The Cold Start Problem by Andrew Chen

A successful new product should be able to answer detailed questions: Who is the hard side of your network, and how will they use the product? What is the unique value proposition to the hard side?

The technology product metaphor here is obvious—if a messaging app doesn’t have enough people in it, some users will delete it. And as the user base shrinks, it becomes more likely that each user will leave, ultimately causing inactivity and collapse of the network.

There’s a lot on the line. When a new product leverages a network effect to build an ecosystem around it, adjacent industries can be disrupted quickly.

How many users does your network need before the product experience becomes good? The way to answer this is for companies to do an analysis on the size of their networks (on the X-axis) plotted against a set of important engagement metrics (on the Y-axis).