Igniting network effects: The hardest game in tech startups

Network effects are the holy grail of digital business models. Once they’re active, they generate compounding value, defensibility, and growth that accelerates itself. But before any of that happens — before the flywheel spins — there’s a brutal, overlooked stage that kills most ideas before they even begin: ignition.

This is the moment where the value of a product depends on the presence of others — but those others aren’t there yet. It’s the cold start problem in the ignition phase. And escaping it isn’t just a challenge — it’s the entire game of many innovations.

The Chicken-or-Egg dilemma

Every network-based product faces a paradox: people won’t join until there’s value, but there’s no value until people join. Without enough participants on each side — whether users and creators, buyers and sellers, or consumers and contributors — the network doesn’t work.

This isn’t a problem that solves itself with time. You can’t launch quietly and wait. Ignition must be designed, built, and actively managed. If you’re not planning for it, you’re planning to fail.

Start with something valuable (even alone)

One of the more resilient paths to ignition is to begin with a product that’s immediately useful to a single user — even if the network doesn’t yet exist. Notion, Figma, and even LinkedIn or Instagram all started as individual tools. They provided direct, tangible value right away. Over time, they evolved into platforms where collaboration, sharing, and team workflows created natural network effects. But the hook was already in.

People came for the tools and stayed for the network.

What’s often misunderstood is that these tools were not technically superior. In fact, many of them were inferior in terms of performance or functionality when compared to legacy software. But they were good enough — intuitive, accessible, and focused on user needs. And most importantly, they had a path from tool to network. That evolution is what made them sticky, scalable, and eventually successful. They turned a single-player experience into a shared one, generating value users embraced — and paid for.

Don’t go wide. Go deep.

Early networks don’t need size. They need density. It’s a common trap to try and grow horizontally — across user types, industries, or geographies — far too soon. But in the ignition phase, value only emerges when enough of the right users are active in the same context.

Facebook didn’t start with the world. It started with Harvard. Slack didn’t target the entire enterprise. It focused on tight-knit teams. These were controlled environments where the first meaningful interactions could happen. That’s what matters — not how many people you have, but whether they can actually interact with each other in a way that creates value.

Seed one side and simulate the other

Two-sided networks are even tougher. If both sides grow slowly, the whole system stalls. That’s why smart builders often seed one side heavily and simulate or subsidise the other.

Airbnb scraped listings onto Craigslist to show early supply. Uber paid drivers to stay available in areas with low demand. These moves were temporary, even hacky. But they worked. They created just enough perceived liquidity to nudge real users into action. It’s not about scalability in this phase — it’s about belief. If users believe there’s value, they’ll come back. And that gives you something to build on.

The hustle phase: OMG, it’s all manual

The earliest stages of a network are never automated. They are hand-built. You’re onboarding users one-by-one. You’re matchmaking manually. You’re watching (and learning to automate later) every interaction. And sometimes, you’re pretending things are smoother than they are — just to keep people engaged long enough for the network to start working on its own.

Every successful network has its origin story of hustle. Someone doing things that don’t scale, because nothing scales until the core interaction loop exists. This is the most fragile moment — but it’s also where the real DNA of the network is set.

Don’t aim for critical mass — aim for the first loop

Founders often obsess over reaching “critical mass,” but the real breakthrough happens much earlier: the first moment when one user creates value for another. That’s the spark — the moment the network shifts from being a product to becoming a system.

Once you’ve built that first loop, even in a small, focused community, you’ve created a solid foundation. Now you can grow it. Without that loop, everything else is just noise.

This reminds me of a discussion I had in my last startup with a board member who was pushing me to acquire a wider user base prematurely. I couldn’t stress enough the importance of penetrating the existing networks before trying to invite new ones. It’s tempting to scale quickly, but without understanding why the existing networks work — or why they don’t — it’s a shot in the dark. I insisted that before we try to pull in more users, we need to deeply understand and nurture the networks that are already in play. People came for the tools and stayed for the network. It’s that progression we need to understand and build on. Only by doing so can we ensure we’re not just adding noise but creating genuine value that resonates.

Ignition is the real test for network effects

We admire the scale of LinkedIn, YouTube, or Airbnb. But what we don’t see is how brutally hard their ignition phases were. Most products never make it past this stage — not because they lacked ambition, but because they underestimated what it takes to get the network moving in the first place.

If you’re building a platform, marketplace, or tool that depends on network effects, this is your real challenge. Not the logo. Not the pitch deck. Not even the tech stack.

Your real job as a founder is to ignite. Everything else comes after.

P.S: Follow for more ideas

I regularly write about innovation, business models in my blog, and real solutions to real problems. If you're working on a platform idea or looking for structured feedback, feel free to reach out.

You can book me for workshops, keynotes, or one-on-one sparring – or just follow along via my newsletter