| **Type** | **Description** | **Examples** | **Category** | |------------------------------|---------------------------------------------------------------------------------|--------------------------------------|--------------------| | **Direct** | Value increases as more users join. | Telephone networks, Facebook | Network | | **Indirect** | Value increases due to complementary products or services. | Video game consoles, App stores | Network | | **Two-Sided** | Value increases as both sides of the market grow. | eBay, Uber | Marketplace | | **Data** | Value increases as more data is collected and utilized. | Waze, Yelp! | Data | | **Tech Performance** | Technical performance improves with more users. | BitTorrent, Skype | Technology | | **Social** | Value increases through social interactions and psychology. | Language, Belief, Bandwagon effects | Social | | **Asymptotic** | Network effects with diminishing returns. | Uber, Lyft | Network | | **Personal** | Value increases with personal connections and utility. | Facebook, LinkedIn | Personal | | **Market Network** | Combines elements of marketplaces and social networks. | HoneyBook, AngelList | Market Network | | **Platform** | Value increases as more developers and users join. | Windows, iOS, Android | Platform | | **Brand** | Value increases as brand recognition and loyalty grow. | Apple, Nike | Brand | | **Embed** | Value increases as the product becomes embedded in other products or services. | PayPal, Stripe | Embed | | **Scale** | Value increases as the network scales, reducing costs and increasing efficiency.| Amazon, Google | Scale | ## thoughts - dating x network effect - nodes want to join your network if your network is good enough - ## zz ![[Pasted image 20240122192245.png]] 1. Introduction to network effects and the importance of understanding them - Network effects are important to value creation and understanding many systems - This masterclass will teach about network effects and how to apply them 2. Types of network effects and network structures - Different types of network effects behave differently - Networks have nodes, links, sizes, densities and other properties 3. Historical context of network effects - Network effects have always existed but recent technologies allow their study - Understanding of network effects has evolved over decades - Language and theories to describe network effects are emerging 4. Examples of powerful network effects - Goodreads built a large reader network that Amazon had to acquire - WhatsApp's strong network effect led to its large acquisition 5. Defining network effects - Basic definition is that every new user adds value to other users 6. Early examples of network effects - Marketplaces and telephone networks demonstrated early network effects - Microsoft benefitted from unforeseen platform network effects 7. Distinguishing network effects from viral effects - Network effects create retention and value, not just growth - Many past companies relied on viral growth without network effects 8. Challenges of building network businesses - Cold starts, chicken-and-egg problems, multi-tenancy, disintermediation 9. Negative network effects to avoid - Congestion and pollution can degrade network experience early on #entrepreneurship #business