The Opposite of Network Effects And Viral Loops

A few days ago, I wrote about network effects and viral loops.  Yesterday, I read about new private social network Pair on TechCrunch.  I work a lot and travel a fair bit, so I actually think the idea of a two-person private network to stay connected to your significant other is a great idea. I even downloaded the iPhone app and invited my wife to join. She was touched.

But the more I thought about Pair the more I realized it is a great opposite example of network effects and viral loops. Let’s start with network effects.  In most social networks, the value of the service increases as more people join.  As more of your friends joined Facebook, for example, you could keep up and in touch with increasingly more of them in one place, so stickiness increased. The opposite is true with Pair. Inviting a third person kills the intimacy factor.  Now what about viral loops?  As far as I can tell, Pair only has one.  Every time your significant other posts a picture, video or cute message it’s going to bring you back. But the problem is that as soon as you experience fatigue with the service there is no other hook.  I am an extremist on Facebook. I use it heavily for weeks or months and then not at all for a while.  Something one of my ~300 friends posts is always the catalyst that brings me back for a period of heavy usage.  But Pair doesn’t have this luxury.  Sure, it has some old-school off line word-of-mouth potential where you hear about other friends using it, but that is not a mechanized viral loop that will scale.  Path is another private social network that suffers some of these symptoms, but at least Path is for your whole family and closest friends, so there are network effects, even if they are within a smaller pool of people, and there are more than two people to count on to bring you back.  So what does all this mean? Well, unless Pair figures out a way to add network effects and viral loops without breaking the intimacy factor it was founded on, is not going to have the kind of insane growth trajectory that Facebook and Twitter enjoyed to make them huge over night.  More likely, it will grow very linearly using old-school marketing techniques like PR and advertising.  What’s wrong with that you ask? Well,  the most likely business model for Pair is advertising.  I can tell you from experience that buying advertising to bring to people to you service so you can sell more advertising to monetize them is called arbitrage and it is extremely hard and the margins are very slim. To make real money at the advertising game you need reach and frequency, which means you need scale.  Let’s see how fast Pair can scale without network effects or more than one viral loop. 

17 more posts to go in my 30 posts in 30 days challenge.

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