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聽crowd-based companies such as Kickstarter, Wikipedia, and Threadless for this OK blog post.

Submitted (138)

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 鈥� 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鈥檚 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 鈥� how one controversial decision ignited massive growth
Oded
Posted on October 4, 2015 at 11:26 am
People often think that Amazon鈥檚 success is all about economies of scale, when actually it is the controversial customer review system that fueled Amazon鈥檚 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鈥檚 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鈥檛 resist
From the Windoooows to the MALL 鈥� 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鈥檚 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.聽 While Amazon鈥檚 initial model involved warehouses and stocking every book in history, Amazon really took off when it became the internet鈥檚 primary storefront.聽 I acknowledge that Amazon still has lots of warehouses and many [...]
Waze 鈥� 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
LevelUp: A Rewarding Network $$
mtv0302
Last modified on October 5, 2015 at 1:05 am
LevelUp, a mobile-first payment and customer loyalty platform is channeling multiple network effects and value capture decisions to disrupt the point of sale experience for consumers and merchants.
DogVacay: Building a Network of Dog Sitters
Fisher
Last modified on October 5, 2015 at 11:38 am
DogVacay's multi-sided platform connects dog owners and sitters, and eliminates the need for expensive and unnatural kennels.
Nextdoor to Replace Yelp?
Julie
Posted on October 4, 2015 at 8:47 pm
Nextdoor is creating virtual neighborhood communities with lucrative demonetization opportunities.
Waze: Using Network Effects to Improve Your GPS System
CC24
Last modified on October 4, 2015 at 9:30 pm
Waze is a different kind of GPS navigation system. It uses data generated by its users to map cities, provide real time data about traffic patterns, alert users to accidents and police checkpoints, and even identify the cheapest places to [...]
Daimler鈥檚 struggle to become a platform player in urban transportation
hawkeye
Last modified on October 19, 2015 at 6:10 pm
Car manufacturer Daimler, who owns the Mercedes brand, has been quite aggressive in pursuing new business opportunities in the evolving context of urban transportation. Along the way the company is shifting from a product-centric business model to a platform approach [...]
Alexa, Amazon and the Beauty of a Platform that Makes No Money
Rob C.
Posted on October 4, 2015 at 2:32 pm
Amazon, Apple, Google, Microsoft are battling it out for dominance of voice as the next UX and for creating a truly intelligent personal assistant. Each has taken a difference approach, which will determine the strength of the network effects at [...]
Is it looking terminal for the Bloomberg Terminal?
SDS
Last modified on October 4, 2015 at 5:01 pm
After decades of dominating the financial data market through strong network effects, the Bloomberg Terminal may be facing some serious competition from its own community of users.
Can Lyft survive as #2 in the car-sharing battle, or is this a winner takes all game?
Ximena
Posted on October 4, 2015 at 1:12 pm
Even though Lyft entered the market before Uber, today it is lagging far behind. While Uber is worth more than $50 billion and has presence in more than 300 cities, Lyft is worth less than $3 billion and has presence [...]
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.
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