I learned from this experiment early on a lesson that would repeat itself for the next two years: a social network isn’t a product as such. Rather, the product that a social network provides is access to a large pool of other people. Every social network, whether it be a subscription-based dating site or an advertising-funded general community, must grapple with this ineluctable fact. It’s what makes the rules for social networks different from utility applications like Basecamp and BlinkSale.
If a new member signs up for Highrise today, she can use the application, put in some contacts, appreciate the app’s interface and functionality directly and, if she likes it, leave a happy paying customer. Highrise with one customer is a product with one happy client who might just become an evangelist to others. On the other hand, a social network with one customer, even if it were infinitely better than MySpace in every regard, is a company with one bored and angry customer, which is to say: an utter failure. In the taxonomy of Web applications, social and utility applications are entirely different species. [Excellent grounded story.]
Source: Vitamin Interviews