions, addressing the cold start problem in either case, as mobile and web coexist and offer unique opportunities.
Mobile and the web are no longer competing platforms, but rather coexisting ecosystems. People are increasingly excited about mobile capabilities, but the web continues to grow and evolve. For founders, the decision lies between creating a crypto-native solution or a hybrid one that leverages both mobile and web. The cold start problem, a common challenge in building network effects, can be addressed through strategies outlined in Andrew's upcoming book, "The Cold Start Problem," available December 7th at coldstart.com. Overall, this conversation highlighted the importance of understanding the intersection of mobile and web, and the opportunities that lie in both crypto-native and hybrid solutions.
