"Successful companies often look like previously unsuccessful ones, but with a few differences that are only obvious in retrospect."

"Choose whichever cliche you like best - past is prologue? back to the future? - but it’s undeniable that the future often starts off looking pretty similar to the past. In fact, because consumers favour things they know, this can be a feature, not a bug."

"(1) has this been tried unsuccessfully before? (2) why did that company fail? (3) am I really different?"

"Best thing you can do is find nodes - investors, advisors, recruiters - that see a lot of things and might remember. Extra points for finding people who have been around a long time or from different cohorts."

"Ask everyone you meet: “have you seen anything like this before?” The trick is to ask it *honestly*. It’s discovery not promotion."

"ask them to connect the dots between the proximate and the cause in fact of their company not working. Keep asking why. Keep going down the ladder of inference. The more specific the answer, the more likely you’re at something real."

"A small product change can open up a set of users that never existed before. A unique go-to-market can make all the difference. Even a new competitor can help users and investors understand your category."

"You can be different in a way that doesn’t actually change the outcome."

"Find the evidence that means your unique twist will help you succeed where others have failed. Give yourself a time limit to find that evidence. If you can't find them, then make them your initial OKRs. Work to prove that in the initial phase of your company."

"people need a different motivation to try something new, something that connects with them emotionally rather than functionally. It’s a seemingly simple idea can create powerful business advantages, a concept I call product zeitgeist fit (PZF): when a product resonates with the mood of the times."

"Harnessing and cultivating the zeitgeist buys you the time and energy you need to gain support on your way to product-market fit. Product zeitgeist fit helps answer the age-old question—beyond tech platform shifts and other factors—of why some things, especially in consumer tech, work and others just don’t."

"When you have PZF, the product resonates with users not because it’s better, but because it feels extremely culturally relevant at that particular moment in time for a particular group of people. Users may or may not love your product, but for some reason they want it to win."

"Most startups die not because they can’t get their tech to work or because their competition out-executes them. The death of most startups is indifference. Put simply, most companies fail to launch because no one cares: not users, not employees, not investors, and certainly not the media. It’s death by a thousand shrugs."

"finding PZF isn’t the end of the story, it’s the beginning of it. You still need to work your way to product market fit, a functional use case and mainstream adoption.  But finding PZF is like getting a thousand extra chances as you weave your way to product market fit."

"here’s the thing about crypto: for those in the mainstream, it’s still not that easy to use. Despite that, people are still using it, building on it, investing in it, and writing about it, allowing it to hold product zeitgeist fit as it moves toward product market fit."

"“Nerd Heat”: Coined by my partner Chris Dixon, this is when the most talented, hardest working, and most in-demand people—the product managers, engineers, and data scientists—are so intrigued by a product that they’re working on it, excited by it, and trying to make it a thing."

"The “Despite Test”: When people are using a product despite the fact that it’s not the best thing out there, or, in some cases, that it’s straight-up terrible (see examples above), it’s a great sign. It shows that the product has a line into something emotional, not solely functional. Wanted, not just needed."

"The “T-shirt Test”: If people with no connection to the company are wearing their t-shirts or putting their stickers on their laptops or wearing their socks, that  desire to associate with the idea indicates as much a movement as a product."

"The “Eyebrow Test”: In the early days, things that have product zeitgeist fit often feel misunderstood or controversial. At first blush, the conceit may even raise a few eyebrows. But to the people who have been working on those products, they’re so clearly elegant, if temporarily imperfect, solutions to big and important problems that they seem almost obvious once they recognize it."

"These things tend to be generational; they’re reactionary; and they’re usually organized around a really compelling villain. Because we always seem to react against the unintended consequences, excesses, and blind spots of the previous generation, the zeitgeist is constantly changing. That means there’s always going to be an opening for innovators and disruptors, especially in consumer tech."

"Find something that is both important to you and resonates with a group of people at this particular moment in time. In the early days you’ll need to frame your story—to recruits, to partners, to investors, and to the entire outside world—along those lines. Talk about why your company matters, not just what it does. Make sure your product remains authentic and product decisions are connected with the mission. Finally, make sure the people you hire are as connected with these ideas as you are. Give everyone a reason to cheer for you."

"if you’re just trying to figure out what the future looks like, not just build it, look for the things that are broken and terrible but that people still really care about. Look for the four tests: the raised eyebrows, the T-shirts, the nerd heat, and the people that are still using a product, despite its shortcomings."

"It started with the “Information Economy” in the 90’s. Since then, every couple of years there is a refresh. Just in the last 10 years we’ve seen The Attention Economy, The Sharing Economy, The On-Demand Economy, The Crypto Economy, The Creator Economy, and The Ownership Economy all become real categories."

"Jeff Jordan – who’s been involved in everything from eBay to OpenTable to Airbnb – said off the cuff “the secret to everything I’ve done, and it’s not a secret, is economic empowerment. It is building things that help people make money.”"

"Nearly every big platform hits escape velocity by helping people make more money. So if a platform can’t (eventually) see itself operate as the central node in its own economy helping people make money, then there could be a disappointment in its future. In the end, maybe the most relevant question for founders and investors is simply whether something has “The _____ Economy” potential."

"Lots of consumer platforms — everything from Instagram to Youtube to Twitch — didn’t start out as ways for people to make money. They were initially about fun, status, connection and/or fame. They initially started as social networks, but as each grew their users realized they could build income off of them, which changed the trajectory of the companies."

"Regardless of where you start, it seems that all successful roads eventually lead to economic empowerment."

"Then the “creator economy” hit. Who didn’t want to become a creator? Not only was there the potential for fame and connection to a community, but it promised the creative freedom that most people want from their life. Now it’s a career path."

"Vitalik famously said “even a billion dollars of capital cannot compete with a project having a soul.”"

"For better or worse, “The ____ Economy” isn’t going anywhere. It isn’t going anywhere because in its structure is the playbook for building an enormous and successful platform."

"Are you building something that (at least initially) is fun/cool/interesting enough to inspire and motivate people? Are you building something that can sustain a real economy and help people make money?"

"In the same way that the best startup ideas are good ideas that initially sound like really bad ideas — because the obviously good ideas are both picked over and hyper-competitive — some of the strongest network effects companies end up being strong precisely because they initially don’t seem to have strong network effects."

"Most important is how this can affect the competitive landscape. If the value of the network isn’t quantitatively obvious in the early days, then these teams and markets can get less attention and fewer copycats trying to build a similar product and overlapping network. This gives founders more time and space to build their product and networks in an efficient, sustainable, and defensible way."

"1) Slow networks"

"Slow networks are defined by a time delay between when the network is created and when it starts to show value."

"In theory, it’s easy to understand the network effects in Lambda School. As they get more (and better) students, they should be able to (1) find more employers who want to hire Lambda grads and (2) build a deeper network of Lambda alumni for recent grads to lean on, learn from, and get hired by. This flywheel brings more, better students into the top of the funnel and eventually more, better employers to the end of it."

"It’s years before the true value of the Lambda network begins to reveal itself. That’s a slow network at work."

"The advantage of slow networks is that once built, they’re usually very difficult to displace. The top universities took hundreds of years to build their network effects, and despite periodic predictions of their demise, these networks effects don’t seem to be showing any sign of weakening."

"We were building networks of people that would lend to and borrow from each other, so the more people each user was connected to on the platform, the more valuable the platform would be."

"A good test is if it (1) has all the features of a network effect business (e.g., more nodes makes the product more valuable), and (2) long product loops or insufficient saturation. If so, then it’s worth taking a deeper look."

"Once you’ve identified a slow network, it’s important that everyone — founders, employees, investors, users — have the patience and resources necessary to let the network come to fruition."

"2A) Unfinished networks"

"An unfinished network is one where a product feature or strategic decision leaves the network temporarily incomplete in some material way. When the network is eventually completed though, the network effects are immediately clear."

"As OpenTable built up enough restaurants, it created an opportunity for itself to be the easiest place for diners to discover restaurants, too. Once they had enough restaurants, they were able to invest in their consumer-facing products, like their website and apps that help consumers find restaurants, and thus, they completed the network. More diners = more restaurants = more network effects."

"The challenge, of course, is that unfinished networks often don’t get completed. The start-up graveyard is filled with companies that thought they could flip the switch to complete their network but didn’t."

"This is especially risky when the completed side of the network is the supply side. Most businesses and workers will sign-up for anything that brings them business, so understanding which part of a network you’ve built and how difficult it will be to complete the full network is critical."

"The key variable is whether there is emergent behavior on the incomplete side of the network. Are users trying to pull your product there? Are they trying to complete the network? If so, then there’s a good chance you’ve got an unfinished network."

"2B) Throttled networks"

"A throttled network is one where a product feature or strategic decision limits the size or engagement of the network in a material way, thereby masking the strength of the network effects."

"In the short run, Chief’s network effects seem non-existent. But in the long run, they might unlock the value of their network through increasing opportunities to engage, pricing that rises with network value, or even a deeper membership pool. The eventual manifestation of their network effects will depend on what the founders believe works best for their product, but it doesn’t take a huge leap to see the potential."

"The value proposition can support a larger network, just not yet. In contrast, networks that rely on exclusivity — dating apps like Raya or members clubs like Soho House are a couple of examples here — often have an upper limit to their network effects."

"Throttled networks are sometimes kept small through a conscious decision of the founders, a temporary technical or operational constraint on the business, or even a short-term regulatory control."

"The test for telling whether it’s a throttled network with strong network effects is fairly straight-forward: understand what would happen if one of more of these constraints (e.g., price, network growth, engagement, etc.) were relaxed. If the answer is positive or neutral, then it might be a throttled network just waiting to be unshackled."

"3) Latent networks: (aka “Come for the network, stay for the tool” networks)"

"But there are also companies building the network before they build the actual product or tool. Think of this as “Come for the network, stay for the tool.”"

"The concept is that you start by building a community that acts like a network, with users interacting, engaging, and generally creating value for each other. Eventually, a product is introduced that catalyzes or amplifies the way the network engages. Before the product arrives, there isn’t anything measuring or monetizing the network, so it can be difficult to really see the strength and potential of these networks."

"Savvy game developers have been following this playbook for years. Even before there is a game to test, they’ll set up a Discord server to help build the community and network of gamers. Most importantly, this ensures there is a vibrant ecosystem when the game launches, which is important in social games where having other players materially improves the experience."

"These latent networks are the hardest “hidden network effects” to both predict and execute. Often times these communities are actually an audience rather than a latent network, meaning users derive value from the central node, not the network. When it’s just an audience, the tool or product ends up scaling more like a linear business (e.g., a DTC product) than a network."

"So what’s the test to tell whether there is a latent network waiting to be activated? A network engages, an audience consumes. Look to see if the network’s users are engaged with each other or just the central node. Ask yourself who is getting additional value when someone new enters this community."

"Hidden networks are hidden advantages"

"While they have their own unique challenges — primarily that they often need more patience, conviction, and capital — hidden networks are, in my opinion, the under-appreciated type of company that everyone should consider starting, investing in, and working at."

"the best version of every consumer product is the one that’s intrinsically social."

"Any product that has a social component baked in has fundamental and asymmetric advantages over competing non-social products in that category: better growth loops, better engagement, better retention, better defensibility."

"The key isn’t the rule itself, but the implication for founders trying to compete: No category is really won until the social product is built."

"nearly every category of company will eventually make the fateful transition from single-player to multiplayer, from company-driven to community-driven, from individual to social."

"1. Social+ companies have a unique and proprietary social graph that is purpose-built for that product."

"2. The social graph is critical to the product."

"The social element needs to be integral to the experience, not an afterthought."

"To be a social+ product, the social element needs to be critical to the overall product experience."

"3. Peer-to-peer social engagement is baked into the product itself."

"Social+ products feature authentic engagement between the users in the network, not just with a single curator or creator."

"Strava creates true peer-to-peer engagement, while a company like Peloton is largely focused on engagement with instructors."

"one of the reasons social+ companies present a unique opportunity is that they’re hard to build—both from both a product design and a distribution standpoint."

"The interaction layer appeals to a user’s emotional and cognitive side, while the transaction layer is more functional and rational"

"when the emotional layer and the transactional one are well-designed and mutually reinforcing, that’s when the magic happens."

"Social+ companies can start with a familiar single-player concept, but it’s thoughtful design and that deliberate social/transactional balance that distinguish them from the rest."

"There are many activities in which the analog version is inherently social, but the digital version is still a single-player experience."

"Eating isn’t always social (especially in COVID times), but when it is, it’s very social."

"so far social+ food has proven elusive. We believe companies like Snackpass and Ritual show promise, but there is still plenty of room for innovation."

"But at our core, humans are social beings. We crave connection and community—beyond social media—and things start to fall apart when we don’t have it."

"“Social” is a universal and timeless need."

"“Social” doesn’t exist in a vacuum—it’s frequently layered on top of an activity or experience. And this is why the concept of social+ is so important."