3 ms·

They probably mean network effects. Facebook is the prime example. For Uber, a critical mass in users and drivers makes it hard to unseat.

by psbp 10y ago

hangonhn 10y ago
There is no network effect here. Each additional driver does not increase the value of the network to the other drivers and similarly for passengers. Uber and Lyft are old-fashioned market makers. They increased the pool of suppliers and consumers and connected the groups. In cities where both Uber and Lyft exist, substituting Uber for Lyft and vice versa does not change the value the driver or passenger derives from either service.
- stale2002 10y ago
  Yes, that is called a two-sided market/network effect. Each driver increases value for riders, and each rider increases value for drivers. This two sides. A 1 sided network is facebook. A two sided market is like the video game industry (more video games are good for gamers and more gamers are good for video game devs) For taxi apps, imagine if there was only 1 driver in SF. That wouldn't be a good experience for consumers. Thus, network effect.
  - acchow 10y ago
    > A 1 sided network is facebook. Almost every user in Facebook is both a provider and consumer of content. It's like an exponentially-sided network. In Uber, drivers provide supply to riders. Riders provide demand for drivers.
    - stale2002 10y ago
      Yes, they are both a provider and a consumer. That is the definition of a 1 sided market. Sorry, I am using economics jargon. https://en.wikipedia.org/wiki/Two-sided_market https://en.wikipedia.org/wiki/Two-sided_market
- erikpukinskis 10y ago
  > There is no network effect here. Each additional driver does not increase the value More drivers => decreased wait times => more customers => more drivers
  - acchow 10y ago
    But there's minimal stickiness to the network. The switching cost to another network is almost free, and the network value itself is pretty low. Consider eBay, perhaps the most-successful two-sided network of the first dot-com boom. You could switch to another auction site, but as a seller you would lose all of your online reputation (sales history) which is worth a lot on eBay (since people don't buy expensive items from someone with no sales history whatsoever). When is the last time you cared how many drives your Uber/Lyft driver had given? eBay - very sticky. Uber/Lyft - not so much.

They probably mean network effects. Facebook is the prime example. For Uber, a critical mass in users and drivers makes it hard to unseat.

by psbp 10y ago

They probably mean network effects. Facebook is the prime example. For Uber, a critical mass in users and drivers makes it hard to unseat.

hangonhn 10y ago

There is no network effect here. Each additional driver does not increase the value of the network to the other drivers and similarly for passengers. Uber and Lyft are old-fashioned market makers. They increased the pool of suppliers and consumers and connected the groups. In cities where both Uber and Lyft exist, substituting Uber for Lyft and vice versa does not change the value the driver or passenger derives from either service.

stale2002 10y ago
Yes, that is called a two-sided market/network effect. Each driver increases value for riders, and each rider increases value for drivers. This two sides. A 1 sided network is facebook. A two sided market is like the video game industry (more video games are good for gamers and more gamers are good for video game devs) For taxi apps, imagine if there was only 1 driver in SF. That wouldn't be a good experience for consumers. Thus, network effect.
- acchow 10y ago
  > A 1 sided network is facebook. Almost every user in Facebook is both a provider and consumer of content. It's like an exponentially-sided network. In Uber, drivers provide supply to riders. Riders provide demand for drivers.
  - stale2002 10y ago
    Yes, they are both a provider and a consumer. That is the definition of a 1 sided market. Sorry, I am using economics jargon. https://en.wikipedia.org/wiki/Two-sided_market https://en.wikipedia.org/wiki/Two-sided_market
erikpukinskis 10y ago
> There is no network effect here. Each additional driver does not increase the value More drivers => decreased wait times => more customers => more drivers
- acchow 10y ago
  But there's minimal stickiness to the network. The switching cost to another network is almost free, and the network value itself is pretty low. Consider eBay, perhaps the most-successful two-sided network of the first dot-com boom. You could switch to another auction site, but as a seller you would lose all of your online reputation (sales history) which is worth a lot on eBay (since people don't buy expensive items from someone with no sales history whatsoever). When is the last time you cared how many drives your Uber/Lyft driver had given? eBay - very sticky. Uber/Lyft - not so much.