☕ Welcome to The Coder Cafe! I sucked at product management1. Early in my career, I was only passionate about how a product works under the hood, not about what the product actually does. Over time, I began to change and open up. Today, I want to share a concept from a book recommended on X by Pratim Bhosale that I really loved: The Cold Start Problem. Get cozy, grab a coffee, and let’s begin!
Network Effects
Let’s consider a dating app. If there are only three people who installed the app in New-York, anyone new will probably try it for a few seconds and uninstall it. But if a big part of the city is on it, then someone single will probably stick around.
Said differently, the more people use the product, the more valuable it becomes. There’s a term for that type of product, and it’s called the network effect: when a product gets more valuable as more people use it.
Delving into the network effect, it’s not a single force but actually a trio of forces:
The acquisition effect: How a product can use its own network to attract new people.
The engagement effect: The more people join, the more useful and sticky it becomes.
The economic effect: A larger network reduces costs, improves monetization, and strengthens the business model.
Now comes the real challenge. If our product relies on network effects, how do we launch it? Do we start from zero, or wait until enough people are on board? It’s a chicken-and-egg problem, and that’s the cold start problem.
Anti-Pattern: Big Bang
One common mistake to solve the cold start problem is the big bang launch: releasing to everyone before any community exists.
Google+ is the perfect example. Launched in 2011, it was Google’s attempt at a social network with a Facebook-style feed. The problem was that when people joined, they found empty timelines and left. Google later admitted that 90% of user sessions lasted less than five seconds.
At one point, Google even tied YouTube comments to Google+, requiring an account just to comment. The platform eventually reached more than 500 million users, but the issue was never sign-ups. The real problem was that a newcomer’s first session didn’t feel like walking into a lively room. It was forced growth instead of real networks.
Google+ didn’t fail because Google couldn’t build a social network. It lost because it never created a place where a new user could land in a live network. In short, Google+ failed to solve the cold start problem.
Pattern: Atomic Networks
A solution to the cold start problem was applied by Tinder, and it involves focusing on the concept of atomic networks.
Back then, dating apps were not very popular. Yet, Tinder was ambitious and wanted to succeed in that market. Instead of launching worldwide, they did the complete opposite. They organized a party at a college that required installing the application to attend. The next day, most students there had Tinder installed. This college was an atomic network: the smallest self-sustaining cluster of users where network effects actually work.
Soon after, they repeated the same process in another college in the same city, with the same result: within days, most students there had joined Tinder.
What’s powerful about atomic networks is simple: if we can build one network, we can build two. If we can build two, we can build thousands. Tinder repeated this strategy college by college, then city by city, eventually growing into entire countries.
The takeaway is that when we start a product with network effects, the first step is to build a single, tiny network that’s self-sustaining on its own. We just want to get started. If we can create one stable, engaged network, then we can build a second one next to it. From there, we can replicate the process and eventually connect them into one large network that spans the whole market.
Summary
Network effects happen when a product gets more valuable as more people use it.
How do we launch such a product with zero users? That’s the cold start problem.
Big bang launches fail when newcomers find empty networks.
One effective approach is to build atomic networks: the smallest self-sustaining clusters where network effects work.
If we can build one atomic network, we can repeat it and scale across a market.
Resources
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Sources
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💬 The book is really great and covers many more aspects. I definitely recommend it. Are you into product management? What resources would you recommend?
Right, Afroditi?
The Tinder college party strategy is brilliant. Starting with a geographic atomic network rather than trying to scale globally makes so much sense when you break it down. Google+ is such a perfect counter-example, they had massive distribution but no density anywhere. I've seen startups make this mistake where they launch in 50 cities simultaneously instead of owning one neighborhood first. The atomic network concept reminds me of how Facebook started at Harvard before expanding, density beats reach inthe early days.
This is fascinating. In 2020, I launched a venture with a good friend of mine and it failed exactly because of the cold start and lack of users—that and the pandemic, which caused lots of businesses to withdraw from subscriptions.
The idea still has legs and lots of potential to scale. If I was doing that venture again—which might happen—I would take some of the lessons from this post and the mentioned resources to try and lessen the impact of only a small community at launch by getting more people signed up in the launch phase.