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)

Twitch.tv: Amazon’s Billion-Dollar Bet on Network Effects in Streaming Video
Sean L
Last modified on October 19, 2015 at 6:10 pm
As their features converge, Twitch and YouTube Gaming will continue to coexist in an untipped market unless one platform can utilize network effects to its advantage and lock in users through high switching and multi-homing costs.
Twitter: A network potentially losing its effects
AS
Last modified on October 4, 2015 at 7:33 pm
Twitter's ability to capture users quickly led to its early rapid growth, but recent slowing in active users and the rise of competing social platforms questions the strength of their direct network effects, and could potentially have lasting consequences on [...]
Swing-by-swing: Network Effects Drive Success for(e) this Golf App
Drew O.
Posted on October 4, 2015 at 10:50 pm
Swing-by-swing (SBS) is a GPS enabled golf application (app) that gives players precise yardage estimates based on where they are standing on a given golf course. SBS also provides a digital scorecard so players can keep track of their scores, [...]
China’s Taxi Wars: Winner-take-all or lose-lose for Uber and its rivals?
hbs2016
Posted on October 5, 2015 at 3:08 pm
Rival taxi-hailing and ride-sharing apps are sustaining heavy losses in the battle for market share. Can a differentiated competitor win in the end?
DoorDash is Leveraging Network Effects to Fight Hangriness
Noam
Last modified on October 5, 2015 at 10:00 am
DoorDash is attempting to disrupt the food delivery market with a service that enables users to order in from almost any restaurant in their area. The key to their success is network effects, but one question remains: can they do [...]
The Fitbit Fad?
s
Posted on October 4, 2015 at 8:32 pm
Fitbit owes its success to strong direct network effects, but its survival depends on the establishment of a strong indirect network.
The Knot : Maximizing Value in an Evergreen Industry
JL
Last modified on October 19, 2015 at 6:10 pm
“Amazing news! Congrats! Where do you want to get married? Have you thought about destination wedding? Are you thinking Spring or Fall wedding? What color will your bridesmaids will wear??” – My future mother-in-law…30 minutes after my fiancé proposed. Planning [...]
Eventbrite: Transforming from a Ticketing Provider to an Event Discovery Platform
ctm
Last modified on October 19, 2015 at 5:26 pm
In less than 10 years Eventbrite has established itself as a major force in the ticketing industry. Longer term, the company’s ultimate goal is to become not just a technology provider for individual ticket sellers, but rather a robust discovery [...]
TripAdvisor: A Network for Vacation Bliss
HBStudent2016
Last modified on October 3, 2015 at 10:49 pm
TripAdvisor has started to dominate the online vacation ecosystem with its large user base and acquisitive business model.
OpenTable: A New Reservation Every Two Seconds
guillermop
Last modified on October 19, 2015 at 5:26 pm
Open-Table was the first mover into the online and mobile restaurant reservation space and is still the industry leader. The space is strongly influenced by network effects, which OpenTable is hoping to leverage to capture even more value and cement [...]
thredUP utilizing network effects
Esty
Last modified on October 19, 2015 at 6:10 pm
thredUP owners increased their control of the multi sided platform by transferring it from a marketplace to a re-seller and grew their network by utilizing direct and indirect network effects. However, they are still at risk of imitation and substitute, [...]
Yoga Panda – introducing network effects to the yoga industry
Pinky and the Brain
Last modified on October 19, 2015 at 5:26 pm
Yoga Panda, though a small, Seattle-based start-up, has introduced network effects into the yoga industry.
Calling All Babysitters & Nannies
DB
Last modified on October 4, 2015 at 8:57 pm
Care.com is a two-sided marketplace that matches caregivers to people seeking care. Think babysitters, nannies and more. They have managed to become the world’s largest online care destination servicing 9.5 million members in 16 countries. How they scaled When Care.com [...]
Coursera: using network effects to build access to education
Sherry
Posted on September 30, 2015 at 5:54 pm
Coursera is leveraging network effects to expand both its user base as well as the quantity and quality of content on its platform.
Amazon – how one controversial decision ignited massive growth
Oded
Posted on October 4, 2015 at 11:26 am
People often think that Amazon’s success is all about economies of scale, when actually it is the controversial customer review system that fueled Amazon’s massive growth.
Craigslist: The dawn of the pioneer in network effects?
Andrea MF
Last modified on October 3, 2015 at 9:19 pm
Craigslist has been offering a low quality service for twenty years, though it has huge network effects. It is now losing its dominance to smaller niche players. It was about time.
Redfin: The more users, the more roofs over people’s heads
Carina Rutgers
Posted on October 4, 2015 at 9:29 pm
This innovative real estate company harnesses network effects so effectively, even the competition can’t resist
Lending Club – a network effect that could change the way we bank.
H Li
Last modified on October 4, 2015 at 9:39 pm
Lending Club is a peer-to-peer lending online platform where individuals can seek or provide capital to others on the platform. This platform grows as more credit-worthy borrowers and lenders are brought to the platform and poses a serious threat to [...]
PatientsLikeMe: unquestionably successful, but only one misstep from disaster
HC Watcher
Last modified on October 4, 2015 at 9:11 pm
No one can deny that PatientsLikeMe is a success story. From its humble beginnings as an online community for patients living with ALS, PatientsLikeMe has grown to be the largest social network and patient community online. The numbers recorded for [...]
Airbnb: Reinventing hospitality with network effects
Elizabeth H
Posted on September 30, 2015 at 10:42 pm
In 2008 Airbnb’s founders were having difficulty raising funds for their new idea and were turned down by many Silicon Valley investors when trying to raise a mere $150,000. No doubt part of investor skepticism revolved around the difficulty inherent [...]
Chicago Mercantile Exchange: The Benefits of a Closed Platform
DD1
Posted on October 5, 2015 at 12:09 pm
CME: a centuries old business that continues to benefit from compounding network effects by operating a closed platform.
Goodreads: What are your friends reading?
Marissa Henry
Posted on October 4, 2015 at 9:52 pm
Goodreads entered a market full of incumbents as varied as local libraries, Amazon reviews, and conversations between friends, and used network effects to create value for users, authors, Amazon, and more.
Pandora: The More You Listen, The Better It Gets
Asaf Lifshitz
Posted on October 3, 2015 at 3:37 pm
Whenever a user likes a new song, Pandora’s playlist choices improve for ALL uses
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