The four seasons of a social network

One of the first things I learnt about finance are its four seasons.

  • High Growth + Low Inflation
  • High Growth + High Inflation
  • Low Growth + Inflation (“Stagflation”)
  • Low growth + Low or negative Inflation (“Contraction”)

I have seen a similar parallel in four social network companies so far.

  • High Growth in new connections + Low Garbage / Ads
  • High Growth in new connections + High Garbage / Ads growth
  • Low growth + High Garbage / Ads “revenue” growth
  • Low growth + Just Ads (a.k.a Twitter today!)

There is a difference however. Unlike the economy which starts another growth cycle after contraction, people usually migrate to another social network leaving the current one full of garbage (“revenue generating ads”).