John Collison: evaluation

Transcript context

…Yeah, yeah. Of great customer emails, but online on comments. Every time I post a video, I'm getting comments with people telling me what we should do differently. I think that's one of the great things about engaging with our community. People think of social networks and messaging apps as network-effects businesses where the bigger they are, the better they work as products and businesses because your friends are there. They are almost the… They are the textbook example used in business school discussions of network effects. That is somewhat true, but there's also an element where you have anti-network effects and diseconomies of scale as a social network. One is as you get more popular, there's more kind of fraud and spam problems and things like that. But there's also a question of what is the "id" of the social network. Maybe teens using a product don't necessarily want their aunts and uncles on it because the vibe is all wrong. Or maybe Silicon Valley insiders prefer Quora. You remember Quora was around when we were first starting out, and it was originally like a very Silicon Valley insider product. Now it's a much broader product. As I think about Snap, one of the things you've done well is you've kept it cool, and you've avoided the "ick" of it feeling like it's too big, which again, sometimes social networks run into. Maybe you can comment on that phenomenon and how you think about the risk in general. It's fascinating because you've tapped into two of the most important kind of ideas in social. Or at least two of the most important findings that we've had. The first one, which is, I think maybe the most important, was that when we were starting Snapchat, you're right. The belief was that the bigger the network was, the more valuable it was, and folks had a whole model for that for how they thought about it. What Snapchat proved was actually that it's not about the size of your network or the number of people you can contact on your network. It's about who you actually talk to. That tends to be a much smaller group than the total size of the potential network, or even your total number of friends. In fact, most of your conversations, I would guess, on a daily basis, are like with your wife. Maybe with some of your close friends, maybe some of your closest coworkers. But it's actually a very small group of people that you talk to the most. That broke the model of social media, which was the more friends you have, the more engaged you have, the more value there is. We actually said, "That doesn't sound right." I think people spend most of their time talking to the folks who are most important to them. If we design a service that's all about talking to the people who are most important to you, your close friends, and we design a service that's really, really great at that. You may not send snaps all day to your 400th friend, but certainly for me, I love seeing what our two-year-old is up to throughout the day. My wife sends me little Snaps, and it makes my day. It's the best part of my day seeing what he's doing and what he's up to. We've really built a service that's great for your close friends. That doesn't necessarily mean that you need the largest possible network. You just need the most important people in it. I think that that was one of the reasons why Snapchat was able to grow. Because when we were first getting started, we just heard from everyone, you're never going to be able to compete with Meta. There's no way because they've got a bigger network. Then I think the second lesson is a follow-on from that, because the other thing that we found is that as Facebook grew and Instagram grew, there was so much pressure to add more friends. Because if you remember back in the day, their entire business was based on the newsfeed. In order to have content in the newsfeed, you needed to have friends. In order to have more content, you needed to add more and more and more friends to have a newsfeed that had more posts and therefore, more advertising opportunities. That created a really precarious problem. Because I think what folks found is after they added a certain number of friends, they got to a place where they actually didn't know who they were friends with on Facebook. They didn't know who was going to see their content.…

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