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)

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.
Predix – Turning Data into Insights and Insights into Action
LMT
Last modified on October 4, 2015 at 11:53 pm
With its pattern-finding platform, Predix, GE is transforming from a traditional equipment manufacturer to a full-fledge customer solutions provider – optimizing both customer outcomes and profitability.
GoPro – A Platform Worth $3 Billion
Jonathan T
Posted on October 4, 2015 at 4:30 pm
The GoPro Camera Platform utilized direct network effects to grow its user base, while utilizing indirect network effects to defend against large competitors.
Visa – Leveraging Indirect Network effects
RS
Last modified on October 19, 2015 at 5:26 pm
Visa has dominated the payment processing industry for decades, leveraging indirect network effects
Poshmark: Disrupting the $13 Billion Resale Industry
Golden
Last modified on October 19, 2015 at 6:10 pm
Four years ago fashion marketplace, Poshmark, launched an iOS app which allows consumers to buy and sell second-hand clothing, shoes and accessories. The company has grown its online community to millions of followers, was on track to make $200m in sales [...]
The Arduino Community
Donald Frump
Last modified on October 4, 2015 at 9:13 pm
The Arduino community keeps alive a simple piece of hardware that was made obsolete years ago.
PayPal’s head start not enough to dominate online payments
vlad.hanzlik
Last modified on October 4, 2015 at 8:56 pm
Fuelled by its user base and network effects PayPal once looked invincible. The network effects have since crumbled and PayPal faces real threats.
SmackHigh: A social media platform fighting teen bullying
Angela Zhang
Last modified on October 4, 2015 at 10:12 pm
SmackHigh aims to build inter-school community through friendly smack talk and shared experiences in a safe online space
Microsoft: Took the Lead Early
Grace
Last modified on October 2, 2015 at 3:15 pm
Microsoft is a company that achieved their dominance within the PC market by capitalizing on direct network effects. Compatibility Arguably the most obvious way in which Microsoft leveraged success through direct network effects is due to the very nature of [...]
Epic EHR Systems: The Role of Network Effects
RFD123
Posted on October 4, 2015 at 5:18 pm
Epic's use of perverse network effects to lock in users may be its downfall...
The rise and demise of Groupon: the importance of satisfying both sides of a two-sided network
ilny
Last modified on October 19, 2015 at 5:26 pm
80% of Groupon's market value evaporates after it fails to satisfy one side of the two-sided network on which its business model relies
WeWork: What can they do to make their platform even more valuable?
Nazli O
Last modified on October 4, 2015 at 10:37 pm
WeWork rides the wave of shared economy and provides cheap office solutions to SMBs and startups. But can the company become a hot spot for these companies and attract them for anything more than low rent and a cool workspace?
Teladoc: How network effects are evolving in the world of telemedicine
Belowthefold
Last modified on October 4, 2015 at 5:52 pm
Teladoc is currently the market leader in the new world of telemedicine, but competitors are on the horizon and growing fast. Teladoc will need to find a way to increase the network effects of its service if it plans on [...]
AMAZON KINDLE IS KING OF NETWORK EFFECTS
Madrid
Last modified on October 4, 2015 at 2:10 pm
Amazon brings together readers, publishers, authors, and advertisers in a platform/environment that creates mutual value for all stakeholders and allows Amazon to capture value for itself.
eBay – The Perfect Store(y) of network effects
Y.S.H.
Posted on October 4, 2015 at 11:53 pm
A few thoughts on why eBay is a great example of how a business grew through indirect network effects
StubHub: The Ticket Scalper of the Digital Age
Faisal
Last modified on October 4, 2015 at 3:42 pm
The indirect network effects present in StubHub's operating model have allowed it to create value to buyers, sellers, and ticket originators.
Bill.com – Do network features mean network effects?
BS
Posted on October 4, 2015 at 11:20 pm
Is business-to-business (B2B) payments platform Bill.com competing successfully with network effects?
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