Andrew Chen Archives

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, marketplaces, workplace collaboration apps, and so on.

For today, I’m cross-posting and combining two tweetstorms I recently did on the future generation of social apps, and what we can learn from the Web 2.0 era. I’m toying with the idea of doing a series on all of these “forgotten lessons” with the idea that they will be relevant for people coming up. More soon!

thanks,
Andrew
(writing from San Francisco, but headed back to LA shortly!)

Before and after — social network edition

When you examine the ideas that are percolating now for social apps, you see a clear pattern.

The past generation of social apps won the market through a playbook:

• building big networks with feeds for discovery
• creating a followers/status competition for engagement
• bringing together creators and audiences
• monetizing with ads
• supporting photo, text, video

The next generation of social is necessarily a reactionary movement:

• small networks or algo-driven big ones
• creating real connection with people
• letting creators own their audiences
• monetizing directly with subs, NFTs, etc
• evolving media format towards interactivity

The most interesting things about these “new” ideas is that they simply didn’t make sense back in the original emergence of the social network category.

Why didn’t these reactionary ideas make sense?
Back then, building large networks with invites and solving discovery with feeds was the right move when it was novel to simply see what your friends were up to. Today, too many connections is bad. Maintaining which of 1000s of high school friends and employers have access to which content, is quite simply a chore. Small chat groups simplify this. Algo-driven feeds also simplify by just showing you the best stuff. More will be invented to solve the problem of maintaining connections.

Similarly, the era of edited, posed travel, food, and concert photos showing the top 1% of peoples’ lives is creating a fake reality that is repetitive. This worked at first since it was a spectacle. A new app can focus on what’s real, or who has talent, or something in reaction to this overly repetitive 1%.

Originally, creators didn’t exist. They weren’t a thing. So bringing them together with their audience — even if they didn’t own that audience — was amazing since it provided a degree of ads-based monetization. Today, creators are looking for more, and new apps can cater. A lot of the Creator Economy, of course, is a reaction to pre-existing platforms that get between a creator and their audience. And brands sponsorships who inevitably nudge creators into compromising their integrity. New apps can target this and align creators with their audience. NFTs, subscription, ecommerce, and other biz models now exist for creators. More will come – lots of innovation here. Furthermore, the “back office” will become an important battleground. Instead of coffee shops and retail, online will be the next generation of small business.

Finally, the last decade of social has been about simply putting videos, photos, and text up. And making this easy for anyone to publish. This has unlocked hundreds of billions of dollars of business value. I think it may not be enough to simply do more photos, text, and video. Instead, new platforms will emerge that let people author 3D content more easily — and maybe put it into a game. Or interactive content. Or NFTs. And of course audio. All of these new forms of media will probably look like toys at first, but they may catch on in a big way.

All of these ideas weren’t the first set to tackle during the Web 2.0 days. In a world where uploading a video was hard, it made sense that Youtube was the first type of app to be built. Social status and competition is an easy engagement hook.

It is the success of the incumbent social networks that have established dominant norms that then allows new startups to try new ideas that might work. However, the new is built from the old, and there’s an important set of knowledge and skillset from 15 years (!!!) back that needs to be considered. Yes, let’s talk about Web 2.0.

The lost art of Web 2.0
There was a generation of founders trying to add social to everything. Social and music. Social fitness. Social news. Social social social. There were new kinds of creation, profiles, etc. No, I’m not talking about today. I mean 15 years ago!

There’s a lost art of Web 2.0.

This was the era of Flickr, Tumblr, Blogger, Hi5, Digg, Slide, Imeem, Flixster, Odeo, and dozens of other companies that just the grizzled old tech veterans now remember. Web 2.0 was about a lot of things. There was big UX breakthroughs, like tagging, profiles, feeds, photos, and everything else in user generated content. This was built on AJAX (lol!), Rails, early cloud platforms, and so on. New apps were being built in weeks – but most failed.

A key lesson from Web 2.0 — growth matters
After all, one of the hardest lessons we learned from that period: It wasn’t enough to build the app, you needed to also grow a critical mass of users. Without the right users there at the beginning, a user-generated content product would inherently be too shallow on content. Low engagement would lead to more low engagement.

People solve this with ideas like wait list hacks, A/B tested invite flows, contact importers, “people you may know” algos. Embedded video widgets, Facebook platform API hacks, viral factor tracking, and so on. The details of many of these ideas are intricate — to this day, there are teams of dozens of people working on “people you may know” recommendations at companies like LinkedIn and Facebook. Building the density of connections is incredibly important. Yet these fundamental tactics are getting swept under the rug while fun, new concepts like creator houses, memes, etc take all the spotlight.

15 years later, social is back but much of the hard won lessons of web 2.0 have been lost. The folks of that era are in their 40s now – more likely to be investors or execs at big tech cos (you know who you are! Lol) – than the new gen founders trying to build the new social app. Of course history will not repeat itself – it’ll all be reinvented

Yet many of the same core strategies still hold. It’s still better to focus on a single community, gain saturation, before adding adjacent networks. Viral loops are still a thing that can be constructed, measured, and optimized. The core stickiness of an app is all about p/m fit

The next generation of social
Web 2.0 was a magical time with 1000s of new social apps. Today’s resurgence is comparable in scope, but with a larger maret, built on the supercomputer in our pockets, and with the full knowledge of how big it can be when everything goes right.

It’s gonna be magic again.

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 of my upcoming book, THE COLD START PROBLEM, which has its final book cover and is ready for pre-order.

Pre-order here!  (Not in the US? Canada · UK · Australia · France · Germany · Japan · India)

I’ll talk a bit more about the book and the process there shortly, but wanted to drop those links in too.

Thanks,
Andrew

 

The clash between SF and LA, and how it’s thawing
Something big is happening at the intersection of tech and entertainment – of SF and LA. From LA, you see celebs angel investing, and promoting tech. And SF startups are actively courting creators, both mainstream and digital native, as the anchors in their new social products

This was not always the case. For a long time, the SF world found the LA ecosystem to be byzantine, full of gatekeepers and copyright owners. The most common interaction was music labels and movie studios suing early startups – Napster, YouTube, BitTorrent – not collaboration.

From the LA POV, the user generated platforms – Web 2.0 – were building products built on the backs of content creators and owners, but without giving much back. Whereas the entertainment ecosystem is driven by cash and % profits, the startup ecosystem is built on equity

And it went on for years.

How the thawing happened
But in the recent past, some big things have happened:

• First, you had Dr Dre making $700M+ on selling a company like Beats to Apple. Tech can be big when you engage
• The social apps also got so big that gaining followers became obviously valuable
• For creators who weren’t yet successful in the traditional mold — with an agent, TV show deal, or otherwise — the openness of the social media ecosystem became a huge plus. This created a new type of talent
• Also, Netflix/Amazon/others became simply too big to ignore or reject
• The social media platforms became a major force for brand and advertising dollars. And a way to launch new consumer brands. If talent embraced this, it could be a new way to build an empire

The view of startups started to change also — and not just bc of the “creator economy.” Startups began to realize – in a crowded growth ecosystem with tapped out paid mkting, etc – that influencers could be a new effective channel. It helps with PR – and for recruiting – when celebs (both mainstream and B2B influencers) invest in your company. Every edge counts.

Creator go-to-market
The “creator economy” thesis leverages celebs/influencers/creators both as an end customer but also as a distribution method. When creators use your product – like a Substack or Shopify – they naturally promote it as part of its use. Yet there are limits to how well this SF x LA intersection will work

It’s not yet clear that celebs can “make” a product happen. Yes, sometimes they join early, as they did with Twitter/Clubhouse, and can accelerate growth

There’s still a culture clash between the two worlds. Celebs/creators/influencers often expect to get advisory shares, or to get the last round’s valuation, simply for being involved. The gatekeepers also often ask for their own — it’s annoying! Tech is not building beverage cos here!

The folks in movies/TV/music are still somewhat curmudgeonly. Yes, they are engaging with tech – not just suing them – but it’s still early. New young startups can’t afford licensing, upfront fees, and so on

What’s the solution?

The next wave
The opportunity might be to simply to engage with new sectors. Rather than working with the classic A-list stars, instead, the opportunity is to engage TikTokers and Twitch streamers. Or bloggers and Substackers, rather than published authors. These digitally native content creators got big by adopting technology early, and might be willing to work with startups earlier. They don’t work with the traditional gatekeepers in entertainment, and thus might be easier to connect with — startup founder to digital creator — to quickly work out deals.

The truth is, well-established talent in the entertainment world often face a kind of innovator’s dilemma in adopting new products. If they jump in too soon, they might expend energy on an app or technology that doesn’t go anywhere. They might also end up creating a lot of value that is hard to create. By not charging to participate, they might undermine their other mainstream revenue streams, where they charge for commercials, appearances, and otherwise. Digital creators often don’t have any of this to worry about.

The other thought, even more radically, to invest in game studios and new interactive experiences – not film/movies. As we’ve articulated in the past, we think games will be the next social network, and the next huge entertainment medium. I have a Venturebeat interview here that spells out the thesis. Importantly, games are software. They launch like apps, buy Facebook ads, engage social networks, and have many of the motions that look like the software companies we’re used to in SF. Rather than focusing on film/TV/music, it might be that games becomes the focal point that brings the two groups together.

This is a long way of saying, while LA x SF is trending up – more cross-pollination, more people spending time in both, more collaboration – it’s still early. But more is happening and it will unlock new approaches to engage consumers that could never of happened before

My next moves
I’ve committed to spending more time in LA over the next year – something like 60/30/10 in SF/LA/other will be the split. In recent visits, I’ve found a fascinating ecosystem of people. I would summarize these constituents like:

• “new to LA” founders — this is the new gen of startups
• fancy SF CEOs who are now in LA — lots of folks have moved down, on the down low!
• SF/LA investors — especially seed funds, and SF folks who have relocated
• digitally native creators — tiktokers, streamers, etc
• big co tech platforms — YouTube and Netflix folks who have a big presence in LA
• incumbent entertainment folks — this is a big umbrella, but includes agencies, studios, talent, and much more
• DTC startups — lots of these!
• OG LA tech — the folks who started it all

There’s many other groups of course, and it’s quite diverse, but fascinating to see a much more complex ecosystem — in many ways — than SF which constitute maybe a third of this. SF is more clustered into various “mafias” than LA, since it’s more tech than not.

Anyway, I plan to be between LA and SF in the coming quarters. If you’d like to meet up, send me a DM!