Social Networks are SaaS businesses: Status as a Service.
published this week is as good as it is long: incredibly.
These are some concepts in it I found very interesting:
Social networks are analogous to cryptocurrencies. How?
- Each new social network issues a new form of social capital, a token.
- You must show proof of work to earn the token.
- Over time it becomes harder and harder to mine new tokens on each social network, creating built-in scarcity.
- Many people, especially older folks, scoff at both social networks and cryptocurrencies.
People seek out the most efficient path to maximizing social capital. People are status-seeking monkeys. “Some people find status games distasteful. Despite this, everyone I know is engaged in multiple status games. Some people sneer at people hashtag spamming on Instagram, but then retweet praise on Twitter. Others roll their eyes at photo albums of expensive meals on Facebook but then submit research papers to prestigious journals in the hopes of being published. Parents show off photos of their children performances at recitals, etc.”
Status is a relative ladder. By definition, if everyone can achieve a certain type of status, it’s no status at all, it’s a participation trophy.
It’s difficult to overstate what a momentous sea change it was for hundreds of millions, and eventually billions, of humans who had grown up competing for status in small tribes, to suddenly be dropped into a talent show competing against every person they had ever met. (through internet social networks / feeds).
“The rhetorical style of any Twitter account that continues to gain followers converges on that of a fortune cookie.”
Why do young people tend to be the tip of the spear when it comes to catapulting new Status as a Service businesses?
One reason is that older people tend to have built up more stores of social capital. A job title, a spouse, maybe children, often a house or some piece of real estate, etc. Because of their previously accumulated social capital, adults tend to have more efficient means of accumulating even more status than playing around online. Maintenance of existing social capital stores is often a more efficient use of time than fighting to earn more on a new social network given the ease of just earning interest on your sizeable status reserves. For young people, the fastest and most efficient path to gaining social capital, while they wait to level up enough to win at more grown-up games like office politics, is to ply their trade on social media. Both the young and old pursue optimal strategies.
If we think of these networks as marketplaces trading only in information, and not in status, then we’re only seeing part of the machine.