Network Defect

By Ivan Gevirtz

created: Thursday, January 28, 2010
updated: Thursday, March 04, 2010

Shortly after the beginning of the new millennium, I helped start a fantastic secure communications company in Seattle called Coco.  Our technology was not only revolutionary, but it also actually worked, and that meant that I could attract top talent.  Among other sources, we were able to tap in to Seattle's (mostly) white-hat security community, the Ghetto Hackers.  At Coco, personalities were as big as IQs.  As you could imagine, we had quite a colorful cast of abnormal prodigies representing diverse ideologies.

For instance:

Our radio engineer came to work carrying a permit and a hardened briefcase.  Encasing a Glock.

For instance:

An English-language-only designer married a Spanish speaking Peruvian.  For a couple grand.  While dating one of our product managers.

For instance:

Our CTO designed his own business card.  In metal.  Which doubled as a set of lock-picks.

For instance:

There was the time when a plucky young woman came in announcing herself to be the girlfriend of both our tech writer ... and her husband.

Yes, Coco was a colorful place.  So when one of the polyamorous engineers sent me an invitation to join Friendster, I was intrigued, but reserved.  I signed up, and acknowledged his acquaintance.  I was able to see his relationships, and their relationships, and attempt to follow the chain.  I was excited to apply my renewed knowledge of graph theory, and can undeniably assert that the network was neither directed nor acyclic.  After managing to cross out of that forest, I was able to find that there were plenty of people more like myself -- who adhered to a more strictly literal interpretation of the word couple, people for whom single meant they weren't in a relationship, rather than merely indicating their availability.

In spite of my understandable hesitation to use Friendster for finding a girlfriend, I was very excited and intrigued by the possibility it represented.  I thought the notion of a social network was brilliant, and thought that Friendster's first-mover advantage would lead it to an insurmountable market position.  After all, I knew about the power of the network effect, and Friendster seemed to have even more costs associated with users switching away.  But, then something happened.

"Friendster", you ask, "I've never even heard of Friendster.  Don't you mean MySpace, which is still wildly popular worldwide?"  No, but we'll pull MySpace in to the story soon enough.  Like, right now.  A rumor I can't seem to verify right now suggested that in one catastrophic outage in 2005 or 2006, a double digit percentage of Friendster's users moved to MySpace.  See, look, there it is.  I've now included MySpace.  Aah yes, MySpace.  Friendster's downfall has been well detailed in a New York Times article, with site performance being a major reason.

On AIM, it is pretty hard to get the usernames of all the people you want.  You can search by name, or by email.  Searching by name often leads to ambiguity, and email addresses change all the time.  And because people have become more spam savvy, they may have signed up using a spam email account that you don't even know about.  But, because AIM is a closed network, people can't easily spam you or get themselves added to your buddy list.  These factors combine to give AIM stickiness.  But the question I want to ask is, "Why didn't the network effect lock users in to Friendster?" like it has for AIM.

Some of the most powerful features of social networks reduce the network effect.  On social networks such as Friendster, MySpace, and Facebook, it is easy to find and keep current with people's contact information.  Unlike AIM, these sites derive some of their power based on making it easy to find and reconnect with long-lost friends.  And, they also make it easy to send a persistent message to all the friends you already have, such as:

Congratulations, Friendster friends!  The very fact that you can see this means that the site was up long enough for you to log in.  Rest assured, I was able to log in myself some time ago, for just long enough to broadcast my new MySpace page URL at:


Hey Everyone!  MySpace is so last week.  Facebook is where all the cool kids now hang.  Connect with me over there!


I need to hide from the Mafia.  They've been burning down my Farm.  Find me on Orkut...

So what does this mean for Facebook or even LinkedIn?  One major advantage Facebook has is its platform.  Since it is a social network, games and other applications can confer socially visible credentials upon an individual user.  The value of some of these, like character possessions in MafiaWars, will persist only as long as the game is fun and people in your network continue to care.  However, other virtual goods, such as those based on merit, longevity on site, or even depth of usage might endurably evoke people's competitive spirit, and provide another kind of non-transferable lock in.

Creating some kind of virtual economy -- token currency, goods, or even transferable (virtual) services -- could increase this durable lock in.  Often, simple point systems suffice to stimulate people's competitive spirit and create increased usage.  Finding a way to parlay this in to the real world could be the clincher.  TigerBow is half way there, providing a safe fulfillment mechanism to transfer real goods to virtual friends, but they do not provide a way to accrue or convert virtual goods into real goods, or even other virtual goods.  Other applications extend the metaphor by allowing people to send virtual goods that can be redeemed for a real goods, such as a beer.