Network Effects #1 | 13 types of network effects
James Currier of NFX1 has written a wonderful post about network effects. He categorizes them into 13 buckets.
James earlier also wrote about what creates defensible companies. His list - Scale, Brand, Embedding and Network effects. Of this, the most powerful one is the network effect. For a more in-depth view on why it is so, read more about Metcalfe’s Law.
Direct Network Effects:
Physical (infra, e.g. phone lines, railways, fiber cables
Protocol (e.g. USB, Ethernet, Bitcoin, AWS?)
Personal Utility (e.g. Whatsapp, Slack)
Personal Public (e.g. Facebook, Instagram, Linkedin etc)
Market Network (e.g. Angellist, Honeybook)
2 Sided Network Effects:
Marketplaces (e.g. eBay, Amazon, Tinder)
Platforms (e.g. Windows, Android, iOS, twilio etc)
Aggregators (Asymptotic Marketplaces) (e.g. Uber, Urban Company)
Data Network Effects (e.g. Google, Yelp, IMDB)
Tech Performance Network Effects (e.g. Tile)
Social Network Effects:
Language (e.g. IndusOS)
Belief (religions, ideologies, currencies)
Bandwagons (Apple?!!)
Read the article as written by the man himself, here. It’s a fascinating read.
a great writer and explainer of concepts. A great example is here.