Reaction Paper 8 – Social Network Platforms

Several weeks ago, Max Levchin made news with the funding of, a popular tool that allows users to create slide shows and pimp out their photos for social network pages (started in ’04). Slide is essentially an API for Facebook and all the rest, but it’s attracting the big bucks. It just raised $50 million in a fourth round of funding that values the company at more than $500 million, with major investors like Fidelity Investments and T. Rowe Price.  News article.

As a founders and Chief Technology Officer of PayPal at the tender age of 23, Levchin knows the web. He is probably the largest widget/app out there. He keeps a smart blog called ‘You’ve Gotta Be Kidding Me.” His recent post is titled Developer incentives in social networking platforms, in which he breaks down the essence of a successful social network site. More accurately, he says that a good way to consider social platform design is from the perspective of game design. The goals of a good  platform are to:

  1. Attract and keep top developer talent
  2. Encourage development of net-positive products
  3. Maximize constructive competition among developers
  4. Minimize objectively net-negative developers & products

Simplicity, consistency, and fairness are also keys to proper development, according to Levchin. I find it interesting that he lists these 3 rules.  Simplicity I completely understand. It seems to me that consistency and fairness both essentially relate to trust – trust between the user and developer.  If a user goes to a site and the site keeps changing, and the functions keep changing, then that is motivation enough to abandon the site.  Facebook has become the most successful social network platform because they have performed well against the above list of rules. They have top talent, they have kept the platform open and marketable, giving a perceived notion of fairness and encouraging competitive development practices.  If someone is able to develop the best killer app, then that will be exploited and disseminated.

On that note, Levchin also has some interesting things to say about viral marketing, which was the topic of my last paper and of increasing interest. According to him, the platform’s most valuable control is distribution. “Perhaps the hardest task in social platform design is creating the rules and limits applying to viral channels.”                Valuable distribution is the key. It is easy for a viral marketing to essentially become spam.  One must be wary of saturation, another surefire way to turn off users.  The goal is to have reach, frequency, consistency, and valuable traffic.   

            Again back to the Facebook model, it is easy to see how fickle users become. On one hand, some products are able to attract such a large userbase because of strength in numbers. If all of my friends are using a certain product, then I inevitably will have to use that product as well.  Conversely, if you introduce one product that is perceived as a threat or an infringement upon security or privacy (i.e. Beacon), users will flee to the next bright thing.  It is sort of like the bar scene. The point of going to any bar is to be there hanging out with my friends and meeting other new people.  I don’t care about the architecture or the space, I care more about who is using it.


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