Digg's failure + community feeling

Via Forbes:

What did Reddit do right that Digg did wrong? Well, they haven’t redesigned since what appears to be 1997, which has pleased their user base who like the simple look. They don’t assault users with ads. They create actual communities for their users to enjoy, rather than just recruiting them to submit content.

Via Wikipedia:

In recent history, Reddit has been known as the instigator of several large-scale projects, some short and others long-term, in order to benefit others. A selection of major events are outlined below:

In early December 2010, members of the Christianity subreddit decided to hold a fundraiser [57] and later members of the atheism subreddit decided to give some friendly competition,[58] cross-promoting[59] fundraising drives for Médecins Sans Frontières (Doctors Without Borders) and World Vision's Clean Water Fund, respectively. Later, the Islam subreddit joined in, raising money for Islamic Relief. In less than a week, the three communities (as well as the Reddit community at large) raised over $200,000. Most of this was raised by the atheism subreddit,[60] though the Christianity subreddit had a higher donation amount per subscriber.

In early October 2010, a story was posted on Reddit about a seven-year-old girl, Kathleen Edward, who was in the advanced stages of Huntington's disease. The girl's neighbors were taunting her and her family. Redditors banded together and gave the girl a shopping spree[61][62] at Tree Town Toys, a toy store local to the story owned by a Reddit user.

Reddit started the largest Secret Santa program in the world, which is still in operation to date. For the 2010 Holiday season, 92 countries were involved in the Secret Santa program. There were 17,543 participants, and $662,907.60 was collectively spent on gift purchases and shipping costs.[63][64][65]

Members from Reddit donated over $600,000 to DonorsChoose in support of Stephen Colbert's March to Keep Fear Alive. The donation spree broke previous records for the most money donated to a single cause by the Reddit community and resulted in an interview with Colbert on Reddit.[66]

Reddit users donated $185,356.70 to Direct Relief International for Haiti after the earthquake devastated the island in January 2010.[67]

Reddit users donated over $70,000 to the Faraja Orphanage in the first 24 hours to help secure the orphanage after intruders robbed and attacked one of the volunteers, Omari, who survived a strike to the head from a machete.[68]

Via the blog of Reddit co-founder Alexis Ohanian:

Product-wise, what won the day for reddit was user-created reddits. The more tools we gave to users, the more they impressed us (partially why I reasoned turning away from a user-centric model would turn out so poorly). It was a gradual process though, as it took a good year of house ad promotion and cultivation to finally take off (I can't tell you how many /r/gaming ads & submissions I made to get us to critical mass). But when they did, the exceded all expectations.

Nearly all of our best and most original communities on reddit are entirely redditor-created and -run. /r/IAmA is an endless treasure trove of fabulous content being created within reddit. When we started, publishers were thrilled to see reddit in their referral logs - now they're thrilled to see our content so they can use it on their own websites. Any clever blogger needs only read the reddit about their field to know what they should be writing about (or linking to).

Three observations:

1. The video you included shows how in the beginning Reddit had to lie about having users to attract people to the site.

2. Users actually love the crappy 1990s era user interface because it is simple and relatively ad-free.

3. Reddit took five long years to get to 5 million users; at that point Reddit's growth started to accelerate. It's hard to find investors who are willing to be that patient these days.

Your number three point is interesting especially given all the recent flameouts we've seen with companies that got to zillions of users seemingly overnight but had no engagement or retention. Basically they gamed the system.

Do investors have realistic expectations right now or are they benchmarking against outlier success stories and companies that rigged the system before vanishing? Has anyone really studied what really works? Do we know what percentage of successful exits come from 5 year Reddits or overnight success stories?

Frankly, I'm curious if there's a moneyball element at work here. Are the traits we prize early on really the ones that create successful exits years later?

There haven't been any scientistic studies I'm aware of.

Anecdotally, Caterina says that communities need time to build an immune system.

That explains why it took Pinterest several years to build a base before it exploded.

As did Twitter and Tumblr have slow starts, likely for similar reasons.

I'm collecting more anecdotes in my Slow stash.

My guess would be that slow is always better from a development side -- as long as it's not a completely closed ecosystem. If you're not getting sufficient exposure to the mainstream interwebz then you could get steamrolled by threats you're not ready for. It's like someone who spars all the time but never gets in a real fight -- you're not really as prepared as you think for all the possibilities. But if you are getting exposed minimally, not enough to kill you, then you build up "antibodies."

The Caterina piece is dead-on.

It's interesting to see the constant back-and-forth between the technological and human factors in social networks and online communities. There has to be a balance between the two. Technology allows massive, rapid scale -- but effective human societies don't work like that, and for good reason. Trust between individual and community and between individuals is not built that quickly. Investors obviously want all the speed/scale of the technology side but they want the rich depth and trust of the human side. It's really, really hard to get both.

MySpace and Facebook may have had an edge simply because they were replacements -- people en masse picked up and fled Friendster for MySpace and MySpace for Facebook. But FB's worst enemy has been themselves; people do not really trust the site but see it as a monopoly due to network effects. Twitter, Pinterest, etc were not "replacements" and didn't get that overnight audience and hence neither has really reached mainstream status. (I do not expect a movie about the making of Pinterest in theaters this year.)

I'm curious if there is a Moneyball effect. But investors may not care. Odds of success in early stage companies may be so terrible that VC's really just want to bet on the outliers that defy the statistics. In other words overpaying after companies have already demonstrated a high threshold of success might be a better strategy than investing early before there's been sufficient market triage.

Another convo I just started about Buzzfeed taking over politics has some related insights on growth:

http://pandawhale.com/convo/6288/how-buzzfeed-went-from-cat-pictures-to-the-hub-of-politics-on-the-web

You wrote:

Overpaying after companies have already demonstrated a high threshold of success might be a better strategy than investing early before there's been sufficient market triage.

In general, this is true.

It is much harder to get distribution and breakout of the crowd.

The products that do breakout, quality investors are worth paying a lot for.

I agree that Facebook is its own worst enemy, and its trust issues will hurt it long term.

Whether anyone else could siphon away Facebook's audience remains a question.

I don't think they'll collapse the way Friendster or MySpace did -- undone by a better version of themselves.

They'll likely fall victim to a paradigm shift. It may be the coming dominance in mobile or perhaps the concept of one social-network-to-rule-them-all may no longer make sense with a major change in the web ecosystem.

People being frustrated with Facebook will not directly be their undoing but it will accelerate the exodus when a paradigm shift occurs.

It's almost axiomatic that the more a company grows the less nimble they become. Facebook quickly established itself as the dominant player on the web and being revolutionary no longer suited them as it might a scrappy newcomer. It appears they are now more interested in maintaining their position than breaking new ground and while this is a tried and true rule for brick and mortar companies it's rarely safe in the internet space because of the relentless change and dynamism. And now being public they will have to please Wall Street. That rarely, if ever, leads to greater risk taking.

The Instagram purchase was very telling. A simple mobile photo app that lets you put filters on photos and share them was a such a threat that it got a billion dollar buyout? That's all it takes to strike fear into the heart of the mighty Facebook?

Have no illusions. There will be greater threats to come.

I look forward to those greater threats.

Instagram just got to 100 million users.

It must scare the daylights out of Facebook that something so gossamer could become a tenth the size of Facebook in less than 2 years.

They bought Instagram but one day someone will build something that Facebook cannot buy.