How does the Cold Start Theory apply to industries outside of tech startups?

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.

To build a 'moat' around a networked product, one strategy is to start with a single network, or an 'atomic network'. This could be a small, specific location or group, like a single city, college campus, or small beta tests at individual companies. Once the product is successful in this smaller network, it can gradually be expanded to larger networks. This strategy helps to establish a strong user base and create a barrier to entry for competitors.