Status as a Service. Part 2

Eugene Wei, 2019-02-19

Part 1 Part 2 Part 3

The Greatest Social Capital Creation Event

  • Facebook feed effectively made people compete with everyone in their network.

  • # of likes —> feedback loop, A/B testing of Instagram posts. Trial and error.

  • Inflection point: too many posts to view (scarcity of attention) —> algorithms to the rescue.

  • Interests shift, so it’s wise to edit/remove old posts that can be picked up to haunt you.

  • Even if you are not successful now, the hope for fame is still alive.

Luck Favours the Young

Older People

  • In many countries older folks have more than one source of social capital: job, family, house, car, etc.

  • Have more efficient means to accumulate even more status without resorting to online activities. Maintenance of existing social capital is a better use of time, especially for risk averse people.

  • Many older folks don’t want to learn new status games and are hesitant to start something new (conflicting responsibilities or just “why bother”).

Younger People

  • For younger population it’s faster to build status on social networks and games while they’re [maybe] working towards more “adult” accomplishments.

  • Social capital in the form of likes and followers is as real for them as the shiny car for their parents.

  • Have a surplus of time (which adults have too little), can afford to be early adopter of new things and get tired of them by the time their parents discover them.

  • Younger people choose services (Instagram, Snapchat) allowing them to have almost non-overlapping multiple identities (school, home, work, friends, etc.) vs a single public identity (Facebook, LinkedIn).

Utility and Social Capital

  • Come for utility, stay for capital. Most social networks.

  • Come for social capital, stay for utility. IMDb, Reddit, Foursquare, Quora.

  • Come for utility, no social capital. Messengers, Diallers, etc. No need to bother.

  • Only social capital, no utility. For many this will be the endgame for Facebook.

  • Both social capital AND utility. Superapps (ex: WeChat).

Limitations (asymptotes)

  • Proof of work – every network has a ceiling on the number of content creators. [MK: Increased demands on quality, too, leading to creator attrition] Also: WSJ, 2020-07-27 Facebook Offers Money to Reel In TikTok Creators

  • Volatility of Status – SMNs aim to keep the signal-to-noise ratio (incl. engagement) high, so no all posts make to others’ feeds. Value to content consumer is more important that to a producer. Attention is increasingly scarce.

  • Network effects can get reversed – what brought you up can easily throw you down with a vengeance. While there almost can be no too much utility, social capital relies on scarcity determining its value. And this is volatile for the business.

Change of Winds

  • Status hierarchy requires lower status people to join and reinforce the feeling.

  • Past the tipping point of popularity is not an S-curve, it’s a bell curve.

  • If the “cool kids” start leaving the platform, they take audience with them —> churn.

  • If the “uncool adults” join the platform, they spook off the audience —> churn.

  • Proactively devaluing something (“crop rotation”) may reintroduce scarcity into the cycle.

  • Fervent early adopters may shape the positioning of the SMN; shift in positioning – loss of audience.

Lengthening the Half-life of Status Games

  • With proof of work over time those who could mine status the most would’ve done it eventually.

  • If at that point there’s no new/increased utility —> the network goes stale.

  • Introducing new forms of proof of work (and hurdles) reintroduces potential energy reserves.

  • Risk: overdoing it by misjudging the size of the target audience.

to be concluded…