What do a dating app, Uber, a nightclub, and Airbnb all have in common? “If your customers come to this product, and there aren't enough other people around, then they're just going to bounce,” says Andrew Chen, a general partner at the high-profile Silicon Valley VC firm Andreessen Horowitz, who sits on the boards of Clubhouse, Substack, and a dozen other buzzy tech startups. These companies require what's called a network effect: They become more valuable as more people use them. (After all, nobody hangs out at an empty club.) That means founders need to attract an active and connected base of users quickly, or they may fail to attract anyone at all.
This isn't easy, but it is possible-and one strategy to make it happen applies to any business aiming to foster a community. It's the subject of Chen's new book, The Cold Start Problem. Here, he explains how to attract the masses by starting with the few.
When a company is new, how should it begin to build a community?
In my job as a venture capital investor, I see a lot of startups launch by going to big blogs and getting press. As a result, you get a lot of different users showing up-but none of the users know each other. You might get 1,000 users or 10,000 users. But if they're not in the product at the same time to connect with each other, those 1,000 users aren't that valuable. It turns out that the quality of users, and how interconnected they are, matters a lot.
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