Uber's early atomic networks were not defined by entire cities like San Francisco. Instead, they were much more specific and smaller in scale. An example of this would be '5pm at the Caltrain Station at 5th and King Street'.

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The Cold Start Problem

When a networked product launches, it faces a chicken-and-egg problem: people need to use it for it to be worth anything. So how do you start the very...

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To overcome the Cold Start Problem, businesses tend to start with a single network—what Chen calls an 'atomic network'. This is perhaps the most crucial idea in the book. Networked products tend to start small, in a single city, college campus, or in small beta tests at individual companies—like when Facebook launched at Harvard University. "Only once they nail it in a smaller network do they build up over time to eventually conquer the world," Chen writes. Moreover, appropriate atomic networks are often smaller than entrepreneurs think. Uber's early atomic networks were not cities like San Francisco; '5pm at the Caltrain Station at 5th and King Street' is more accurate.

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The Cold Start Problem can have significant implications for market competition. It can create barriers to entry for new businesses, as they need to overcome this problem to establish themselves in the market. This often involves starting small, in a single network or location, and gradually expanding once they have established a successful model. This can slow down the rate of expansion and limit the ability of new businesses to compete with established ones. Moreover, the need to overcome the Cold Start Problem can also lead to a focus on niche markets or specific locations, which can limit the scope of competition.

The Cold Start Theory can apply to industries outside of tech startups in a similar way. The idea is to start small, focusing on a specific niche or market, and then gradually expand. This could be a specific geographic location, a particular demographic, or a unique product offering. Once the business has established itself within this smaller network, it can then use this as a foundation to expand and grow.

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