Book summary: The Cold Start Problem

Using network effects to scale your product

1 Paragraph Summary

  1. Tipping Point — once you have built this first network each subsequent network gets a little easier.
  2. Escape Velocity — once scale is hit quickly three complementary advantages come into play: low cost user acquisition through networks, high engagement as the network is so robust & improved economics as the network grows.
  3. Hitting the Ceiling — something happens which stalls growth, this may be saturation, scams or something else entirely. Products must adjust to respond and to overcome this.
  4. The Moat — a strong, established network becomes a strong moat over time.
See, it’s simple!

The Cold Start Problem

Unsurprisingly, as the books namesake this first step gets a lot more attention than the other stages.

The atomic network

The atomic network is the first network that the product is adopted by, this is the smallest possible group in which this can provide value. In every single case study the atomic network is incredibly small and specific.

The hard side

Every network has a user that provides disproportionate value. Wikipedia has power editors, Uber has highly committed drivers, Youtube has content creators. eBay has people actually selling things. These are the users that make a network valuable.

  • 10% actively engage with content (sharing, commenting etc)
  • The rest ‘lurk’ and get the benefits of these folks

The Tipping Point

Building a single, atomic network is the first step towards a large and dominant network effect company. Creating a single atomic network is a challenge, creating a repeatable approach to building these atomic networks in different circles, cities or groups is where things become really interesting.


Many very well known products launch as invite only, LinkedIn and Gmail both began in this way. The advantages of invite-only give people who otherwise may not join a product a reason to join. Much like the friendship paradox your contacts are better connected than you are meaning those who initially join an invite-only network are likely to connect other well connected people.

Come for the tool, stay for the network

Many networks begin with a useful tool. Users initially join to get access to this tool and then use networked features as a secondary benefit. Over time the benefits flip and the network becomes the source of value.

Paying for launch

In a more than a century-old tactic, paying for launch can incentivise both users and hard side to adopt. From evaporated milk companies handing out coupons in magazines (and using the incoming rush of sales to onboard grocers). To streaming content platforms like Twitch and Netflix paying content creators upfront.


Named after Fred running his bare feet below his stone aged car to get around Flinstoning is exactly what you are imaging: making it seem like a network is more active than it really is to encourage users to join and gain value.

Escape Velocity

Ok, so now you are huge. Millions of users and the network is creating a lot of value for both your users and hard side. Now what?

The Ceiling

Eventually the growth party stops. Maybe through competition, saturation or other forces. This isn’t abrupt, often their will be periods of fitful growth and contraction but things begin to level out. What do you do then?


A good problem to have: you are so popular you just saturated the market and you are not growing exponentially anymore. What can you do then?

Reduced marketing efficiency

Every marketing channel degrades over time and it more becomes more expensive to acquire users. Every product should continue to add more channels to their marketing distribution as they scale. But, network effects can be used to acquire users as well. Twitch

The Moat

You’ve weathered everything to here, now you finally get to reap the rewards.



Founder & CEO - Vow (

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