@andrewchen

Subscribe · Featured · Recent

Why it’s hard to evaluate new social products

Like any tech early adopter, I try and evaluate every new buzzy product that comes to market. These days, many of these come with built-in social and messaging functions.

“What’s the point of this?”
Most of the time I find my most common reaction is “hmmm, well this is neat, but what’s the point?” These new products often look trivial, even unfinished. And yet, I find my reaction is often wrong because of how hard it is to evaluate the “network” component of a new social product, when the network is often 95% of the value prop.

Network blindness
I find myself blinded by the following:

  1. It’s hard to demo the network, when only a few people are on it
  2. It’s even harder to connect w it if it’s not YOUR kind of network – Quora’s the exception to the rule :)
  3. The typical # of connections you need with active users to really appreciate a product is something like 10-20, and it’s hard to break through that threshold if you aren’t acquired organically via invites from a dense network already
  4. The value of the network rises exponentially, which is hard to comprehend. That means a network can rapidly go from useless to useful very quickly
  5. Finally, the non-network components seem technically trivial – the 140chars, the snap, the ding dong. This leads to a “WTF” moment for many people

Imagine using Twitter for the first time, but no one’s on the network. The whole thing seems pointless, and while it’s easy to grok the mechanics of how it works, it’s hard to guess that “oh, one day 200 million people will be using Twitter and then it’s really useful to find out news, celeb gossip, articles, and chat w people.” It’s a communication network at its core, and without the people, it’s not very useful.

eBay, browsers, and other platforms and networks
Many platforms and networks are like this- think of eBay with only beanie babies, and the foresight it would take to think the network would go beyond collectibles. Or imagine using the web browser if the web was only a few thousand pages. The same things that make these really powerful networks later on are the same things that impede comprehension of their value in the early days.

Single user products
Contrast that with great single-user products like Evernote, an amazing mobile game, or a new 3D TV. The value is a lot more obvious and it’s easier to demo because there’s no network component. You don’t have to extrapolate.

In fact, extrapolation of network effects is so hard that it probably makes sense to just try to invest in stuff that already has an engaged network, even at a small level. And to look at stuff like network density, the activity of cross-network interactions, etc. from a metrics standpoint. But even at the end of that, you still need to make a big leap on if they can get to the next level :)

PS. Get new essays sent to your inbox

Get my weekly newsletter covering what's happening in Silicon Valley, focused on startups, marketing, and mobile.