“Status As a Service”, 2019-02-19 (; backlinks; similar):
[Meditation on what drives social networks like Instagram: status and signaling. A social network provides a way for monkeys to create and ascend status hierarchies, and a new social network can bootstrap and succeed by offering a new way to do that.]
Let’s begin with two principles:
People are status-seeking monkeys
People seek out the most efficient path to maximizing social capital
…we can start to demystify social networks if we also think of them as SaaS businesses, but instead of software, they provide status.
Almost every social network of note had an early signature proof of work hurdle. For Facebook it was posting some witty text-based status update. For Instagram, it was posting an interesting square photo. For Vine, an entertaining 6-second video. For Twitter, it was writing an amusing bit of text of 140 characters or fewer. Pinterest? Pinning a compelling photo. You can likely derive the proof of work for other networks like Quora and Reddit and Twitch and so on. Successful social networks don’t pose trick questions at the start, it’s usually clear what they want from you.
…Thirst for status is potential energy. It is the lifeblood of a Status as a Service business. To succeed at carving out unique space in the market, social networks offer their own unique form of status token, earned through some distinctive proof of work.
…Most of these near clones have and will fail. The reason that matching the basic proof of work hurdle of an Status as a Service incumbent fails is that it generally duplicates the status game that already exists. By definition, if the proof of work is the same, you’re not really creating a new status ladder game, and so there isn’t a real compelling reason to switch when the new network really has no one in it.
…Why do social network effects reverse? Utility, the other axis by which I judge social networks, tends to be uncapped in value. It’s rare to describe a product or service as having become too useful. That is, it’s hard to over-serve on utility. The more people that accept a form of payment, the more useful it is, like Visa or Mastercard or Alipay. People don’t stop using a service because it’s too useful.
…Social network effects are different. If you’ve lived in New York City, you’ve likely seen, over and over, night clubs which are so hot for months suddenly go out of business just a short while later. Many types of social capital have qualities which render them fragile. Status relies on coordinated consensus to define the scarcity that determines its value. Consensus can shift in an instant. Recall the friend in Swingers, who, at every crowded LA party, quips, “This place is dead anyway.” Or recall the wise words of noted sociologist Groucho Marx: “I don’t care to belong to any club that will have me as a member.”
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