The Power of Networking and Gamification in Investing and User Behavior

The Power of Networking and Gamification in Investing and User Behavior

Silicon Valley investing legend Ron Conway has seen it all when it comes to the ups and downs of the startup world. With a portfolio that includes successful investments in Google, Facebook, Twitter, and Snap, Conway knows what it takes to spot a winner. And according to him, the key to his success has been networking.

Conway believes that the founder network is like the Mafia, with founders talking to each other and recommending value-adding investors. This network has been incredibly beneficial for his firm, SV Angel. By staying connected and keeping their noses to the grindstone, SV Angel has been able to invest in some of the most successful companies in the tech world.

But not every investment has been a success for Conway. In fact, he admits that about 60% of the companies they invest in go out of business, with another 30% just breaking even. It's that small balance, around 10% to 20%, that brings in the big returns and makes up for the losses. Conway understands that investing is a game of risk, but by leveraging his network, he increases his chances of finding those few winners.

Speaking of games, gamification has been a powerful tool in driving user behavior. Foursquare, the location-based social network, was one of the pioneers in using gamification to engage its users. By awarding points, badges, and mayorships, Foursquare encouraged users to check-in and compete with their friends. People loved the sense of progress and accomplishment that came with earning these rewards.

However, as other social networks caught up with location-based check-ins, Foursquare's popularity began to decline. It became clear that gamification alone couldn't sustain long-term user engagement. Rewards should have real value for both the user and the platform. Merely gamifying for the sake of gamification won't drive lasting behavioral change.

The lesson here is that gamification mechanics can be powerful, but they need to be tied to behaviors that have intrinsic value. In the case of Foursquare, the expertise of its users was directly linked to their performance within the platform. This encouraged users to review more places and submit more tips, making the service more valuable for all users.

In the corporate world, gamification can also be effective in driving desired behaviors. However, it's important to carefully choose the behaviors you want to incentivize. These behaviors should align with corporate goals and have real meaning within the organization. Additionally, recognition of someone's expertise is crucial for long-term success. Rewards without recognition won't motivate employees to continue their efforts.

So, what can we learn from Conway's networking prowess and Foursquare's gamification strategy?

1. Build and nurture your network: Like Conway, focus on building relationships and connections within your industry. Your network can provide valuable insights, recommendations, and opportunities.

2. Gamify with purpose: If you're considering gamification to drive user behavior, ensure that the behaviors you incentivize have real value. Gamification should enhance the user experience and provide a sense of progress and accomplishment.

3. Recognize and reward expertise: Incentives and rewards should be tied to recognition of someone's expertise. This not only motivates individuals but also validates their skills and contributions.

By combining the power of networking and gamification with these actionable insights, you can increase your chances of success in investing and driving user behavior. Just remember, it's about finding those valuable connections and behaviors that have real meaning and impact.