Keep reading for FREE
Why do some networks succeed and others fail? One consistent pattern of successful networks is that they have scarcity early on so that people can signal status, and then over time the network moves toward providing more utility. Humans are hard-wired for status games, so product builders would be wise to understand how status & scarcity function.
Offering a utility to your user base is the most stable sort of long-term competitive advantage that you can have.
A lot of network-based utility only is realized at some level of scale.
That’s where status comes in.
A lot of networks that have achieved super scale had some sort of status incentives or status games built-in, very early on. It helped them to get that kinetic energy that you need in order to achieve the scale that then increases your utility.
Those networks were paying you to contribute — paying with ego, with status, with a sort of an emotional payback rather than money.
Social media, ultimately, is mostly just about entertainment, not utility. But, if you have a network like Uber or Lyft, you’re ultimately about getting someone from point A to point B. That’s not really an entertainment-based product. So your competitive set may be more limited.
It’s very critical if you’re doing a startup to understand if you are going to be offering a product that is actually an entertainment-based product — because that really widens your competitive set.
An understudied and overlooked aspect of product design is that a lot of times, people use products that just make them feel good.
People in the gaming world have an intuitive understanding of how important this is — how important it is, moment to moment, to track your user’s emotional valence.
Because games are continuous, interactive experiences. The user in a game will churn out if he’s not feeling the right balance of:
That same principle can be applied to a lot of other products. How products take off = a lot of it is in how they make you feel.
Mental frameworks that are more common in business and analysis tend to be more focused on things that are measurable or easily measured, which often is some sort of utility-based function. It is much harder sometimes to measure that emotional quality.
If you’re in a tech world where you have winner-take-all dynamics and network effects, where you have things that are absolutely free and infinitely available, well, at the edges of that, the old prescriptions kind of break down.
If you’re allowed to define scarcity on any axis, that is a form of power.
Video games have become leaders at figuring out how to define forms of scarcity.
You can also look in the retail world for similar things where you have flash sales and things like that, where it’s just constrained inventory or limited time for something.
If a centralized provider can guarantee the scarcity of that virtual good, then it actually does have emotional value. People who play League of Legends all know how hard it is to acquire certain types of equipment in that game and there’s a flourishing aftermarket for it.
Every product person or entrepreneur moving forward needs to have familiarity with the tactics and strategic understanding of this important point: Structurally, when determining how you build your product, part of what you’re doing is defining what scarcity means on your platform.
You can think of all of the things like sales ranking and customer review ratings as a game. There is always some sort of proof of work. There is some hurdle that you have to do to capture that amount of status. And if you can define some unique form of proof of work, then you may have something that jumpstarts a new game.
These restrictions, in order to create scarcity, drive initial white-hot centre type activity, which then can bleed into bigger products.
In the early days of Instagram, there was a sense of progression in that they had filters and things that allowed you to feel like you were improving as a photographer. But the part of Instagram that’s challenging now, is a lot of that network is about if you have a lot of wealth or something, and the average person is going to be like, “That’s not my life. I can’t compete with that.” And so there is a point in which you start to feel you could churn out of that network because you’re not going to feel any progression.
All product people have had it beaten into their heads that, “Hey, you’ve got to remove friction from every process in your app. From the signup flow to this flow, everything has to be fast and easy.” That is not necessarily good.
We have to start distinguishing, at the product design level, between positive and negative forms of engagement.
You actually need proof of work. You do need some friction in the product, and it can be used for something good. It can be used to motivate.
When we think about product design, we have to think about those positive forms of friction.
In the first decade or two of the web and the smartphone, everything was really focused on efficiencies achieved from going asynchronous.
In every field, you can see there are huge gains to going asynchronous.
But we’ve lost that social feeling of community that comes from synchronicity.
Over time we will once again say: “It actually does matter occasionally that a society is all watching something at the same time, or that you and a group of people benefit by doing something together.”
You start to feel like societies start to fracture when you don’t have that feeling of communal harmony.
We have long held this idea that there will someday be this kind of Metaverse-like world that more of us live in. We actually have already partially transitioned into it with our smartphones. We’re not necessarily wearing VR headsets and spending all our days like those people in Wall-E. But most people today spend a good fraction of the day with their faces in their phones, interacting in software-constructed environments. The fact that it’s not 3D doesn’t matter — it’s still a form of sort of low-fidelity Metaverse.
MORE LIKE THIS
Ready for the next level?
Read Like a Pro
Explore the World’s
Take Your Ideas
Just press play and we take care of the words.
No Internet access? No problem. Within the mobile app, all your ideas are available, even when offline.
2 Million Stashers
Don’t look further if you love learning new things. A refreshing concept that provides quick ideas for busy thought leaders.
Best app ever! You heard it right. This app has helped me get back on my quest to get things done while equipping myself with knowledge everyday.
This app is LOADED with RELEVANT, HELPFUL, AND EDUCATIONAL material. It is creatively intellectual, yet minimal enough to not overstimulate and create a learning block. I am exceptionally impressed with this app!
Great interesting short snippets of informative articles. Highly recommended to anyone who loves information and lacks patience.
Brilliant. It feels fresh and encouraging. So many interesting pieces of information that are just enough to absorb and apply. So happy I found this.
Great for quick bits of information and interesting ideas around whatever topics you are interested in. Visually, it looks great as well.
Even five minutes a day will improve your thinking. I've come across new ideas and learnt to improve existing ways to become more motivated, confident and happier.
I have only been using it for a few days now, but I have found answers to questions I had never consciously formulated, or to problems I face everyday at work or at home. I wish I had found this earlier, highly recommended!
Read & Learn
Access to 200,000+ ideas
Access to the mobile app
Unlimited idea saving & library
Unlimited listening to ideas
Downloading & offline access
Claim Your Limited Offer
Get Deepstash Pro
75% OFF | 1-Year Pro Subscription