Network effect, the hardside and customer interviews

20240108.1 - focusing on the 'hardside' of a network in product creation

I'm reading The Cold Start Problem by Andrew Chen. One of the interesting things he talks about in his book is the concept of the hard side of the network and how it relates to the network effect.

Essentially, the hard side of the network is the side where users have to perform more actions. These are the value-creating actions of the network and the reason for the opposite side—the easy side—to join the network and participate. Examples would be the drivers on the Uber app, the app developers on the App Store, or the sellers on eBay.

Chen then goes on to talk about how, in order to develop a network, we really want to be focused on developing the platform to support the needs of the hard side. He provides a few examples of questions to consider: What is the unique value proposition of the network to the hard side? How do we attract hard-side users? As the network grows, why would they come back more frequently and become more engaged? What makes the hard-side user sticky such that, when a new competing network emerges, they retain usage of your product?

It got me thinking that many of these questions are product questions—customer interview-style questions. So, I believe that we need to add this consideration into any product research: Are we catering to the hard side or are we catering to the easy side?

I think this is relevant because we often overlook this and only focus on ideal customer profiles (ICPs). Generally, we only categorize these based on certain demographic and sociographic signals; we talk about the product being for marketers or being for people who want to buy things. We don't often consider the marketplace network effect, where there is an easy side and a hard side.

In conclusion, I think this adds an additional lens through which we should do product research prior to product development and will improve the chances of building something of value.