Note: This article was originally published on TheNextWeb Marketplaces are difficult businesses to run. Like all multi-sided platform businesses, they suffer from the classic chicken and egg problem: the technology has no value unless buyers and sellers are present and you can’t get the buyers on board unless you have sellers and you can’t bring in sellers [...]
Note: This essay was first featured on TheNextWeb Technology startups are disruptive because they are driven by a desire to solve an unsolved problem in a unique way and create new value. Most large and established companies, in contrast, are driven by a desire to defeat competition and protect their market turf. Consider the problem [...]
“What got you here won’t get you there.” Career advice that works equally well in the world of online platforms. The single factor that separates a successful platform from a failed one is the development of network effects. Most platform businesses fail because they never develop network effects. Social networks without users, content platforms without [...]
Network effects are the most exciting aspect of Platform Thinking. Platform Thinking is an approach to business which looks at an online business as being composed of two elements: platform and value created on the platform. YouTube provides the platform, users create the value (videos) on the platform. KickStarter provides a platform but users [...]
This essay originally appeared on TechCrunch. I had the pleasure of co-authoring it with Nir Eyal. Nir runs a great blog about the intersection of psychology, technology, and business at NirAndFar.com. If there is one altar at which Silicon Valley worships, it is the shrine of the holy network effect. Its mystical powers pluck lone startups from obscurity [...]
Platforms that are dependent on user-generated content (UGC) constantly face a challenge to be sustainable. A key metric for such platforms is the ratio of producers to consumers. Very often, production of content on such platforms occurs around certain seeds. A few examples of seeds are: a) A movie listing on Rotten Tomatoes to incentivize [...]
As a network scales, network effects make the network more useful for users until a point after which further scale makes the network less useful to the users. This is reverse network effects with scale.