Status as a Service (StaaS) §
Key takeaways §
Highlights §
- If we had better measures besides user counts, this piece and many others would be full of charts and graphs that added a sense of intellectual heft to the analysis.
- Despite this, most of the social media networks we study generate much more social capital than actual financial capital, especially in their early stages; almost all such companies have internalized one of the popular truisms of Silicon Valley, that in the early days, companies should postpone revenue generation in favor of rapid network scaling. Social capital has much to say about why social networks lose heat, stall out, and sometimes disappear altogether. And, while we may not be able to quantify social capital, as highly attuned social creatures, we can feel it.
- This post is a deep dive into what I refer to as Status as a Service (StaaS) businesses.
- One of the fundamental lessons of successful social networks is that they must first appeal to people when they have few users. Typically this is done through some form of single-user utility.
- The second fundamental lessons is that social networks must have strong network effects so that as more and more users come aboard, the network enters a positive flywheel of growth,
- “Come for the tool, stay for the network” wrote Chris Dixon, in perhaps the most memorable maxim for how this works.
- how we analyze social networks should include a study of a social network’s accumulation of social capital assets and the nature and structure of its status games. In other words, how do such companies capitalize, either consciously or not, on the fact that people are status-seeking monkeys, always trying to seek more of it in the most efficient way possible?
- It’s true that as more people join a network, more social capital is up for grabs in the aggregate. However, in general, if you come to a social network later, unless you bring incredible exogenous social capital (Taylor Swift can join any social network on the planet and collect a massive following immediately), the competition for attention is going to be more intense than it was in the beginning. Everyone has more of an understanding of how the game works so the competition is stiffer.
- Thirst for status is potential energy. It is the lifeblood of a Status as a Service business. To succeed at carving out unique space in the market, social networks offer their own unique form of status token, earned through some distinctive proof of work.
- new Status as a Service business must devise some proof of work that depends on some actual skill to differentiate among users. If it does, then it creates, like an ICO, some new form of social capital currency of value to those users.
- Thus Stories is inherently about lowering the publishing hurdle for users and about a new method of storytelling, and any multi-sided network seeing declining growth will try grafting it on their own network at some point just to see if it solves supply-side social modesty.
- Note: People feel bad about “pushing” their posts down their followers’ throats, but Stories is less invasive
- By merging all updates from all the accounts you followed into a single continuous surface and having that serve as the default screen, Facebook News Feed simultaneously increased the efficiency of distribution of new posts and pitted all such posts against each other in what was effectively a single giant attention arena, complete with live updating scoreboards on each post.
- It’s difficult to overstate what a momentous sea change it was for hundreds of millions, and eventually billions, of humans who had grown up competing for status in small tribes, to suddenly be dropped into a talent show competing against EVERY PERSON THEY HAD EVER MET.
- Note: The unified News Feed changed the game completely.
- Remember, status derives value from some type of scarcity. What is the one fundamental scarcity in the age of abundance? User attention. The launch of an algorithmic feed raises the stakes of the social media game. Even if someone follows you, they might no longer see every one of your posts.
- Secondly, because of their previously accumulated social capital, adults tend to have more efficient means of accumulating even more status than playing around online. Maintenance of existing social capital stores is often a more efficient use of time than fighting to earn more on a new social network given the ease of just earning interest on your sizeable status reserves.