An illuminating insight occurred last week around network effects and value creation. The strange thing is that nobody cared. I was blown away by both: insight and (lack of) discussion.
Here’s the story, morning glory:
Some old guy 
comes up with some principle (”for many phenomena, 80% of the consequences stem from 20% of the causes”).
A few years later people discover that user generated content on many sites is created by ~1% of users.
A (slightly younger) guy 
realizes an opportunity and tries to capitalize on it.
I understood both principles and enjoyed the play by the (slightly younger) guy. And yet. An unsettledness persisted. It was astute, clever and, from an economic standpoint, right. And yet. I didn’t (and don’t) believe that 1% of users being active creates enough value to seed/scale long-term value from network effects.
Enter the insights from (somewhere inbetween) guy 
.
- 1 % of users will be the active content producers (1% principle)
- 80 % of the users are merely consumers, not contributors (Pareto)
“…the gold is in the other 19%…”
“If you can figure out how to engage these folks, you win. If you don’t, you’ll have a site driven merely by the 1%, which ultimately won’t scale. While theoretically the law of large numbers should apply (e.g. as N (= number of users) gets big enough, life is good), I hypothesize that if you don’t figure out how to engage this 19%, you won’t drive growth in N that will get you big enough to have the law of large numbers effect deliver you to happiness.”
I reread the post a few times. If you get a similar thrill from thinking about and trying to understand the transformative power of the internet this insight must thrill you. I found it delicious.
I’ve been trying to spend as much time as possible thinking about Brad’s insight. The input from the 19% doesn’t have to be large but how do you engage them? I understand the motivation for the 1 % and 80 %, but what about the 19 %? Can anyone think of examples/cases of a situation where the 19 % is well understood?
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COMMENTS / 8 COMMENTS
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Brad Feld added these pithy words on Sep 05 06 at 8:45 amIt’s really hard to figure out what motivates the 19%. I think two characteristics are (1) trivial for the end user to use and (2) highly self-referential value (e.g. whatever I use needs to have immediate value for ME). These two things drive the network effect - but in the absense of them, there’s not much network effect. But - I’m still pondering and experimenting.
Brad Feld added these pithy words on Sep 05 06 at 12:45 pmIt’s really hard to figure out what motivates the 19%. I think two characteristics are (1) trivial for the end user to use and (2) highly self-referential value (e.g. whatever I use needs to have immediate value for ME). These two things drive the network effect - but in the absense of them, there’s not much network effect. But - I’m still pondering and experimenting.
Fraser added these pithy words on Sep 05 06 at 3:41 pmI’m wondering if we think of the development of a network as stages - attraction of 1 %, activity by 19 %, adoption of 80 % - if we can effectively split out the motivation for each group of users. Still leaves me thinking about what motivates the golden middle.
Fraser added these pithy words on Sep 05 06 at 7:41 pmI’m wondering if we think of the development of a network as stages - attraction of 1 %, activity by 19 %, adoption of 80 % - if we can effectively split out the motivation for each group of users.
Still leaves me thinking about what motivates the golden middle.
Liz Strauss added these pithy words on Sep 09 06 at 7:00 pmThe ME effect is very powerful. I need to know that I exist, that I am a part of something important, and that I’m still an idividual with value. All of the noise and clutter are making me invisible . . . I was already wondering who I was, now I’m wondering if anyone hears me or know if I am.
Liz Strauss added these pithy words on Sep 09 06 at 11:00 pmThe ME effect is very powerful. I need to know that I exist, that I am a part of something important, and that I’m still an idividual with value. All of the noise and clutter are making me invisible . . . I was already wondering who I was, now I’m wondering if anyone hears me or know if I am.
John Harris added these pithy words on Sep 15 06 at 4:34 pm80/19/1 feels suspiciously like the definition of modern western society: 1% of the population leads (politicians, corporate executives, etc.), 19% are active doers and have an extended sphere of influence (club/society leaders, clergy, small business owners), and 80% are the worker bees that live in a bubble that’s circumscribed by their daily existence. The 19% seem to be driven by self-interest, ego, a sense of power and influence; a sub-set of the 1% gang. Maybe creating a user hierarchy would catalyze the 19% by appealing to their innate drive for a position above the masses.
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