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Eugene Wei — Status-as-a-Service

Two principles: 1. People are status-seeking monkeys 2. People seek out the most efficient path to maximizing social capital I begin with these two observations of human nature because few would dispute them, yet I seldom see social networks, some of the largest and fastest-growing companies in the history of the world, analyzed on the dimension of status or social capital.

It’s in part a measurement issue. Numbers lend an air of legitimacy and credibility. We have longstanding ways to denominate and measure financial capital and its flows.

...most of the social media networks we study generate much more social capital than actual financial capital, especially in their early stages... Social capital has much to say about why social networks lose heat, stall out, and sometimes disappear altogether. And, while we may not be able to quantify social capital, as highly attuned social creatures, we can feel it.

Why do some large social networks suddenly fade away, or lose out to new tiny networks? Why do some new social networks with great single-player tools fail to transform into networks, while others with seemingly frivolous purposes make the leap? Why do some networks sometimes lose value when they add more users? What determines why different networks stall out at different user base sizes? Why do some networks cross international borders easily while others stay locked within specific countries? Why, if Metcalfe's Law holds, do many of Facebook's clones of other social network features fail, while some succeed, like Instagram Stories?

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How is a new social network analogous to an ICO? 1. Each new social network issues a new form of social capital, a token. 2. You must show proof of work to earn the token. 3. Over time it becomes harder and harder to mine new tokens on each social network, creating built-in scarcity. 4. Many people, especially older folks, scoff at both social networks and cryptocurrencies.

TikTok dances = proof of work. Eugene first noticed this in early Musically days while visiting a friend's home (with kids upstairs jumping around making Musically videos with friends)

...status games of adults are already well covered by the existing media, from literature to film. Children's status games, once familiar to us, begin to fade from our memory as time passes, and its modern forms have been drastically altered by social media.

While you can outsource Bitcoin mining to a computer, people still mine for social capital on social networks largely through their own blood, sweat, and tears.

Almost every social network of note had an early signature proof of work hurdle. For Facebook it was posting some witty text-based status update. For Instagram, it was posting an interesting square photo. For Vine, an entertaining 6-second video. For Twitter, it was writing an amusing bit of text of 140 characters or fewer. Successful social networks don't pose trick questions at the start, it’s usually clear what they want from you.

This gave Twitter its own proof of work, and over time the overall quality of tweets improved as that feedback loop spun and tightened. The strategies that gained the most likes were fed in increasing volume into people's timelines as everyone learned from and competed with each other.
Read Twitter today and hardly any of the tweets are the mundane life updates of its awkward pre-puberty years. We are now in late-stage performative Twitter, where nearly every tweet is hungry as hell for favorites and retweets, and everyone is a trained pundit or comedian.

⭐️ Thirst for status is potential energy. It is the lifeblood of a Status as a Service business. To succeed at carving out unique space in the market, social networks offer their own unique form of status token, earned through some distinctive proof of work.

Conversely, let's look at something like Prisma, a photo filter app which tried to pivot to become a social network. Prisma surged in popularity upon launch by making it trivial to turn one of your photos into a fine art painting with one of its many neural-network-powered filters.
It worked well. Too well.
Since almost any photo could, with one-click, be turned into a gorgeous painting, no single photo really stands out. The star is the filter, not the user, and so it didn't really make sense to follow any one person over any other person.
⭐️Without that element of skill, no framework for a status game or skill-based network existed. It was a utility that failed at becoming a Status as a Service business.
In contrast, while Instagram filters, in its earliest days, improved upon the somewhat limited quality of smartphone photos at the time, the quality of those photos still depended for the most part on the photographer. The composition, the selection of subject matter, these still derived from the photographer’s craft, and no filter could elevate a poor photo into a masterpiece.

In fact, Facebook launched with one of the most famous proof of work hurdles in the world: you had to be a student at Harvard.
Layer that on top of the broader social status game of stalking attractive members of the other sex that animates much of college life and Facebook was a service that tapped into reserves of some of the most heated social capital competitions in the world.

The Greatest Social Capital Creation Event in Tech History In the annals of tech, and perhaps the world, the event that created the greatest social capital boom in history was the launch of Facebook's News Feed. Before News Feed, if you were on, say MySpace, or even on a Facebook before News Feed launched, you had to browse around to find all the activity in your network. Only a demographic of a particular age will recall having to click from one profile to another on MySpace while stalking one’s friends. It almost seems comical in hindsight, that we'd impose such a heavy UI burden on social media users.

While we're all status-seeking monkeys, young people tend to be the tip of the spear when it comes to catapulting new Status as a Service businesses, and may always will be. One 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, maybe a car, furniture that doesn't require you to assemble it on your own, a curriculum vitae, one or more college degrees, and so on. Young people are generally social capital poor unless they've lucked into a fat inheritance. They have no job title, they may not have finished college, they own few assets like homes and cars, and often if they've finished college they're saddled with substantial school debt. For them, 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 (or video games, but that’s a topic for another day). Secondly, because of their previously accumulated social capital, adults tend to have more efficient means of accumulating even more status than playing around online. Young people look at so many of the status games of older folks—what brand of car is parked in your garage, what neighborhood can you afford to live in, how many levels below CEO are you in your org—and then look at apps like Vine and Musical.ly, and they choose the only real viable and thus optimal path before them. Remember the second tenet: people maximize their social capital the most efficient way possible. Both the young and old pursue optimal strategies.

[Young people] can afford to spend some of that surplus [of time] exploring new social networks, mining them to see if the social capital returns are attractive, whereas most adults can afford to wait until a network has runaway product-market fit to jump in.

These modern forms of social capital are like new money. Not surprisingly, then, older folks, who are worse at accumulating these new badges than the young, often scoff at those kids wasting time on those apps, just as old money from the Upper West and Upper East Sides of New York look down their noses at those hoodie-wearing new money billionaire philistines of Silicon Valley.

Witness how many young NBA stars track their own appearances on House of Highlights the way stars of old hoped looked for themselves on Sportscenter.

→ Generational shifts in where participation happens, who the gatekeepers are, and how stars think to engage with fans.

→ Distribution channel: accounts like House of Highlights

Incidentally, teens and twenty-somethings, more so than the middle-aged and elderly, tend to juggle more identities. In middle and high school, kids have to maintain an identity among classmates at school, then another identity at home with family. Twenty-somethings craft one identity among coworkers during the day, then another among their friends outside of work.

Life may not be a spectator sport, but a lot of social media is.

Proof of work is an asymptote

This isn’t to say that proof of work is bad. In fact, coming up with a constraint that unlocks the creativity of so many people is exactly how Status as a Service businesses achieve product-market fit. Constraints force the type of compression that often begets artistic elegance, and forcing creatives to grapple with a constraint can foster the type of focused exertion that totally unconstrained exploration fails to inspire.

Social capital inflation and devaluation is an asymptote

News pages once reaped rewards for posting frequently on Facebook after incentivizing massive followings. Then, one day, Facebook snapped its fingers and much of that dependable reach evaporated into ash. No longer would every one of your Page followers see every one of your posts. Facebook did what central banks do to combat inflation and raised interest rates on borrowing attention from the News Feed.
...there is one scarce resource which is a natural limit on every social network and media company today, and that is user attention.

In the beginning, a status hierarchy requires lower status people to join so that the higher status people have a sense of just how far above the masses they reside. It's silly to order bottle service at Hakkasan in Las Vegas if no one is sitting on the opposite side of the velvet ropes; a leaderboard with just a single high score is meaningless.

We love taking a utility (clothing, transportation) and making it a status symbol

Fashion is one of the most interesting industries for having understood this recurring boom and bust pattern in network effects and taken ownership of its own status devaluation cycles. There is usually no real utility change at all; functionally, the shirt you buy this season doesn’t do anything the shirt you bought last season still can’t do equally well. The industry as a whole is simply pulling the frontier of scarcity forward like a wave we're all trying to surf.

Because of the incredible efficiency of News Feed distribution, Facebook became a de facto surveillance apparatus for the young: Mommy and Daddy are watching, as well as future universities and employers and dates who will time travel back and scour your profile someday. As Facebook became less attractive as a platform for the young, many of them flocked to Snapchat as their new messaging solution, its ephemeral nature offering built-in security and its UX opacity acting as a gate against clueless seniors.

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I suspect the frontier of social network strategy will draw more and more upon deep study of these adjacent and much older social capital games. Fashion, video games, religion, and society itself are some of the original Status as a Service businesses.

Witness how many young NBA stars track their own appearances on House of Highlights the way stars of old hoped looked for themselves on Sportscenter.