The correct way to “value” social apps

“This is a social APP that will subvert WeChat!”

“This is the social network that best suits the psychology of those born after 1995!”

“This will be China’s Snapchat+Tinder+Yikyanark. It will be a blast!”

"We are the post-90s generation from 3BAT and overseas investors. Our social APP is absolutely reliable!"

"What? You're asking me about my return on investment in the next three years? This is a social network!"

Social apps have always been the "Bermuda Triangle" with the lowest entry threshold, the hardest to do well, and the interactions and data being confusing. Social networking taps into human nature, the most difficult thing to calculate in the world. In the face of the subtle human nature, traditional business logic is completely ineffective. It is precisely because of this that the social field is sometimes full of bubbles, inflated valuations, and many unreliable products inexplicably making huge amounts of money; and sometimes it is generally pessimistic, with a capital winter, and investors stay away. So, is there a set of tools that can calculate the value of a social app from a strategic perspective, or - can preliminarily evaluate the value of this business plan when the product is far from being polished and launched?

This is what I, a product novice, will do in this article. I will use a simple logical tool to value social products. Let’s call it the “Sens Eight-Step Method” for now. First, put the pre-declaration:

The following is not so much a valuation tool for investors as it is a thinking tool for entrepreneurs themselves. Take a good look at your project. If you really want to make a name for yourself instead of looking for a buyer from 2VC, then you should really think clearly about the key points in the article.

1. Theories are always theories, and every one of them may be wrong. There are definitely exceptions in reality.
2. Again, the author is just a product novice, not a big shot, and doesn’t understand investment, so “valuation” is put in quotation marks.

1. Tangent Point

describe

Which market, group of people, type of demand, and scenario does your social product target? Which specific point of entry should you start with? In practice, when you open a social APP, the point of intersection should be clear on the first screen.

First impressions are crucial. Many times, when users see the introduction and screenshots in the app market, or when they open the app and see the first screen, they have already subconsciously valued your product. Tick, tick, tick... Did you hear that? The countdown in the users' minds has already started. If their content cannot prove its value as soon as possible, it will be deleted without mercy.

Evaluate

To evaluate the value of a cut point, Caigou uses the following formula:

Cut-point utility = (demand urgency * scenario frequency * expected satisfaction - interaction cost) * self-organizing ability - competitive platform value

The whole formula is a qualitative analysis rather than a quantitative statistics, and it is just to explain logically:

1. The three most critical factors are the urgency of the demand itself, the frequency of the scenarios, and the satisfaction of the user expectations induced by them;
2. You must do everything possible to reduce the interaction cost in the process of achieving this experience. If the interaction cost cannot be reduced, then your experience must be improved.
3. Self-organizing ability refers to whether the platform's own mechanism can ensure that the closed loop of experience is not "diluted" when a large number of users pour in;
4. Even if these issues have been considered, you still have to think about whether mainstream platforms such as WeChat can already meet this demand well and whether you are good enough to induce users to migrate.

Myth

"Does this demand really exist? I don't have this demand." This is almost the most headache-inducing problem for all entrepreneurs in front of investors.

Because many times the demand is there, but it is not something you can explain to investors. Entrepreneurs cannot expect investors to understand the demand mentality of the general public that you describe - this is almost impossible given their living conditions. So if he wants to deny you, just simply say "Is this a rigid demand, or a need of a specific group of people at a specific time?"

What is the demand for social apps? Simply put from a social psychology perspective, the key to maintaining a set of social relationships is "a sustained positive correlation between input and return." The key to people's engagement in social behavior is nothing more than continuous rewards: valuable people, valuable information, and valuable psychological experiences (vanity, desire to express, sense of belonging, the opposite sex) .

It is clear at a glance why some people are keen on offline social networking while others are keen on online social networking? Why choose this platform instead of that one? Why fit in with this circle and not that one? To put it bluntly, people have a scale in their hearts that subtly calculates - where can they get higher returns at a lower cost? Where are costs and rewards positively correlated, and the more I engage in it, the better it feels?

This is the core of the demand for social APPs. Forget about the damn one-night stands. What you need to focus on is locking in your target users, designing the rules of the game, and allowing them to reap far higher "rewards" on your platform than offline or on other platforms. Most social products don’t die because of fake demands, but because the core demands you want to capture have already been met, and the rest are either unimportant, uncommon, unurgent, or unsustainable. In short, the “rewards” are not attractive enough. You are already very good, but I, the user, already have someone in my heart…

Case

Although there is a formula for evaluating the cut-off point, unfortunately, there is no formula for "concepting the cut-off point". The cut-off points of successful products are often simple, powerful, and natural, as if they were discovered by the founder in an instant.

Dayima, Value for Money (TaQu) , Super Class Schedule, and Sing Bar, these products have clear and definite focuses. The moment you hear the names, you can already imagine their main functions, people, and community atmosphere. As for the workplace social networking market, which is generally promising but has never been able to make much progress, do you remember that Maimai’s initial focus was on anonymous gossip (the “no secrets” in the IT circle?) ? This very “down-to-earth” stroke of genius immediately made Maimai stand out in the early competition.

2. Ice Breaker

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For the reserved and face-conscious Chinese, breaking the ice is the beginning and key to social interaction. How to quickly discover other people, how to quickly open up the situation, break the awkward state of meeting strangers, and start chatting quickly - instead of social barriers in real life, and still not knowing how to start the conversation online, this is the ice-breaking mechanism.

In practice, breaking the ice happens within the first few minutes after opening the APP. Just imagine, if a user logs onto the platform with full expectations and urgent desires, and spends half a day without being able to chat with anyone, your product will definitely disappear from his desktop much faster than it can be downloaded, unless he is... a product dog.

For the outgoing God of Cannon, social platforms only increase the scope and efficiency of social interaction. But for most people like Zuckerberg, who are dull, nervous to death, the value of the platform is truly highlighted. These young people are obviously blue chip stocks with great potential, but because they don't know how to socialize and look bad, they have become losers and stay-at-home moms. Our APP is now going to solve these problems, allowing them to forget about embarrassment and feel at ease in virtual social interactions, so that they will become addicted and unable to extricate themselves.

Evaluate

The key to the ice-breaking mechanism is to match "relatively matching" people, build a safe and "natural" environment, and provide a valuable scene and topic.

This has been discussed in detail in the article "The Pain Points of Stranger Social Networking", so I will not repeat it here.

Case

In the early days of social platforms, the most classic way to break the ice was through groups and forums. Chatting with a group of people in the square at the beginning is much less stressful than chatting one-on-one from the beginning, and the topic is basically determined. However, this model is difficult to adapt to the surge in the number of people. Once this situation occurs, the square will become a world where those who are good at controlling topics and those who agree with them will gradually fall into a spiral of silence.

Among the social products of the past two years, a very classic case of ice-breaking is "hug". On the one hand, there is the drift bottle mechanism. Every mood status you post can be turned into a drift bottle and sent to "relatively matching" users (same city, opposite sex) . This makes it so easy to start a topic, which basically revolves around the mood itself. On the other hand, there is the truth or dare mechanism. What if you run out of topics to talk about? Just click on the truth, and you can have something to talk about around the topic here - is the topic too "sensitive"? Anyway, it was given by the system, not by me.

For another example, Uber and Didi Kuaidi have been hyped up recently as tools for hooking up. Regardless of whether it is true or not, the reasons behind it are indeed worth pondering: a preliminary match is achieved (a man with a nice car and a white-collar woman) , and it is easy to break the ice: just call a car, chat on the way, contact information is automatically left, and "what happens next" is a natural thing.

3. Continuous Linking Mechanism

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How can we connect subjects with different needs and personalities with a “reason” so that they can interact continuously and naturally?

The core of the continuous connection mechanism is to allow both parties to continue to "friction" and naturally demonstrate their own values, needs and interests, thereby allowing the relationship to continue to heat up.

Many friends have read the book "Men are from Mars, Women are from Venus". When girls confide their complaints, boys often think of "devaluing the value of the complaint (it's nothing) " or "proposing solutions to show your ability (stop complaining, it's very simple) ", but what girls actually need is not a solution at all, but "affirmation of their feelings to gain the pleasure of talking". This is a basic contradiction.

The asymmetry in needs between men and women is only the most basic asymmetry. Common asymmetries include grassroots and big Vs, introverts and extroverts, pure socializers and commercial business seekers, etc. Social products must carefully analyze the differences in their needs and cleverly weave the points of convergence. This is a delicate job and much more complicated than the theory I am explaining here.

Evaluate

Keywords: safety, naturalness, matching confirmation, input-output ratio.

Safety and nature are well understood. The so-called matching confirmation refers to the fact that social interaction between people is a process of constantly determining the matching of "values ​​and interests". If breaking the ice is completing the first match, then continued interaction is to constantly confirm and correct the match. When people display their thoughts, insights, and life photos on social platforms, they are actually demonstrating their self-worth to potential objects, and the objects of their interests are also constantly confirming and repairing this "value impression."

The so-called input-output ratio refers to the comparison between the rewards people get from their social behavior and their efforts and expectations. In a stable set of social relationships, both parties can continuously gain rewards from the interaction of the relationship, and the rewards are positively correlated with the input. Although the expectations of both parties are different, as long as they can continue to obtain returns within the expected range, the relationship is stable (the so-called win-win situation) . Once one party's continuous investment and return are disproportionate, the relationship between the two parties will become unbalanced and even break down.

There are three common persistent links on social platforms:

1. Accidental interaction. For example, if you browse the information flow every day and see a photo of a beautiful woman, you will click "like";
2. Transaction collaboration. This time it is centered around a specific matter, striving to achieve a win-win situation for both parties;
3. Community organization. This time it is not only about specific things, but about the common and continuous goals of a group of people.

Different platforms focus on different link forms, and the accumulation and dependence they can generate are even more different.

Examples:

In the SNS network world brought by Facebook, news feed is a square where people interact continuously. They browse their friends’ moods, updates, and photos on it every day, and reply to anything they find interesting. Everything happens naturally. With the accumulation of photos, texts, reposts, etc., people who "match each other" become more "confirmed to be a match", and many people who cannot get close in real life quickly get close.

Now, this method of continuous connection is simpler and more diverse. On the photo social platform, if you like someone's post and they like your post back, the relationship between the two parties will develop naturally. You put a tag and send a barrage. Although the publishers do not communicate directly with each other, you can enjoy the fun of "playing together" by watching all kinds of interesting elements fly across the picture. It looks lively, but it is actually lonely; it seems that they are playing together, but in fact they are playing their own games. The latest artifact like fork, "modify image and forward" is an interactive link mechanism. If you modify other people's images into comics in a more unscrupulous and creative way, the distance between you two will be shortened!

Of course, some social platforms have no continuous linking mechanism at all. What they want is short and fast matching. It is up to you to move offline or use WeChat afterwards. They only make money in the matching process. For such platforms, Caigou believes that they are more like e-commerce - e-commerce + O2O with "social opportunities" as their target (snickering...).

4. Tipping Point

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In simple terms, it refers to whether the product can "go viral", that is, whether it has the potential to spread spontaneously without relying on spending money to promote it. This requires that the product has unique sharing value, is very easy to share, and can spread rapidly and unstoppably like a plague in specific situations.

Starting a business and building a big company are two different things. If you are penniless, you simply don’t have that much money to burn, so the explosion point is very important at this time.

Myth

Unfortunately, the lean startup theory is not fully applicable in the field of social products. There are many things you must think about - and think clearly - at the very beginning. Starting a social product business must not be just about “starting with an idea”. You need to have your own functional matrix, a complete set of product logic, business model, strategies and tactics, even if these are far from being achieved when MVP comes out.

Unfortunately, in practice, people often misinterpret “single-point entry” as “just thinking about one point and then going for it”. As a result, either they have a hot spot but don’t think about the depth, so users come and go quickly and the product dies after one trick; or they think about the depth but not the hot spot, so the function is too advanced and must rely on a certain user density, so it is “kept in the boudoir and unknown to the world” and dies with hatred.

Evaluate

There is a classic book called “What Happens to a Product” to analyze whether a product has a hot spot, so I won’t go into details here. Focus on a few:

• The value of sharing. What value (instrumental? psychological?) can sharing behavior bring to the sharer? What value can it bring to the recipient of information? How to induce the recipient of information to quickly become a sharer?
• The cost of sharing.
• Are channel resources easily available? It is easy to find kol and corresponding people and spread the plague quickly.
• The relationship between the burst point and the main axis. The most worrying thing is that sharing becomes the only reason for users to use the APP. A large number of users cannot be converted to the social axis, and relationships cannot be formed.

Case

Let's take a look at the popular Zuji this year. The blockbuster mode is a classic as a hot spot design:

• The form is novel, eye-catching and easy to become a topic;
• The demand is universal, and everyone has a "blockbuster dream";
• The cost of participation is low, it is easy to make and easy to appreciate (pictures and texts) ;
• Automatically open the circle of friends to share, this is too cruel;
• It quickly forms "identity distinction and value-added", and the first person to do it immediately attracts the attention of the people around him, and then forms a sense of superiority, while the last group of people to play seem very low...

But the problem is that the blockbuster model is likely to turn the application into a pure tool for image processing, without effective response to social depth.

Recently, Bobo launched a face-changing camera, and a new application called "Mianmian" even launched an anonymous text messaging function. These are very fierce and easy to explode points, and we can observe them in the future.

5. Sedimentation and moat mechanism

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The most critical thing for a social product is never the short-term burst of "new additions", but the continuously active "retention", especially the proportion of high-value users among the retention . To improve this indicator, a clear sedimentation and moat mechanism is needed.

Caigou once said in the fourth article "How Social APPs Dance with WeChat Whales":

The key to the survival of social apps is the segmentation of user habits and time. The core must be finding "unique scenarios" and "corresponding values". You not only have to give users a reason to use your app, but also a reason to continue using it, and a reason to "continue using it even when there are platforms like WeChat."

Evaluate

There are four key indicators:

1. Unique scenarios and values, and relatively high frequency;
2. Have you avoided WeChat's "attack radius"? That is, WeChat is unlikely to kill you through iterations, and there are structural barriers between your platform and them;
3. The non-exportable "monuments", that is, the "monuments" formed by your personal information, endorsements, labels, records and experiences are completely carried on this platform and can only be felt and seen through this platform, thus forming an individual sense of belonging;
4. Connect to a "completely different world" with WeChat and get completely different "social rewards". In order to keep paying attention to this world, you can only log in to your platform.

Case

Although Renren was already declining, Caigou did not officially withdraw until 2014. The reason is very simple: Caigou is actually a "small big V" on Renren. He is not only a "hot expert" in his alma mater, but also a kol in the national debate circle. Unfortunately, the connection in the debate world is often based on universities, and the mainstream debaters at the time were all on Renren. Therefore, in order to maintain the connection with the circle and enjoy the benefits of the so-called big V, one had to open Renren every day.

By the same token, in the first half of the year, Caigou read Maimai's information flow much more frequently than Moments, because it was almost the only way to integrate into the "IT venture capital circle" at the time. However, since the publication of Huxiu's articles in the past two months, the number of WeChat friends has surged to 2,100 (and most of them are people in the circle) . A more obvious feeling is that the time spent in Moments every day is increasing, because the "world I see" is different.

This situation also occurs on a clearly differentiated platform like Zhihu. If you happen to like this and hope that every problem can be analyzed in a long and incisive manner, and you are also passionate about the so-called experts in various industries, then Zhihu will be your home that you will never leave. On the other hand, if you are used to loneliness and want to find a small planet that no friends know about, and post things with a group of people with the same "quirks", same is the right choice. The channel name is random and not easy to search, there is no follow-up relationship, and the comments are not visible to each other... Great, go to Bright and Sad. Platforms like Weiai and Xiaoenai have created unique spaces and monuments for couples. Before breaking up, would you dare to delete them? (Must delete after breaking up...)

6. Rebuilding the Center

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How to break down the relationship system in real life and create new circles? How to build the center of the circle and retain each kol?

Believe me, all the "decentralization" talks are just deceiving the public and playing rogue. On the one hand, they remove the original center, and on the other hand, they secretly build their own small center. This is called center reconstruction. In the traditional square environment, the relationship between the center and the satellite is relatively constant. The bright and beautiful are always at the center of the stage, while most people can only fall into a spiral of silence.

Today we are committed to building a flexible center reconstruction mechanism so that everyone can be in different circles because of their intrinsic interests and characteristics (rather than their actual identity and interests) . In some circles you are an idol, in some circles you are a fan, in some platforms you are close to the center, and in some platforms you revolve around the center. Such flexible conversion is rich and tempting. Of course, if a person is so introverted that he doesn't want to be without a circle, he can at least experience a relative sense of "centrality" within his own network of acquaintances.

Traditional collectives are disintegrating, and people are placing more emphasis on connections based on inner interests and values. In this fragmented era, individuals are becoming increasingly lonely, and their desire for "association" is becoming stronger and stronger - they are more eager to achieve a "value far higher than themselves" in an organization, with a group of like-minded people. This is a peak experience that will make even the most eccentric otaku eager to try.

Evaluate

1. Whether the circle can be created and organized flexibly to gather the right people;
2. Whether the circle is built on relatively fair rules, and whether becoming the center depends more on inner qualities rather than other factors (such as whether one can play interpersonal relationships, etc.) ;
3. Can everyone be in different circles, or satisfy the pleasure of the center, or satisfy the belonging of fans;
4. The motivation and feedback mechanism of the circle, whether there is a clear goal, whether it can be naturally decomposed (not artificially) to each person, whether it can automatically feedback (not artificially) everyone's efforts, quickly satisfy the sense of value and control, and form a new sense of belonging;

Case

Today's social applications are paying more and more attention to groups. Douban groups, same channels, Baidu Tieba, Momo chat rooms, and chat rooms that are conditionally formed on kind (starting a chat) and may disappear are actually consciously strengthening and exploring group functions. We have all experienced the various pitfalls of WeChat groups: information overload, evaporation effect, spiral of silence... and everyone wants to use this as a breakthrough. Among them, the foreign bands are very worth mentioning. Their functional design is very suitable for multi-topic discussions and activity organization in groups, but the interaction is far from the habits of Chinese people and I am not very interested in them.

7. Anti-cheating mechanism

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Social apps are always born from social dividends and die from information noise. This has been elaborated in detail in the seventh article of this series. The essence is that when a social APP becomes popular rapidly, a large number of users begin to pour in - the users here include "those who come because of the product itself" and "those who come because of the traffic bonus". At this time, the early rules cannot adapt to the influx of the latter group of people, so the carnival of micro-businesses, zombie fans, joke tellers, young ladies, wine-touts and box princesses begins.

Evaluate

• Rule setting: Can we resist the temptation of short-term explosive growth among users, stay sober, and establish a set of reasonable rules to limit “information noise”?
• Technical screening: If the established rules are no longer effective, is it possible to start with technology and create an intelligent screening system?

Case

Unfortunately, there have been no very successful cases so far in terms of restraining information overload and eliminating information noise, and almost all large platforms have fallen into this problem. Hopefully in the future.

8. Profit Mechanism

Regardless of the original intention, social platforms must eventually shift from burning money to making money, otherwise it would be rogue. The huge flow of people must be converted into cash flow as soon as possible. There are two common ideas for this:

1. The small store chain grows day by day. This is common in applications with clear professional scenarios and erotic edge. They make small money from the beginning, and you have to pay for matching, reading profiles, and invitations. The characteristic is that cash flow comes quickly, and the weakness is that the characteristics of the population are too obvious and there is insufficient room for explosive growth.
2. Commercial real estate, painting a big picture. The characteristic is that they first pursue the flow of people, and say that as long as so many people come in, they will make money, right? The characteristic is that the social environment is relatively pure and continuous, but the weakness is that too much money is spent and it is not known when the big pie will be eaten.

Again, the former is actually e-commerce targeting social opportunities, and the latter is a social network.

Regarding this area, Caigou's ideas are still immature and it is impossible to conduct effective evaluation and examples. The current idea is to be simple, sustainable, not externally controlled, and seamlessly connected. With the development of mobile Internet, the boundaries between social networking and e-commerce will become increasingly blurred, and commercial activities embedded in social platforms will become more streamlined and natural. People's sharing and communication, showing off and collaboration - these social behaviors are likely to become "natural advertising and transaction carriers." This has already been seen in the development of platforms such as Pinterest and Meilishuo.

Conclusion

After talking about these eight points, some readers may be unhappy: these eight points are too idealistic. If they were used to guide practice, even Facebook, the leader in the social world, would not have passed the test when it was first founded!

Of course, we cannot simply apply the eight criteria to evaluate, as different stages of development have different priorities:

• In the early stage of a startup, more emphasis is placed on cutting points and breaking the ice. Only when this part of the experience closed loop is done well, there is no need to worry about lack of users.
• In the development stage, more attention should be paid to hot spots, moats and continuous links, which will keep the development of social platforms at a relatively healthy and sustainable level. Don’t lose your eyes and rush for quick success for the sake of 2VC data.
• When your platform is mature, a complete core structure, anti-cheating mechanism and profit model become particularly important.

But no matter what stage you are in, you must keep thinking about these eight questions. This is far more important than participating in entrepreneurial competitions every day, becoming familiar with the investment circle, and sharing various experiences.

In the final analysis, even if we put these eight points aside and go back to the beginning of this article, what you should always calculate is: whether you can bring higher social returns to users at a lower cost, and whether the user's investment can continue to bring positive social returns.

The above are all derived from the experience and insights of the product rookie in entrepreneurship. All we can do is to do our best to provide a reference standard and evaluation tool for social product analysis for colleagues and investors. I hope this can help this circle return to rationality and hope, and avoid being too crude and reckless, or too pessimistic and blindly following others.