The Power of Accomplishment Arbitrage and Building a Successful Community

The Power of Accomplishment Arbitrage and Building a Successful Community

In the world of accomplishments, there is a phenomenon known as "accomplishment arbitrage." It occurs when someone refers to an accomplishment from the past, taking advantage of the difference in value between then and now. By claiming an accomplishment with perceived value higher than its true value, they essentially arbitrage the accomplishment. This disconnect between perceived and true value is crucial. Interestingly, it seems that a negative arbitrage occurs for acquisitions made before 1995.

This concept of accomplishment arbitrage extends beyond personal achievements. Taking a company public is another example. Sometimes, it's easy to take a company public, and sometimes it's a challenging feat. Our interpretation of the value of this accomplishment is often based on how easy or hard it is to achieve in the present.

The idea of accomplishment arbitrage leads us to examine the growth strategies and community-building techniques employed by TikTok's predecessor, musical.ly. They recognized that focusing on entertainment rather than education was more likely to resonate with people. Education often goes against human nature, while entertainment aligns with it. This insight is crucial for startups, as going against human nature can be challenging.

To make a new social networking platform successful, it is essential to target young individuals, especially teenagers, as early adopters. Teenagers have ample time and are incredibly creative. In the United States, teenagers spend their time after school engaging with social media platforms, sharing their daily lives. However, in China, where students mainly focus on studying, the concept of "Life" is absent. To create a successful platform, it is important to be in close proximity to users, a concept known as "Participatory Design." Musical.ly connected with hundreds of users on WeChat and engaged in daily conversations with them. They even sought feedback from users before writing any code, emphasizing the importance of involving end-users in the design process.

Before reaching critical mass in terms of users and content, it is crucial to focus on utility rather than community. Musical.ly offered the utility of adding background music to videos, which attracted a significant number of users. Once enough users were acquired, they started building a community around the platform, following the principle of "Come for the tool, stay for the network."

When trying to make an unsuccessful product successful, simply adding features does not always help. Success often lies in having one core feature that becomes a killer feature. To change the growth curve, one must alter the value proposition. This is a fundamental takeaway – changing the value proposition is key to altering the growth trajectory.

In the case of musical.ly, after users registered, they ensured that the best content appeared in their feeds. They hand-picked videos to curate the user experience, an often overlooked but critical element. This personalized approach ensures that users are engaged and satisfied.

Creating a successful community is akin to governing a nation or managing an economy. There are many lessons to be learned from economic policies. Building a community from scratch is like discovering new land, attracting people who believe they can achieve wealth and success. However, it is essential to decentralize power and avoid concentrating privileges solely among the early adopters.

TikTok's unique feature of displaying both popular and lesser-known videos in the "For You" section exemplifies this principle. This approach provides an opportunity for new entrants to be seen, a strategy that works well for a short video platform like TikTok.

Just as America went from being a destination for European immigrants to a superpower surpassing Europe's wealth, a successful SNS platform must provide users with fame as the initial draw. However, fame alone is not enough; monetization is crucial. The platform that generates the most income for influencers becomes the stickiest platform.

While top artists contribute to a platform's growth, it is not advisable to invest excessive time and effort in attracting them. Top artists are the result, not the process. A platform that fulfills the daily needs of the majority will naturally attract artists. Prosperity does not come from having multiple artists; it comes from satisfying the needs of the masses.

In the case of musical.ly, lip-syncing played a crucial role in lowering the barrier to content creation and gaining initial popularity. The ability to perform comedy, dance, and various acts through lip-syncing made the content more engaging. This highlights the importance of considering the unique aspects of a product that contribute to its success.

When a product goes from 0 to 1, it needs to be highly specific, effectively addressing a particular need. Once it reaches 1 and aims for further growth from 1 to x, it must become a canvas, allowing for diverse possibilities.

Ultimately, in the world of social networking platforms, the most valuable asset is not the content itself, but the social graph – the network of people connected within the platform.

In conclusion, the concept of accomplishment arbitrage teaches us the importance of recognizing the value disconnect between past and present. By leveraging unique insights and strategies, such as targeting young users, involving users in the design process, prioritizing utility before community, and embracing decentralized growth, companies like musical.ly and TikTok have created successful platforms. To apply these lessons, here are three actionable pieces of advice:

1. Focus on utility before community: Ensure that your product provides a valuable utility that attracts users before building a community around it.

2. Involve users in the design process: Seek feedback from users before implementing features or writing code to ensure that the product meets their needs and desires.

3. Embrace decentralization and avoid concentrating privileges: Create an inclusive environment that allows new entrants to thrive and prevents early adopters from monopolizing benefits.

By considering these principles, companies can build successful communities and navigate the ever-changing landscape of social networking platforms.