Creative Financing for Your Startup

The Dark Side of Social Networking Business Models

Last night’s post on the business model behind social networks generated quite a bit of interest so I am adding a citation here on how people quickly and easily become addicted to the dopamine squirts that come from trivial things like upvotes from complete strangers. Watch the following video.

The Addictive Power of the Word “Maybe” in Reward Allocation

I suggest starting at 26:25 where Dr. Robert Spolsky  starts talking about the neurobiology of reward systems. Pay careful attention at 28:27 where he starts talking about environments where the rewards become unpredictable rather than certain. Not knowing whether or not you will be rewarded for adding content actually increases the addictive power of the site over you. If you use social networking, think about it. Almost every time you post something you are impatiently wondering whether it will receive a positive or negative response. The relevant part ends around 31:20.

So what is the takeaway here for business people here? There’s money to be made in building platforms that entice the public into creating content for free and hooking them like heroin junkies on continuing indefinitely with a gamification system that rewards them in an uncertain way with worthless trinkets such as credits or upvotes.

Although we like to believe that humans are vastly superior to other animals in many ways we are not that different from the mice and monkeys scientists run these types of tests on.

The people behind the successful social networking sites have long understood this.

By the way, I don’t think of Linkedin as a time waster because it rewards you with money instead of just upvotes or karma points.

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