Status as a Service

thoughts about another article

Assertions throughout the article

Two principles: * People are status-seeking monkeys * People seek out the most efficient path to maximizing social capital

There are no methods for measuring stock and flow of social capital, despite many methods for doing this financial capital.

Growth-stage social startups focus on growth through network effects but struggle to quantify progress on these aims.

The author uses 'Social Capital' and 'status' interchangeably.

The author draws a comparison between ICOs and social networks; tokens are social capital, proof of work earns a token, tokens get scarcer.

Successful social networks make the proof of work mechanism clear upfront.

Some forms of social capital from other status games transfer easily to other networks e.g. media fame and some don't e.g. Tweet quality.

Ammassing social captial in one network is easier when the network is small. Competition is more numerous and more intense in older, larger networks.

Value = scarcity = harder proof of work.

Since people seek an efficient path to gaining social capital, they flock to networks where they find the proof of work mechanism easy (compared to the average person).

Twitter benefitted from an external mechanism to help feedback status, with Favstar and Favrd introducing the element of competition (and feedback on your standing in that competition) externally to the network.

Young people have a bias towards visual mediums over textual ones.

The gradient of your social capital ROI can govern your market share among different demographics. Heavy social media users are hyper aware of different status ROI amongst networks they use.

Graph-based social capital allocation mechanisms can suffer from runaway winner-take-all effects. Combined with a lack of a way to clear out old money, this forms one hypothesis on why old networks die out.

It's not that the existence of old money or old social capital dooms a social network to inevitable stagnation, but a social network should continue to prioritize distribution for the best content, whatever the definition of quality, regardless of the vintage of user producing it. Otherwise a form of social capital inequality sets in, and in the virtual world, where exit costs are much lower than in the real world, new users can easily leave for a new network where their work is more properly rewarded and where status mobility is higher.

Distribution is king.

Replicating a form of proof of work in the same market is likely to fail unless your new thing is better along another axis (utility, entertainment) as well. There's no reason to switch if there are less people on the new network.

It is the unique combination of a feature and a specific graph that is any network’s most critical competitive advantage

What is the one scarcity in the age of abundance? User attention.

Older folks have other forms of social capital available to them, as well as less time to 'prove their work' on any given network. This tends to skew the audience of social networks to the young.

People maintain multiple identities and the ease with which one can cultivate multiple accounts/identities in a network is an important factor for people maintaining context in different social circles.

If you want to know the terminal value of a network, first ask yourself how many people have the skill and interest to compete in that arena.

A feed algorithm (that filters content) can be thought of as a form of interest rate on the currency of user attention. In other words, to purchase the same amount user attention in the future will require a cost (proved work e.g. a post) that changes based upon the algorithm.

People dont' stop using a service because it's too useful. In contrast, social networks can unravel overnight. Status relies on coordinated consensus to define the scarcity that determines its value. Consensus can shift in an instant (a la Memetic Desire).

The fashion industry has taken control of the cycle of devaluation by agreeing and defining trends every season. The tech industry has something to learn in this area as the similarities, in terms of the abundance of rivals, are strong.

Snapchat made a thoughtful move when changing from displaying a single 'Super BFF' relationship (a capped amount of social captial) to an unbounded amount of 'streak' for each contact. This is a clear, direct measure of social capital.

As networks mature, they must swap to focusing more on entertainment or utility in order to retain members of the network. Alternatively, some networks introduce new forms of social capital that can be chased in order to extend their life. For good examples of networks offering something else over time, consider MMO games e.g. WoW, LoL, Fortnite.

FAANGs traditionally struggle with building social networks.

Until we have metrics that distinguish between healthy and unhealthy activity, social network execs largely have to steer by anecdote. Distilling data from 100 – 1000k users dilutes a message massively.

Financial-to-social captial exchanges have no clearer example than those of influencers on YouTube or Instagram.

Almost all successful social networkds are adept at providing both accumulation and storage mechanisms.

If your service is free, the best alternative to capturing the value you create is to own the marketplace where that value is realised and exchanged.

For an individual user, we've standardised on a few basic accumulation mechanisms:

For any single user, the stickiness of a social network often correlates strongly with the volume of social capital they've amassed on that network.

Social capital tends to be non-fungible (this somewhat contradicts an earlier point whereby social capital from one network can transfer to another simply by virtue of maintaining the same identity on each – presuming proof of work is just as easily attained in either network), which makes abandoning a network less of an issue.

Requiring that social networks allow people to export their graph and take it to another network might blunt the power of the networks in the social captial axis; forcing them to become more utility or enterainment-driven.

Arbitrage between networks can exist when there are similar proof of work mechanisms. ex. @thefatjewish taking jokes from Twitter and reposting them on Instagram.

IMDb and Wikipedia are two databases that were almost entirely created through the altruistic/status-seeking desires of domain experts.

As we enter a newer age of social networking, claiming ignorance to the downfalls of enormous networks with very little guidance won't be tolerated.

Thoughts

Captial and the use of other, usually financial, constructs can be very useful as a way to illustrate a mechanism. I should explore this more.

Proof of work as a metaphor for social capital value is an excellent analogy.

Feedback about where you are in relation to others is the only mechanism that can drive value creation. Without it there is no way to either: understand where you are in relation to others (removing any notion of status and therefore value) or understand how your actions influence the accumulation of social capital (removing any skill from the proof of work mechanism).

I should look out for arbitrage between new networks as they arise as an intersting thought experiment/predictive exercise.

Digital visual art social network? Proof of work = creating code that is run on the client side and produces the art.