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”).