Network Effects
Siem te Hennepe- Aug 14, 2024
- 8 min read
Definition | A company where the value realized by a customer increases as the user base increases. |
Benefit | Ability to charge higher prices, grow faster or monetize more due to additional value created. |
Barrier | Hard to gain market share as users would rather not switch due to the lower value provided. |
Network effects drive success for top companies like Apple and Amazon. They create defensibility and have generated 70% of tech value since 1994.
Our deep dive explains how to understand and use these powerful network effects, but most importantly how to value and spot them in companies.
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