Recently, a16z led a round in Clubhouse, an invite-only audio chat app, mostly used by VCs. While it was penny change compared to a16z’s 12Bn $ investment corpus, the news combined with (30–60%) increased attention and usage of social media due to Covid has certainly started a lot of buzz about the return of social media networks.

What makes social apps viral though? That is a question people invested in the tech space have often tried to answer.

The combination of core human needs enabled by (and often even driven by) rampant device revolution, as discussed further offers an insight into this answer.

Device Revolution

In view of hardware influencing social media, there are three broad phases that we have gone through -

1. Smartphone boom led to the first boom of mass social media usage. We have always wanted to connect with friends and others. Call was the predominant option before this. Even BBM had emerged by 2005. But making touch keyboard easier to type and larger screens with internet, starting with the launch of iphone in 2007, paved way for social networks.

2. As smartphones started getting increasingly functional, camera became a big area of focus. Within 9 years since 2008, average camera megapixels increased from 3 to 14MP in rear view camera (recent boom of front view camera not withstanding). And with path-breaking improvements in phone camera technology, image sharing became popular.

3. There is a lot of talk of the podcast (audio in general) revolution being caused by AirPods. If we consider Spotify usage as a benchmark for audio app usage (since it has the highest market share), the graph below directionally points out to how the birth of AirPods caused the wireless hearables revolution (as Apple’s share of total wireless hearable sales reduced) and that ultimately led to growth of audio at the same pace.

Core Human Needs

Hardware revolution begets software revolution. Because of the smartphone growth and penetration along with capabilities in improving the internet infrastructure, emergent offline behaviours could now be expressed online, and that led the social network apps to capture the zeitgeist.

Oprah Winfrey had said once, that all of her interviewees, without exception, had asked one question to her, “Was that okay?”. Underlying all of above core needs is another core human need to be validated, to look good, to establish status. We like creating things and like to show those creations to our friends and community and like to be appreciated for that. Social networks capitalise on this need and manifest it in different ways.

What is the secret sauce?

That’s fine, but why have only a handful of apps become viral? Why was Tiktok the fastest to reach 1Bn users? 2500 android apps release every day yet only some make it to our attention. And the answer, as we will see next, is not a plain-vanilla “network effects”.

Utility Focus

Most apps that win often start out as being extremely utilitarian. They identify a core problem and provide a solution to it. Often, they start with a very small market and then expand the market as focusing on a very large market at the start leads to product dilution.

Facebook started as a directory with a core college audience and then expanded to mass users. So did Quora, which wanted to organise experiential/immersive information that people share on the internet. Tiktok made short videos easy to create (with music), which was an underserved class in Youtube. Instagram started as a way to share photos using filters.

Retention Loops

They figure out the retention loop triggers early. While in general, retention metrics of consumer apps are low because of their fleeting nature, the best apps far outperform the average ones.

By the very nature of social networks, it is important to trigger networks from the start. Facebook figured out that a users likelihood to stay on the platform increased drastically if they made 7 friends within first 10 days. That is a great way of finding a numerical answer to a complex problem. Tiktok solved this differently. As the network grows, new creator retention is always a problem, because they have to work harder to achieve fame on the platform. This leads to potential new creators dropping off and hence ultimately causing an overall decline. Almost all public content networks face this issue. Tiktok solved it by ditching the social graph completely and tweaking its algorithms to favour and show new content significantly.

Agility

Social networks are in the business of demanding attention and attention is fickle. Hence, you’d be better off shipping things faster, getting early user feedback and iterating on that. Essentially, “move fast and break things.”

What next?

The New realities

The audio platform trend is expected to continue There are two buzzwords on the rise — AR and VR. VR games like Pokemon Go caught up on this wave. Facebook acquired a VR company Oculus in 2.3Bn $. Snap just had its partner summit in AR. Apple is rumoured to be launching its AR-enabled Apple Glass. Considering interest from these companies in these technologies, there might be a bet of networks developing on the top of this.

Unbundling of giants

As mass networks have matured, they have also left a need gap for customisations of niche networks. This leads to wave of unbundling, as new vertical networks get created to cater to users’ needs better.

Youtube has all the video content, from educational to entertainment to hacks, from normal user generated to institutional. Most of it however is long form (average video duration is 11 mins ~ average user duration as well), leaving a hole in short form. And Tiktok came and swept that need away.

Now that everyone is online, there is a broader question of how relevant your contacts on a particular network are and do you interact with all of them in the same way. Facebook and LinkedIn seem to be facing this issue now.

LinkedIn has been the one-stop for everything professional. But a lot of it has been reduced to mere nomenclature. So we see new vertical networks sprawling up, like RigUp, that capitalise on this.

Facebook has everyone — your friends, family, acquaintances and strangers whom you might have met once. All these interactions are different. Next-door is a niche but powerful carveout from Facebook.

(Facebook and LinkedIn unbundling shall be covered in a separate post)

And the simultaneous bundling into a giant

Akin to a wave of unbundling, there is also a wave of bundling on the rise — in the messaging space. An averageuser uses X messaging apps, across work, personal and official accounts. WeChat is already the aggregated solution in China and the Western world will soon follow suit (in this as well).

Fatigue

It has become increasingly clear that social networks have been a major addiction source for dopamine hits. No wonder, they come to command 2.5 hrs daily. (Source: App annie) However, while people want entertainment, a class of people is also looking for benefits of social media without the accompanying side effects. This doesn’t mean that social media usage would reduce — the core needs enabling their usage still stay. However, this might be a catalyst for low-touch way of interacting with users.

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