The Cold Start Problem implies that new startups, especially those offering networked products or services, may struggle to attract initial users because the value of their product or service is directly tied to the number of users. This can lead to a slow growth rate and difficulty in attracting investment. However, overcoming this problem can lead to rapid growth and success, as the value of the network increases with each new user.
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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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When a networked product launches, it faces a chicken-and-egg problem: people need to use it for it to be worth anything. Think of Facebook, Slack, or Airbnb. So how do you start the very first network without a basis to work from? Andrew Chen, General Partner at Andreessen Horowitz, calls this the Cold Start Problem.