What today’s social apps can learn from Web 2.0, the social network revolution from 15 years ago at andrewchen

Hi readers, Boom! I’m back with another — I told you, I’m really back, after 3 years of hiatus focused on the new book. Anywyay, first, I want to thank you for all the outpouring of support and kind notes on my return to writing. And of course, the preorders for my upcoming book THE COLD START PROBLEM which is all about user growth in the context of network effects — relevant for social apps,…

The future of social apps + the SF and LA tech ecosystem at andrewchen

Hi readers, I’ve been MIA! But ready to be back and writing more now that I’m finished with my book (more on that in a second). Two things today: First, I recently posted a tweetstorm about my adventures in the LA tech ecosystem, and how it compares to SF, and the upcoming changes. I have it below, with some updates and edits And second, I’m happy to announce that I just turned in a final version…

In any project, there comes a time during development, especially from a design point of view, where it feels like a wall has been hit. You have went along with a design solution for so long now, you can’t just throw it and start again because it’s deeply rooted into the whole solution, but you can barely evolve it further. Even after iterative testing and user feedback, the feedback begins to reduce as the amplitude of change lessens. A complete overhaul isn’t always necessary, a big change however could be accommodated and help to drive the solution further.

The ‘local maximum’ reflects the stage where so many changes have been made to an iteration, that no more can be done to better the outcome.

Andrew Chen on the 5 long-term growth strategies:

"1. Paid acquisition. If your users give you money, then you can buy users directly through ads. Usually companies try to maintain a 3:1 CLV:CAC ratio to keep their margins reasonable after other costs. (eBay, Match, Fab, etc.)

2. Virality. If your users love your product, then you can get major “word of mouth” virality driven by a high Net Promoter Score. If you can get your product to spread as a result of users engaging with the product, you can further optimize the viral loops using A/B tests to generate even more virality. People often measure “viral factor” to see how effectively existing users attract new users, and of course, you want your viral factor to exceed 1.0. (Facebook, Instagram, Twitter)

3. SEO. If your product creates a ton of unique content, in the form of Q&A, articles, long-form reviews, etc., you might end up with millions of unique pages that can in turn attract hundreds of millions of new users who are searching for content via search engines. (Yelp, Rap Genius, Stack Overflow, etc.)

4. Sales. For startups targeting SMBs or the enterprise, you’ll end up fielding a large sales org to handle both inbound and outbound. This is especially true for companies targeting local SMBs, where telesales becomes the only option. Of course, to make this work, you’ll need to generate a multiple in revenue of what you pay them.

5. Other. There’s the odd partnership, like Yahoo/Google, that can help make or break a startup – but these are rare and situational

On why they work:

Feedback loops. Each of these channels creates exponential growth because when you make money from customers, you can use that money to buy more customers, which give you more money. Or in the virality scenario, a cohort of new users will invite even more users, who then invite even more on top of that.

High ceiling on saturation. Part of why paid acquisition will always be around is because people like free products, which cause these products to monetize using ads. The biggest ad networks reach a billion users or more. Similarly, SEO works because as long as you’re dealing with a high-volume base of searches (like music lyrics, or products) then you’ll be able to reach hundreds of millions of users."