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I am not convinced by this trichotomy. The "Engagement" effect is just a restatement of the classic network effect, while the "Acquisition" and "Economic" effec
by yholio 5y ago
I am not convinced by this trichotomy. The "Engagement" effect is just a restatement of the classic network effect, while the "Acquisition" and "Economic" effects are simple consequences of it.
He states that networked products obtain clients easier from the existing network. But this is true for non-networked products too - see the early Gmail invite system. If anything, an invite from a friend to chat with him on the early Twitter was even less valuable than a Gmail invite, that allowed you to email the whole non-gmail world, not just SMS a single friend.
What makes acquisition more effective is precisely the network effect, while a classic business acquires in a dampened geometric ratio, a networked business acquires clients much faster because those acquired through word of mouth find a much more compelling product than the early adopters, some of their friends and contacts are already there, and they derive direct benefits when more and more of their friends go online, incentivizing invitations.
The third "Economic" effect is, again, the direct consequence of the network effect: Slack can charge more for business-wide features because the product is much useful for the organization as a whole due to network effects.