
Ask PG: Should network effects be a turnoff? - adamzerner
In How to Start a Startup, you say:<p>&quot;I can think of several heuristics for generating ideas for startups, but most reduce to this: look at something people are trying to do, and figure out how to do it in a way that doesn&#x27;t suck.&quot;<p>and then go on to give the example of making a better dating site.  But what about network effects?  That&#x27;s basically the name of the game with dating sites.<p>1) Should small startup founders avoid ideas that involve network effects?<p>2) If not, what sort of heuristic would you propose for a small founder to overcome network effects?<p>Network effects: http:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;Network_effect
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blauwbilgorgel
[http://ycombinator.com/ideas.html](http://ycombinator.com/ideas.html)

"8\. Dating. Current dating sites are not the last word. Better ones will
appear. But anyone who wants to start a dating startup has to answer two
questions: in addition to the usual question about how you're going to
approach dating differently, you have to answer the even more important
question of how to overcome the huge chicken and egg problem every dating site
faces. A site like Reddit is interesting when there are only 20 users. But no
one wants to use a dating site with only 20 users—which of course becomes a
self-perpetuating problem. So if you want to do a dating startup, don't focus
on the novel take on dating that you're going to offer. That's the easy half.
Focus on novel ways to get around the chicken and egg problem."

To overcome network effects, such as in dating sites, the following can be
used:

\- Leverage an existing network (ie: Facebook).

\- Partner with an existing network (ie: target niche users of a dating site)

\- Do not make it look/feel like a dating site, but gradually grow into it, or
keep dating as an aside functionality to finding or hanging out with like-
minded people (much like a bar).

\- Seed the dating site with fake or paid users (seedy, but practical).

\- Give free or low-threshold access to either the chickens or the eggs. A
dating site that is free for women or offers different functionality.

\- Hustle your early users. Make friends and family use it.

\- Making it useful for online marketeers, exclusive invite only, or the
"place to be" by attracting famous people.

~~~
karamazov
Hustling your early users is a great idea - I'd put this at the top of the
list.

Planning to grow into something else is dangerous, though. To paraphrase Peter
Thiel, you should be wary of building a startup that's a two-stage rocket. If
the first stage works, you can and should stick with it; if it doesn't, you'll
never make it to stage two.

~~~
dustingetz
Someone good enough to execute a two stage startup _on purpose_ (Bezos, Musk)
_are not relying on luck_ as compared to the rest of SV startup lottery.

I think many of the young and arrogant "kid CEOs" would be better off in the
long run by overcoming their ego, go and hustle the smartest mature CEO they
can find into hiring them. Defer taking your own risks until you are actually
in control of them.

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wellboy
The essence of PG says is that you have to bring down critical mass.

For that reason, a founder has to make the product/app so that it's even
useful only with several hundred users.

If your product is not useful with only a several hundred users, you built the
wrong features. --> Try again.

~~~
adventured
Tremendous answer. Seems frequently overlooked that a product should work
great for the first 100 as well as it does the first million.

~~~
schuylerlarson
If you get 50 people to come back everyday to your site for a week then you
probably have something special.

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awwstn
I think network effects should be viewed as a tool for growth, but not a
requirement for early adoption.

As long as you are doing something in a new, better way for some number of
people, you will have early evangelists who love it. Then network effects will
help you grow quickly and become valuable to a wider population.

I think Airbnb is a good example: they had to fight hard for their early
users, but the product had enough inherent value that network effects served
only as a value multiplier.

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btilly
If you think there are network effects, the odds are that they are much
smaller than you think at scale. As
[http://www.dtc.umn.edu/~odlyzko/doc/metcalfe.pdf](http://www.dtc.umn.edu/~odlyzko/doc/metcalfe.pdf)
explains, usually they are of strength n log(n). For small n you can address
that with a degree of personal attention that larger companies can't handle.
For larger n, you have to be better than your competition for your use case,
but not massively better.

If you have true quadratic network effects - auctions would be a good example
- you probably need to find a different startup idea.

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porter
The network effect is just one barrier that helps make your company more
defensible from competitors. It's not a magic bullet though. Just ask MySpace
or AOL.

You should follow PG's advice to make something people want, but also try to
think of barriers you can construct along the way to protect the value you
create. Keep in mind that most small businesses don't have a strong network
effect, yet many are very profitable and sustainable.

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simonw
I don't understand what that small paragraph from one of pg's essays has to do
with network effects.

~~~
adamzerner
It seems to imply that you could just find things that suck, make them better,
and people will come.

~~~
logicallee
OP seems to be reading "figure out how to do it in a way that doesn't suck" as
"imagine a way that wouldn't suck."

'Figure how to do it' is nice and specific: for a physical product, figuring
out how to do it so it doesn't suck includes manufacturing plans. For things
that have a network effect, figuring out how to do it so it doesn't suck
includes having some marketing plan that lets you get it off the ground. e.g.:
big launch; minimally seeded community (e.g. for dating, find every world war
I reenactment enthusiast to join - maybe htere are only a few thousand of them
- and iterate on them to begin with); fake having the network effect already;
or simply piggy-back on someone else's network through some kind of
arrangement.

"Figuring out how to do it" includes, well, figuring out how to do it.

It's not enough to imagine how it might be better. You have to imagine and
find a path to it that you can actually do.

If you can't do it, pick a different idea! It's called a barrier to entry for
a reason; you're not going to figure out how to create a solar-powered
electric flying segway if you only have an arduino and a few scrap parts to do
it with. If you can't think of a plan, then pick something you can think of a
plan for.

