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Hidden Networks
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Hidden Networks

Network Effects That Don’t Look Like Network Effects

D'Arcy Coolican
A16Z, 2019
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Editorial Rating

9

Qualities

  • Applicable
  • Eye Opening
  • Concrete Examples

Recommendation

Some network effects (when a network gains more value to its users as more people participate in its platform) don’t show up in the usual metrics. Their hidden nature makes them hard to measure – but they can confer significant long-term competitive advantages. In an insightful article for A16Z.com, D’Arcy Coolican – an Andreessen Horowitz partner and a co-founder of the peer-to-peer lending platform Frank – shines a light on hidden networks, giving useful guidelines for identifying when they’re at work.

Take-Aways

  • Some companies have hidden networks that yield network effects not apparent in the usual metrics.
  • Hidden networks can give enterprises important long-term advantages.
  • Hidden networks come in three flavors: “slow, unfinished/throttled” and “latent.”

About the Author

D’Arcy Coolican is an investment partner at Andreessen Horowitz and a co-founder of the P2P lending platform Frank.

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