Cold Start Problem by Andrew Chen

• The common wisdom was, “If you have a chicken and egg problem — buy the chicken.”
• Flintstoning across industries and you’ll see the focus tends to be on replicating the hard side of the network with employees, contractors, and other direct efforts.
• Eventually, the workflow is automated so that the marketplace becomes more of a tech company, but the first few years are just people powered. - *Fleetx.io does this.

Nintendo, Xbox, Sony - all set-up a few games, in a way, flintstoning, to gear up the product launch. Launch exclusive games built within the company, build a network - then let third party players jump on to the network.

• “Product can solve problems, but it’s slow. Ops can do it fast.” As a result, Uber saw itself as an “ops-led” company, and it was this team that best embodied the startup’s entrepreneurial and creative culture.
• Only three sourcing strategies account for every B2B company’s very early growth. These are:
  • Personal network,
  • Seek out customers where they are,
  • Get press.

• Thus, your choices are easy, yet limited. Almost every B2B business both hits up their personal network and heads to the places their potential customers were spending time. The question isn’t which of these two routes to pursue, but instead how far your own network will take you before you move on.

• One of the most common types of advice we give at Y Combinator is to do things that don’t scale.
• The most common unscalable thing founders have to do at the start is to recruit users manually. Nearly all startups have to. You can’t wait for users to come to you. You have to go out and get them. There are two reasons founders resist going out and recruiting users individually:
  • One is a combination of shyness and laziness. They’d rather sit at home writing code than go out and talk to a bunch of strangers and probably be rejected by most of them.
  • But for a startup to succeed, at least one founder (usually the CEO) will have to spend a lot of time on sales and marketing.
• By building the functionality that the initial set of customers need on an ad hoc basis, and then generalising, start-ups have a better chance to hit product/market fit.

Consumers will find unexpected use cases for your product/service - sometimes, might pull it into a grey area.

• There are a trio of network effects:
  • Engagement
  • Acquisition
  • Economics.
• Engagement Effects: This process can be modelled as an “engagement loop” that describes how users derive value from others in a network in a step-by step process.
• From the user perspective, think about how these engagement loops are often best visualised, step by step, as a series of actions that tie into each other. Improving any step in the loop benefits all downstream actions
• create user cohorts by levels of engagement, and analyse what differentiates high value users from lower value ones. These start out as correlations, so use A/B testing to prove causality—once the best levers are found, test many variations of these ideas.
• As a rough benchmark for evaluating startups at Andreessen Horowitz, I often look for a minimum baseline of 60 percent retention after day 1, 30 percent after day 7, and 15 percent at day 30, where the curve eventually levels out.

Often, it is the power users that know how well the product or the service works - not just because of the time they have spent using the product but also because the growth team targets and nudges the user with features that will make this user stay on the product longer.

• Driver Rewards @ Uber : Do X trips and get $Y — called DxGy at Uber
• It may be easy to copy features, but it’s nearly impossible to copy a network.
• Once Saturation hits, to add more revenue - add layers to the cake (add adjacent networks by targeting other markets adjacent to the core market) and for the core market - add new formats to engage.
• “Yet hitting the ceiling is an inevitable outcome of success, and companies need a response, lest they slow down to a crawl.”
• Over time, the effect of marketing strategies - die down. The Law of Shitty Clickthroughs is best countered through improving network effects, not by spending more on marketing.
• Rarely in network-effects-driven categories does a product win based on features—instead, it’s a combination of harnessing network effects and building a product experience that reinforces those advantages.
• Cherry picking is an enormously powerful move because it exposes the fundamental asymmetry between the David and Goliath dynamic of networks.
• Competitive Intelligence: When a networked product takes competition seriously, it has to collect metrics to figure out the comparative position of all the players in the market.
• The distribution advantages don’t win when the product is inferior. (In case of Microsoft Bing and Explorer)