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)

WhatsApp — Network effects worth $19 billion?
KMY
Last modified on October 19, 2015 at 5:26 pm
WhatsApp has the potential to leverage extremely sticky network effects for untapped revenue potential
EdX – learning for anyone, anytime, anywhere
Jenny Chiu
Posted on October 4, 2015 at 6:50 pm
How they help global learners to increase access to some of the best learning contents in the world
BlackBerry: Too Reliant on Network Effects in the Face of Better Products
Jason Preston
Posted on October 3, 2015 at 10:21 am
Network effects don't defend against significantly better products (or: you still have to create value for the user).
TripAdvisor: Book the Perfect Trip
HBSSectB
Last modified on October 4, 2015 at 8:54 pm
TripAdvisor is the largest travel site in the world, with a mission to help people plan and book the perfect trip. TripAdvisor accomplishes its goal by offering users a platform that aggregates user-generated reviews and opinions about accommodations, destinations, activities [...]
Luxe – On-demand valet service anywhere you want*
Matt
Posted on October 4, 2015 at 9:56 pm
Never search for parking again! Luxe provides an easy to use on-demand valet service that will change the way you park in major cities.
Napster – The Start of Something Big
gscoon
Last modified on October 5, 2015 at 12:13 am
On June 1, 1999, Shawn Fanning launched Napster, a service that allowed computer owners to easily share music files across the internet.  Within a few months of its launch, 4 million songs were in circulation and in less than a [...]
Apple Pay: Living up to the Hype?
Mike Maley
Last modified on October 19, 2015 at 6:10 pm
Explores network effects in Apple Pay and why adoption to date has been lower than expected.
Easy Taxi: “Disrupting minimizing the disruption”
Mati G
Posted on October 3, 2015 at 3:48 pm
Easy Taxi has grow successfully in emerging countries, primarily in Latin America. They have created a disrupted business model that adapts to local reality
Daily Fantasy Sports Compete Head-to-Head
Becky D
Posted on October 4, 2015 at 3:57 pm
In an industry where a large member base is critical for success, competitors FanDuel and DraftKings battle it out for user dominance using creative customer acquisition techniques.
Two-Sided Network Effects for a Food-Tech Marketplace
David
Last modified on October 4, 2015 at 6:27 pm
CaterCow is a food-tech startup that helps match caterers and restaurants with office managers and other customers looking to order food for meetings or events.  As is typical in a two-sided market, there are both challenges to gaining traction and [...]
Spotify’s Business Model – Competing With Network Effects
jeffzeller
Last modified on October 3, 2015 at 1:50 pm
Spotify leveraged network effects to gain a massive user base, and amass (almost) the entirety of the world's popular music collection. Now the company is seeking to capture value from its users, which as it turns out are the ones [...]
Linux won the servers, but dead on desktop
LC
Last modified on October 5, 2015 at 4:47 pm
Linux is present in very different markets where it has had vastly different results. What explains those differences?
Strava: Social Fitness Veteran
(Wo)Man in the Arena
Posted on October 2, 2015 at 4:25 pm
Strava builds an incredibly loyal and growing community of competitive "everyday cyclists" who are increasingly obsessed with the digital leaderboard.
Is Nextdoor the next big social network?
Yannis
Posted on October 4, 2015 at 8:37 pm
At $1bn valuation, reaching 1/3 of U.S. communities, private social network Nextdoor has come a long a way. The company's targeted, private approach has enabled it to build a tight community of engaged users. The platform has strong network effects [...]
IMG’s three pronged network effect strategy
AlonKremer
Posted on October 4, 2015 at 11:33 pm
IMG is a sports talent agency that uses a three pronged network effect strategy to attract more athletes, agents and advertisers to beat its competitors.
Skype: how a Northern European peer-to-peer software has conquered the world thanks to network effects
europeanfederalist
Posted on October 4, 2015 at 11:16 pm
Once the ultimate savior of long-distance relationships (no matter what their nature is), Skype has been increasingly challenged by new digital players, What's app in particular. How did Skype make itself so relevant, and how does it capture enough value [...]
IBETCHA Want Network Effects
ecashman
Last modified on October 5, 2015 at 11:57 pm
Hobby games are booming and they're making the jump online in search of network effects.
From the Windoooows to the MALL – Mall of America in the Digital Era
Won't Not
Last modified on October 4, 2015 at 6:41 pm
Mall of America has been able to digitally amplify its massive direct and indirect network effects to remain a tour de force of brick and mortar shopping.
Shut out: Can Meerkat win the mobile live streaming war?
moniguzman
Posted on October 5, 2015 at 11:35 am
In March, techies (myself included: http://www.geekwire.com/2015/why-meerkat-is-going-to-make-it/) went wild over a new kind of live streaming. A startup called Meerkat launched a mobile app that let users broadcast high quality live video to the world straight from their phones, using Twitter [...]
Etsy – Beyond Brands and Boarders
Mor Sidi
Posted on October 2, 2015 at 4:37 pm
It is suddenly worth it to be a designer - who would have thought that I could broadcast my designs all over the world?
Same network effects responsible for Amazon’s rise might lead to its undoing
Jon Malankar
Last modified on October 4, 2015 at 8:42 pm
Amazon is the original two-sided marketplace.  While Amazon’s initial model involved warehouses and stocking every book in history, Amazon really took off when it became the internet’s primary storefront.  I acknowledge that Amazon still has lots of warehouses and many [...]
Waze – Generating Better Maps through its Network of Users
JG
Posted on October 2, 2015 at 11:12 am
Through a virtuous cycle, Waze has built a large user-base which functions as both the suppliers and consumers of traffic information.
GrubHub: Seamlessly Taking Over Delivery?
CEA
Posted on October 4, 2015 at 2:21 pm
Leveraging two-sided network effects, GrubHub has established a solid grip on the meal delivery service industry. With many new entrants, however, the industry may be becoming commoditized, and the strength of these network effects will soon be put to the [...]
Getting on the Lyst
uilc
Posted on October 3, 2015 at 3:29 pm
Lyst.com is an online shopping aggregator that has created a network of brands and users totaling annual sales of $2B
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