What Really Drives Social Networks

VCs and entrepreneurs spend a significant amount of time talking about the power of networks. And for good reason – many of the most successful companies of the past 15 years have had networks at their core. The standard argument for why networks are attractive is that the service (and company) becomes more valuable to each participant in the network as more participants join – if there are more people on YouTube that are creating, rating and curating content, my experience becomes better as a result, making me more likely to spend time there.

An important angle I’d add is the relevance of each of the participants to one another. Put another way – it’s great if a KKK member and I are on the same social network; but by and large, that person does not make the experience any more sticky for me (likely the opposite). A different example is Tinder – where most young black singles I know have abandoned it, because it’s difficult to find people open to dating them (OK Cupid’s co-founder wrote an excellent related post). Smaller communities of relevant actors are a big part of what drives engagement, repeat usage, and ultimately creates long-term defensibility for networks. The larger social networks (e.g., Facebook, LinkedIn, etc.) are better thought of as platforms for overlapping communities.

For Facebook, these communities are a personally curated combination of family, friends, colleagues, acquaintances and sometimes tangential figures. LinkedIn tends to be centered around your professional community – current and past colleagues, classmates, and business partners. Twitter breaks down into a complicated mix of interest communities (e.g., tech, sports, literature, music) and demographics (e.g., “black twitter”). While the communities themselves are powerful, they also present a challenge – how do you create enough cohesion across communities to realize the benefits of the entire user base, without destroying what makes each community “work” separately?

For each of these major networks, I’d argue people that bridge multiple communities play an important role in creating a unified whole. Though we’re are all a part of multiple communities – most people are multi-faceted – those that actively strive to share across them are the channels that allow information and ideas (as well as memes, jokes, and dances) to flow throughout the network. They often have a unique perspective on problems in each sphere that helps them build a following from diverse groups- a good example is Bob Lefsetz and his thoughts on how music and technology are beginning to resemble one another. These individuals also create conversations between others that might never otherwise speak to one another- people like Teju Cole (literature and photography) and Bianca St. Louis (startups and diversity) are a few examples on my Twitter timeline that do this often. Like Reddit’s moderators, the people who share across communities are the unsung heroes that keep these services fresh and interesting. I’m excited to see how platforms can use their tools (e.g., algorithmic feeds) to make these connections even more powerful.

Would love to hear your thoughts – you can find me at @ablordesays.


The transparency wave

Technology by and large is a powerful force for openness and transparency. One of the clearest benefits of this transparency is the ability to push decision-making authority to the front line of an organization. If smart, capable people have access to the right information and context, they can execute complex tasks far more rapidly across all functions than centralized organizations. Sales people close more effectively, marketing people allocate resources towards the highest value activities and channels, developers iterate faster on product, and the organization as a whole outpaces competitors.

Startups (and even the Marines) have realized this for a long time – but more and more enterprises are seeing the value that decentralization brings to organizational speed and effectiveness. While there are process and cultural changes that are necessary to drive decentralization, technology will likely play an important role in making this mindset change a reality. The most direct way is as a conduit of information – through BI and analytics tools, but also through lightweight means of distributing that information throughout the enterprise. Much of this is being embedded directly in popular SaaS workflow tools (e.g., leasing pipeline analytics in Hightower). But I think there will be some second order effects that are less direct – here are a few I’ve been thinking about:

  • The decline of per user pricing: while being easy to grasp and somewhat tied to usage, per user licenses often create barriers to the flow of information in an organization. I’d be surprised if more startups didn’t figure out ways to price that merge the best of both worlds.
  • The (continued) rise of HR: though organizations have long touted their people as their largest competitive advantage, the benefits of information ubiquity ultimately depend on talented team members whom you trust to make decisions. HR is not only the linchpin of the recruiting process, but also works with the management team to drive much of the organizational context (mission, values, culture etc.) that allow for good decisions.
  • Transparency as competitive advantage: Tied to the point above, talented people are drawn towards organizations that allow them autonomy, opportunities for growth, and the chance to be a part of something special, all of which is more likely in dynamic organizations. Better information flows not only increase execution speed, but also creates a talent acquisition advantage, both driven by transparency.

Would love to hear some others that you’re seeing or thinking about – you can find me @ablordesays.