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16

Network Effects

The Power of the Platform

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G. Parker, G., W. Van Alstyne, M. and Paul Choudary, S. (2016). Network Effects. In G. Parker, G., W. Van Alstyne, M. and Paul Choudary, S. Platform Revolution: How Networked Markets Are Transforming the Economy--and How to Make Them Work for You. W. W. Norton Company, pp. 16-34

23

Price effects and brand effects have their place in a startup’s growth strategy. But only network effects create the virtuous cycle we described above, which leads to the building of a longlasting network of users—a phenomenon we called lock-in.

—p.23 by Geoffrey G. Parker, Marshall W. Van Alstyne, Sangeet Paul Choudary 2 years, 7 months ago

Price effects and brand effects have their place in a startup’s growth strategy. But only network effects create the virtuous cycle we described above, which leads to the building of a longlasting network of users—a phenomenon we called lock-in.

—p.23 by Geoffrey G. Parker, Marshall W. Van Alstyne, Sangeet Paul Choudary 2 years, 7 months ago
26

In some cases, the growth of a platform can be facilitated by an effect we call side switching. This occurs when users of one side of the platform join the opposite side—for example, when those who consume goods or services begin to produce goods and services for others to consume. On some platforms, users engage in side switching easily and repeatedly.

Uber, for example, recruits new drivers from among its rider pool, just as Airbnb recruits new hosts from among its guest pool. A scalable business model, frictionless entry, and side switching all serve to lubricate network effects.

interesting that they say people do it easily. i would love to see stats on how often people who drive for uber also use it ... there are definite class aspects

—p.26 by Geoffrey G. Parker, Marshall W. Van Alstyne, Sangeet Paul Choudary 2 years, 7 months ago

In some cases, the growth of a platform can be facilitated by an effect we call side switching. This occurs when users of one side of the platform join the opposite side—for example, when those who consume goods or services begin to produce goods and services for others to consume. On some platforms, users engage in side switching easily and repeatedly.

Uber, for example, recruits new drivers from among its rider pool, just as Airbnb recruits new hosts from among its guest pool. A scalable business model, frictionless entry, and side switching all serve to lubricate network effects.

interesting that they say people do it easily. i would love to see stats on how often people who drive for uber also use it ... there are definite class aspects

—p.26 by Geoffrey G. Parker, Marshall W. Van Alstyne, Sangeet Paul Choudary 2 years, 7 months ago