Hidden-Networks-Network-Effects-That-Don-t-Look-Li #

Hidden Networks: Network Effects That Don’t Look Like Network Effects - Andreessen Horowitz #

Created: February 21, 2020 12:06 PM URL: https://a16z.com/2019/07/29/hidden-networks-effects/ Many of the most consequential projects of the internet era — from Wikipedia to Facebook and bitcoin — have all been predicated on network effects, where the network becomes more valuable to users as more people use it.

1) Slow networks #

Slow networks are defined by a time delay between when the network is created and when it starts to show value. Hidden%20Networks%20Network%20Effects%20That%20Don’t%20Look%20Li%2031a5f96f77484e4bb0378718e5a422cf/1f642.svg Like a slow network, an unfinished network will have bottled up network effects, but they won’t show up in any analysis or metrics.

2B) Throttled networks #

A throttled network is one where a product feature or strategic decision limits the size or engagement of the network in a material way, thereby masking the strength of the network effects. Like an unfinished network, a throttled network appears to have limited network effects — until all of a sudden, it doesn’t. The test for telling whether it’s a throttled network with strong network effects is fairly straight-forward: understand what would happen if one of more of these constraints (e.g., price, network growth, engagement, etc.)

3) Latent networks: (aka “Come for the network, stay for the tool” networks) #

There are a host of companies that build the tool or product before they build the network.