Building Successful Networks: The Importance of Real Identity and Trust

Building Successful Networks: The Importance of Real Identity and Trust

Introduction:

When it comes to building network businesses, Founders face the crucial decision of whether to tie user profiles to real identity or allow for more anonymity. While networks with purposefully anonymous profiles may experience initial growth, we have observed that those tying profiles to real identity have a higher probability of enduring and becoming valuable businesses. In this article, we will explore the correlation between real identity and network success, the role of engagement in network effects, and the significance of trust in building communities.

Real Identity and Network Growth:

Using real identity in user profiles may pose challenges during the initial stages of a network. It requires more commitment from users and introduces greater risk, resulting in a higher barrier to activation. However, networks that encourage users to utilize their real names experience increased engagement, leading to growth in size, density, and activity. This, in turn, strengthens the network effect within the company. LinkedIn's slow growth in its early years can be attributed to the requirement of real-name profiles.

Facebook's Success Story:

Facebook succeeded in getting users to adopt real names by launching in a confined environment of perceived safety, namely colleges. By starting within this niche, where it made sense to use real names, Facebook gradually became tied to personal identity and reputation in real life. Networks that lack this close association with users' real identities are more vulnerable to competition, as their users are less committed. Eventually, a competitor can emerge and steal users away, as seen in the case of Friendster.

Semi-Pseudonymous Networks:

While networks like Twitter, Reddit, and Snapchat allow users to have usernames different from their real names, they have managed to sustain themselves. These semi-pseudonymous networks offer persistent online identities that are partially tied to real-world identities. Users emotionally invest in creating and maintaining their reputations, even in a semi-virtual context. Although not as successful as real-identity networks, these semi-pseudonymous networks have strong enough network effects to fend off competition.

The Power of Engagement in Network Effects:

Engagement plays a crucial role in determining the strength of network effects. A dense, highly active network outperforms a larger but less active one. Companies should focus on starting with the white-hot center of their network and expanding from there. The strength of network effects depends on network size, density, and engagement. Mere possession of network effects does not guarantee success; the power of those effects is what truly matters.

The Significance of Trust in Building Communities:

Communities thrive when individuals trust that their contributions will be put to good use. Trust is the foundation of positive behavior cycles within communities. As members contribute and receive validation and rewards for their work, they become more willing to increase their commitments to the community. Building trust within a new community is an essential step before individuals start disengaging. Unfortunately, many communities fail at this stage. Real communities are born when they achieve their first win, which involves understanding and executing the goals desired by the community members.

Actionable Advice:

1. Start with a focused group: Launching within a niche or a confined environment where it makes sense for users to utilize real names can help establish the association with personal identity and reputation.

2. Foster engagement: Prioritize building a dense and highly active network over simply increasing the number of users. Encourage user participation and create incentives for engagement.

3. Build trust from the beginning: Establish trust by actively involving community members in setting goals and executing initiatives on their behalf. Validate and reward their contributions to increase their commitment to the community.

Conclusion:

The correlation between real identity and network success cannot be ignored. While networks with more anonymity may experience initial growth, they often burn out in the long run. Incorporating real identity in user profiles increases engagement, leading to stronger network effects. Furthermore, trust is a crucial element in building successful communities. By prioritizing trust-building, engagement, and starting within a focused group, entrepreneurs can increase the chances of creating enduring and valuable network businesses.