Social capital is, in many ways, a leading indicator of financial capital, and so its nature bears greater scrutiny. Not only is it good investment or business practice, but analyzing social capital dynamics can help to explain all sorts of online behavior that would otherwise seem irrational. (View Highlight)
The mistake that those who dismiss NFTs make is the same that Wei argued people were making in analyzing social networks: missing the importance of social capital. (View Highlight)
It wasn’t that network effects and Metcalfe’s Law were wrong, it was just that they didn’t capture the reasons that someone might use a social network beyond pure utility, so Wei proposed a new framework for analyzing social networks’ strength that added social capital to the mix.
Source: Eugene Wei
Wei evaluates social networks’ strength on three axes: Social Capital, Entertainment, and Utility (View Highlight)
Leaving Entertainment out of the equation, Wei talks about five arcs that social networks can follow, four of which are trade-offs between social capital and utility over time:
Source: Eugene Wei
First Utility, Then Social Capital. “Come for the tool, stay for the network.” Instagram first attracted users with an easy photo editing tool and became a photo-based network on top of which people have built huge followings and businesses.
First Social Capital, Then Utility. Wei highlights Foursquare, Wikipedia, Quora, and Reddit as products that used the promise of social capital to get people to do free work that then becomes a utility for the masses.
Utility, But Not Social Capital. Messaging apps are incredibly useful for communicating with people you know, but don’t really help users build up social capital.
Social Capital, But Little Utility. Wei puts Facebook in this category, mentioning that many of his friends just stopped using Facebook with no impact on their life (This describes me too, as I suspect it describes many of you). (View Highlight)
