I was excited to see that Andrew Chen had a book coming out after following his work over the years. My interest in The Cold Start Problem was led by my egoistic desire to find ideas for the startup I work with as healthcare tech examples are far and few between.
As I was preparing for all this, I asked a friend what she’d look for in book reviews and the conclusion was what I was looking for and if the book lived up to that. So that’s what I’ll share my thoughts on but first, allow me to share a brief, general overview of what the book is about so we are on the same page.
What The Cold Start Problem is about in four sentences
The book discusses the cold start problem in relation to tech startups. The cold start problem is also referred to as the chicken and egg problem, and we learn about how to solve that by getting the chicken first — referred to as the hard side.
As you might imagine, this is relevant for businesses that need to connect two sides with each other (the chicken and the egg). The book explores many non-obvious examples of where that is true (like Wikipedia with its contributors) besides the obvious examples of Tinder, Dropbox, Instagram, and Uber.
Andrew Chen’s book discusses several ways to combat the problem with engagement loops, stickiness, and the power of network effects along with how that can create more impact than popular ideas like performance marketing–if the quality of the network is good enough.
Without sharing too many spoilers, I found the thoughts around network effects interesting especially for moats and defensibility for matured tech startups.
Is the book relevant for someone working in healthtech?
I was personally looking for examples from the healthcare industry or startups in similar industries like insurance or health as those examples are rare these days. I also hoped for insights to apply in my own work day-to-day at a tech startup in the industry. For example, new ideas around growth that aren’t the typical growth hacks or performance marketing, and where network effects would play its role among all of that.
Andrew obviously knows his subject well and I liked the stories but many of them felt as if I had read them on his blog or elsewhere before, and I didn’t notice any examples related to healthcare startups. The examples felt limited to the usual handful of companies, most often being social media or platforms like Airbnb since they (naturally) have major network effects. I get the logic behind using them as examples–there are good stories from relevant people in his network but it felt repetitive at times.
I did discover a couple of interesting insights from the book. Especially, the idea of network effects in the first place and that one could be started through offering a specific feature that customers need to solve a problem which then makes them interested enough to stay for the network benefit — similar to how many of us feel about working out. We might start working out with friends because we want to get fit but we end up staying for the social aspect over time.
Another interesting insight was about what to expect in terms of timeline and yearly growth from the start of a tech startup to IPO along with a general framework. $1B in valuation on $200M/yearly recurring revenue over 10 years (or higher with more years and lower with fewer) appears like a general rule of thumb.
Ultimately, the book didn’t feel like it had a lot of new insights but rather a great overview of them if you read tech startup blogs (especially his) from time to time. The 375 pages felt long and made me think that I’m probably not the target audience. I imagine The Cold Start Problem would be a good book for someone who wants to catch up on ideas in the tech industry — perhaps for someone entering the industry to work or invest.
I would’ve liked the book even better if I hadn’t read Andrew’s blog, so I imagine this book would be a good fit for someone interested in the tech industry but hasn’t read a lot of books or blogs within the area before.
It isn’t particularly relevant for us working in the healthcare industry but that doesn’t mean you can’t get anything out of it.
My conclusion is to buy it if you think you might get even just one good insight from it.
Books are cheap and if you can get one meaningful insight out of it, it will be worth it. If not, simply stop reading if you feel that it wasn’t for you after all.
I wanted to offer some alternative reading about our industry but I’ve been struggling to find anything meaningful to share. If you know of any good books or blogs about tech and the healthcare industry, please share them in the comments below.
If you are interested, you can see where to buy the book here.