Fight Club: A Lesson in Building a Network Effect

Overview

On the heels of finishing Andrew Chen’s, Cold Start Problem, I find myself seeing networks and their mechanics everywhere I look. Chen outlines some of the most detailed nuances around networked products. He talks in-depth about how networks grow (and die), while providing a framework that can be applied to much more than just tech startups.

In the subsequent sections, I will apply pieces of his framework to David Fincher’s 1999 cult classic, Fight Club. That’s right - Brad Pitt and Ed Norton follow Chen’s playbook almost to the letter. Let’s dive in and see how…

Brief Film Refresher

Our protagonist, Ed Norton, is in the automobile risk assessment business. He leads a life of brutal travel and has a genuine hatred for his profession. One day, he “meets” Brad Pitt on a flight and ends up staying with him after coming home to his apartment on fire. Both characters bond over their mutual disdain for the rampant consumerism and concentration of power that plagues America.

Aere repetiti cognataque natus. Habebat vela solutis saepe munus nondum adhuc oscula nomina pignora corpus deserat.

1. Magic Moments

Early in the movie after Brad Pitt and Ed Nortron become friends, Pitt challenges Norton to hit him in the face. After refusing several times, Norton eventually relents and the two men end up hitting each other back and forth for some period of time. The next scene shows them sitting on the curb, bruised and bloody, drinking a beer in an almost euphoric state. They had discovered a “product” that had a “magical moment”.

Applied Lesson:

You have to discover/build something that people actually want or care about. Many times this comes from a founder's personal pain and the product they manifest is the solution to that pain.

For Norton, he had been faking illnesses and attending support groups to find human connection. Eventually that ran its course and wasn’t effective for him anymore - so he needed to find a solution.

2. Start Small (The Atomic Network)

Ed Norton had started Fight Club in a parking lot with Brad Pitt. Later in the movie you find out that it was actually just Norton fighting himself (talk about single-player utility). Other men see him fighting and eventually ask if they can join in. This becomes the start of their atomic network - a bar parking lot and a few guys punching each other in the face.

Applied Lesson:

Many of the incredible networked products we know and love today start from very humble beginnings.

Inexperienced Founders will define this stage as “small and insignificant”. After all, they have aspirations of a billion+ users, it’s almost embarrassing to have 27 users.

Yet, the great founders know this is the most critical part of building their network effectively. Your early users will be the driver of your network and, in many cases, set the “network culture” for future users.

3. Leverage Other Networks

As I mentioned earlier, Ed Norton finds himself faking all sorts of illnesses so he can attend various support groups. These support groups are networks themselves that had to go through a growth phase and “acquire” attendees. Later in the movie, we start to see members from these support groups joining the Fight Club “network”.

This would be considered pulling in “users” from adjacent, complimentary networks. As the late, great Clay Christensen would say, these customers are “hiring” this network/product to do a “job” for them. That “job” was simple - belonging and support.

Applied Lesson:

The internet is at a mature stage of its life cycle with over 4 billion people connected around the world. Many well established networks exist and there are various “growth hacks'' that can be applied to grow your network. Here are some examples used in past:

Microsoft came installed on every IBM (and later their competitors!) Airbnb ran a bot that posted listings on Craigslist automatically. Zynga sat on top of Facebook’s API. (this dependency didn’t end well) Uber ran local craigslist ads for drivers.

Although these are legendary examples, at this stage of maturity, most of the massive networks are great at capturing the appropriate value for their distribution. This means that the economics of acquisition might not make sense, especially as the channel degrades and you’ve captured the low-hanging fruit. That said, innovative entrepreneurs always find new creative ways around this.

4. Invite Only (Copy/Paste Network)

“Rule #1, you do not talk about Fight Club. Rule #2, you DO NOT TALK about Fight Club…”

-Tyler Durdan

The nature of the “product” that Norton and Pitt had launched had been built for a specific type of “user”. The people that joined seemed to be middle-aged men (with an inclination towards violence) that were dealing with some sort of mid-life-crisis or a lack of “belonging”. By controlling the early users that joined the network and making it clear that it was exclusive - Norton and Pitt set the tone for the network to grow like a copy-and-paste feature.

“...if you start with a curated network, and give them invites, that network will copy itself over and over automatically.” - Andrew Chen, Cold Start Problem

Although Pitt makes it clear several times in the movie that Fight Club is a secret, he doesn’t ever take action against new members showing up. In fact, he addresses this in the movie when he states, “...if it’s your first time at Fight Club - you have to fight”.

Applied Lesson:

It’s commonly believed that the “invite-only” mechanism is purely used to increase a sense of exclusivity in the product. Chen makes a great point that, while this may be a factor, the primary benefit is to control the duplication of the network. It can also be utilized to control the inbound of new customers and address any product bugs.

Pitt does a great job in a customer success role by effectively onboarding new customers to the network. By forcing these “new users” to fight, they get to experience their own “magical moment” on their first exposure to the product.

5. Scaling the Network

Fight Club would be considered a hyper regional network - similar to Uber, OpenTable, or Yelp. At one point in the movie, Pitt and Norton are talking about the various cities that have started Fight Clubs. They begin to name cities they’ve gone to and launched, but soon realize they are growing in new cities that they’ve never been. This shows a clear virality component and demand for the product all over the country.

Although they don’t talk about it, I would be suspicious of the Fight Clubs that were started in cities the founder’s never visited. Maintaining this type of parody is very difficult as the network starts to scale.

For example, rule #2 in Detroit could have been “You can tell one person about Fight Club”.

Applied Lesson:

Besides some consumer products, many networks don’t have the luxury of expanding effectively into new markets without any involvement from the core team. However, if you can design this type of “self-onboarding” functionality into the strategy and product, it can go a long way.

Even mature marketplaces like Eats and DoorDash don’t have full penetration into markets. In software, you can put mechanisms in place to capture this activity - in geo dependent products it can even serve as a strong indicator for where you need to go. Examples of this may be signing up to be notified for a social media product that doesn’t yet support your school, or a restaurant owner joining a waitlist in a region where a food delivery service hasn’t yet expanded.

6. The Ambitious Mission (New Formats)

“Fight Club was the beginning, now it's moved out of the basement, it's called Project Mayhem.” -Tyler Durdan

What started as a simple club for guys to beat the shit out of each other, turned into a nationwide plan to destroy every credit institution in America and wipe out all records of debt. While I don’t condone or agree with his philosophy, you gotta hand it to Pitt for leaning into an incredibly ambitious mission for his product. He was only able to do this because the network that he had built was aligned with this philosophy.

“Man, I see in Fight Club the strongest and smartest men who've ever lived. I see all this potential, and I see it squandered. God damn it, an entire generation pumping gas, waiting tables – slaves with white collars. Advertising has us chasing cars and clothes, working jobs we hate so we can buy shit we don't need. We're the middle children of history, man. No purpose or place. We have no Great War. No Great Depression. Our great war is a spiritual war. Our great depression is our lives. We've all been raised on television to believe that one day we'd all be millionaires, and movie gods, and rock stars, but we won't. We're slowly learning that fact. And we're very, very pissed off.” -Tyler Durdan

Facebook was a college campus directory - then they wanted to connect the globe. Uber was for hailing black cars in SF - now they are changing global transportation. Airbnb was a spare room you can rent - now they want everyone to belong anywhere.

This is a typical pattern for networks that scale effectively. The mission gets reset into a global context and attempts to give customers the sense that they’re part of a global mission.

Applied Lesson:

What makes large networked products so valuable is the ability to layer in new features, products, or missions that align directly with the network. This is the justification behind startups sporting poor unit economics. Ultimately the investors believe that building this network properly can yield many times their invested capital and, if it’s executed correctly, they’re right.

Companies like Amazon ran in the red for years in order to build the infrastructure to improve their core product and layer in additional products that would directly benefit. Building the network gives you a built in distribution mechanism to continue growing through the initial product’s ceiling.

7. Professionalization

Towards the end of the movie, Pitt and Norton start to intake members of Fight Club to form a “bootcamp/militia” group at their compound. These members are doing everything from cleaning, to gardening, to making bombs out of soap. These are the Fight Club “power users” who end up being the most valuable members in the network, especially in light of the new mission. At one point, Norton himself even tries to stop Project Mayhem and is unsuccessful (talk about strong network effects!).

The movie ends with Norton coming to grips with his schizophrenia and “killing” the Brad Pitt part of his psyche - but not before the mission is complete and every Financial institution is reduced to rubble. I’ve yet to see a networked product declare “victory” so, admittedly, this is where the metaphor breaks down a bit.

Applied Lesson:

As the network reaches scale and a certain level of maturity, many of the most valuable members of the network will start to professionalize (either intentionally or unintentionally). These members control an outsized amount of power and are critical components for realizing the company's long-term mission. Businesses like Twitch, Youtube, Amazon, and Spotify have invested heavily into these users to make them as successful/effective as possible.

Conclusion

Networks are all around us and we interact with them daily. From credit cards, to telephones, to social apps. The more people that come online - the more opportunities there are to build large relevant networks to connect them. This was meant to be a fun exercise to implement Chen’s “Cold Start Framework” into something that was released 22 years ago.

If you’ve read this far and haven’t purchased Cold Start Problem - do yourself a favor and get a copy. Big thanks to Andrew Chen for taking the time to write such a practical book for entrepreneurs interested in understanding networks and networked products at great depth.

Finally, if Brad Pitt or Ed Norton ever pitch you a networked product - invest immediately.