Network Effects - Main predictor of Platform and Startup Value
The core idea of a network effect is that each additional user increases the value of a good or service. Digital giants like Facebook, Uber, Google, and Amazon all harness the power of network effects. What they all have in common is that they are platform businesses. The concept of how a network effect works can seem difficult at first, but it is really quite simple. By understanding network effects, platform designers can plan how to rapidly scale and grow a platform. It is because of the network effect that growth marketing techniques are adopted (Currier, 2020).
A great resource on understanding network effects is the NFX network effects manual.
Source: https://www.nfx.com/post/network-effe...
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