Competing with Network Effects

October 04, 2015

Read The Full Prompt

One consequence of the digital transformation of the economy is that many industries today are exhibiting network effects.

For this module please pick ONE company/organization and discuss how networks effects may affect its value creation, value capture and/or operating model and/or how it can take advantage of network effects to grow its business.

Issues you may want to address (feel free to consider other related issues not listed below):

– How to scale up businesses that exhibit Direct Network Effects?

– How to scale up businesses that exhibit Indirect Network Effects?

– How should incumbent firms compete when their industries become susceptible to network effects?

– How can an entrant take over market leadership when competing with an incumbent in a networked industry?

– How can product-centric firms grow into platform-centric firms?
Create an approximately 500-750 word post to make your contribution. Please create appropriate tags for your post. Please also respond to and comment on three other posts per module. Feel free to use graphics, data, videos and links to other sites to corroborate your points.

Note: Since our third module is on crowd-based business models (business models that leverage collective intelligence from a large number of users), please do not pick crowd-based companies such as Kickstarter, Wikipedia, and Threadless for this OK blog post.

Submitted (138)

Just Venmo me.
SC
Last modified on October 19, 2015 at 6:10 pm
Venmo uses network effects to make social network their business.
Flatiron: Fighting Cancer Online
Emilie Valentova
Last modified on October 5, 2015 at 8:37 pm
Flatiron Health is powering the most advanced cloud-based oncology software to support cancer care. It received $130 million from Google Ventures in 2014. Since, Flatiron has embarked on an exponential growth track pulling thousands of the best oncologists and cancer [...]
RelayRides – The New Era of Car Sharing Economy
QC
Posted on October 5, 2015 at 2:50 am
The network effect of RelayRide's peer-to-peer car sharing platform.
Handy: Turning Product Into Platform
CX
Last modified on October 5, 2015 at 5:29 pm
Busy “yuppies” with messy apartments used to be stuck with two unappealing options: either go for an expensive cleaning firm that often caters to commercially managed buildings or the gray market where immigrants with questionable legal statuses work for below [...]
How AirBnB Might Ultimately Fail
Pipedreamer
Last modified on October 4, 2015 at 12:16 am
Is AirBnB's network play really building up to a success?
Go-Jek : Uber for motorcycles in Indonesia
Cal K
Last modified on October 4, 2015 at 11:05 pm
Class of 2011 HBS friends turned business rivals. How an Indonesian start-up has succeeded in making the Uber of motorcycles.
Pinterest – a new social media. Playing with the big guys
KP
Last modified on October 6, 2015 at 12:44 am
Pinterest. The waiting game. It pays to be big. Numbers matter. Pin-it to Win-it.
Tribe Vibes: The Cult of SoulCycle
Salem
Last modified on October 4, 2015 at 9:01 pm
The most prevalent criticism of SoulCycle is that it is a cult, but this is perhaps the highest compliment for a business built on network effects.
World of WarCraft: The most successful game ever?
Fbalestra
Posted on October 4, 2015 at 10:35 pm
Blizzard's effective strategy to grow its World of WarCraft network led to an online population that would make any developer jealous.
Groupon – Will Weak Network Effects Be Its Downfall?
HF
Last modified on October 4, 2015 at 11:45 pm
Groupon is a multi-sided platform without the means of leveraging its network effects for market dominance, which in the end could kill their business.
Duolingo: Sheer Genius
Qing
Last modified on October 19, 2015 at 6:10 pm
I have wanted to learn Spanish for a while now, and that was why I started looking into Duolingo. I started the research thinking it’s just another language learning program. But boy was I wrong.Value creation – For students (users) Duolingo [...]
Zillow’s Reliance on Multiple Network Effects
Sara Alsadi
Last modified on October 5, 2015 at 1:46 am
Zillow has initiated a disruption of the real estate online sales market by winning the network effects game. Will it continue to grow and innovate or be disrupted?
Open but not Free – OpenTable’s Monopoly of Reservations
Caribou
Posted on October 4, 2015 at 1:52 pm
OpenTable has grown to a near-monopoly in online reservations thanks to direct and indirect network effects, and by designing a historically high barrier to entry for competitors.
Zuckerberg’s Big Bet on a New Set of Network Benefits
Patrick
Posted on October 4, 2015 at 11:52 pm
Facebook's acquisition of Oculus VR is all about indirect network benefits.
Venmo: Building direct network effects and then…nothing happened?
Allen Yang
Last modified on October 19, 2015 at 6:10 pm
Venmo has grown with strong direct network effects, but has been unable to crack the indirect network effects.
Lending Club – Pioneering P2P Lending
CY
Last modified on October 4, 2015 at 7:01 pm
Lending Club is the world’s largest online marketplace for connecting borrowers and investors. Through its innovative online platform, the company is able to pass on a portion of its savings to investors and borrowers because of its substantially reduced need [...]
Fitbit is Peer Pressuring People into Buying Their Product and It’s Working
Tikola Nesla
Last modified on October 19, 2015 at 5:26 pm
I’m not a huge fan of consumer wearables. In fact, I think most of them are kind of stupid, because they rarely have a unique use case and the redundancy drives me crazy. Like why do I need to wear [...]
Care.com – Family Care Marketplace
IR
Last modified on October 5, 2015 at 12:03 am
Care.com - an online market connecting families with caregivers
Rent the Runway – Value creation through fractional ownership
Bougainvillea
Last modified on October 4, 2015 at 11:14 pm
Exploration of whether RTR can continue to capture value amidst new competition.
Textbook Network Effects: How Instagram Achieved Instagrowth
Austin
Last modified on October 5, 2015 at 12:01 am
Instagram is the textbook example of how a business initially attracts users in the absence of network effects and quickly grows by leveraging those network effects.
Tinder: The dark side of network effects
Jennifer B.
Last modified on October 19, 2015 at 5:26 pm
With the proliferation of the internet and smartphones, we live in a world of unlimited options, including those related to romantic possibilities. Due to network effects, there is a new source of value creation and capture in the dating world. [...]
YouTube 1, everyone else 0
NoSocks
Last modified on October 4, 2015 at 5:12 pm
YouTube is the master of both direct and indirect network effects. Take a look...
The currency of Spotify: How it changed the way we discover music
Chrisoula Kapelonis
Last modified on October 4, 2015 at 11:55 pm
Pandora was once the leader by a long shot in the music streaming space. But today, all eyes are on the neon-green world of Spotify as the next heir to the throne. Spotify is currently touting over 75 million users, [...]
Nike – from products to platform
S
Last modified on October 5, 2015 at 12:45 pm
While I was interning in Seattle this summer, I learned from a friend — who happens to be both a software developer and a fitness enthusiast — that she had applied to “enroll” her startup idea with the Nike+ Accelerator [...]
1 2 3 … 6