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Learnings from Scaling Two-sided networks. Stories from SoundCloud and Oscoin

Eleftherios Diakomichalis at the Community Leadership Summit #2

Eleftherios Diakomichalis is the co-founder of Oscoin, a decentralized network and currency for open source software collaboration and incentivisation.

In this talk at the Community Leadership Summit #2, Eleftherios shares his learnings on platform architecture from his early days at Soundcloud up to building Oscoin today.

Transcript

I'm a data scientist. I was an early employee at Soundcloud and helped them grow to this big brand they are today and also a year ago I founded a project that is trying to address problems of online software communities, specifically when it comes to sustainability and capturing value.

Your community is evolving

I want to share two of my learnings from over the years. The first one comes from open source software communities. One of my favorite authors is Pieter Hintjens who wrote the book “Social architecture: building online communities”. In the book Pieter talks about market cycles and what that means for your community. Usually a new product enters the market. The product then follows the famous s-curve, in the beginning being adopted by pioneers, then early adopters, then mainstream users and finally the skeptics.

What Pieter Hintjens did was to try to debunk what was really going on in terms of open source software communities, in each of those phases. What he said was that at the beginning when you're launching a product, usually your first users are these weirdos that are in the business of finding new stuff and that's what they care about. They basically care about why your product is different, and that’s all. Probably they are not going to use your product because by the time that you're going to be in the market, these people probably have already moved on and they are looking for new cool stuff.

After the weirdos you usually have pioneers. In the open source world. These pioneers are usually hackers, like hardcore hackers that actually don't really care about tutorials, documentation and pretty videos. They know how to manage risk. They are in the business of actually trying products early on and building things with that. So these are usually your first contributors to your community. Then after that we usually start having early adopters that still know how to manage risk, but now they start to expect more stability. Then eventually we have the mainstream market and usually these are your paying customers.

Why I'm saying all of that is that because if you building communities, just make sure that you know where you stand because your users or your community will have very different profiles and very different needs over over the years.

How to bootstrap a two-sided network / marketplace

The second learning comes from my days at Soundcloud. It’s actually quite specific to two sided networks or two sided marketplace. It doesn't generalize that well, but it might have something to say for your product. As you probably know, a lot of these web 2.0 social network usually have two sides. Think of Airbnb hosts and visitors. Think about Soundcloud creators and listeners. Think about tinder women and men. The point here is that if you want to bootstrap a community around a two-sided marketplace, you have what we call the chicken and egg problem. If you don't have one side, then you struggle to attract the other - and vice versa. If you are building a social network, the one group requires the other for you to bootstrap.

What really happens most of the times is that one of the two sides actually is more valuable and more interesting. Or even you can say it has a more clear problem definition. Taking the Soundcloud case, originally when we started the whole project, we only focused on creators and the idea was to go and try to add utility to creators, and then creators would bring the listeners because of their content would be there. You can think of at the same story with Airbnb for example. What they've done early on was to focus on the hosts. In order to do so they were taking pictures of their homes, and they were helping them get listings and then eventually visitors came. If you're building a two sided network, think carefully about how to bootstrap that process because again, different phases, different expectations, different community strategies.

Verify, don't trust

These are my two learnings from the past. These days I’m working on crypto or the peer to peer web, however you want to think about it. My take on the future of social media is a bit contrarian, I think that in the post media age, we're going to stop trusting platforms. What I mean by that is that the idea of trust still will always exist between two humans, but now when we're talking about platforms we use every day, we're gonna move towards verifying assumptions, not trusting. I want to be able to prove that you treat my data in certain ways.

Another thing that I believe that's going to be a bigger thing in terms of platforms of the future, is this idea of p2p and offline-first social media. If you look at social media, we had Facebook, now we started moving towards messaging, which is much more p2p and in many ways goes beyond the web.

Right now Scuttlebutt is modeling a lot of these ideas that we're going to see in the future.

Finally,  what's happening right now with cryptos is that value exchange is being introduced down to the code level, down to every possible online action. If you are building a social media platform in the future, your users will expect that you're going to be sharing some of that value that you're capturing with them, if they contribute to that value creation. This is very different from web 2.0 where the social networks took advantage of their users and didn’t reward them with actual monetary value.

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