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> I can replace the value they provide just by pointing my browser to another provider. I actually can't think of an example of an established e-commerce tech

by nikcub 13y ago

> I can replace the value they provide just by pointing my browser to another provider. I actually can't think of an example of an established e-commerce tech company with a two-sided marketplace that this has actually happen to. eBay, Amazon, Paypal, Google, Alibaba etc. - even Silk Road quickly took up a monopoly position and required the feds to make it go away, it was very resistant to clones that were cheaper, faster, better etc. It is because they have network effects ^ 2. It is proven that they are resilient, there is tons of research in the field: http://www.hbs.edu/research/pdf/12-024.pdf http://www.hbs.edu/research/pdf/12-024.pdf This is the reason why these business models are so attractive to investors, the companies are incredibly difficult to bootstrap, but very lucrative.

larrys 13y ago
"eBay, Amazon, Paypal, Google, Alibaba etc" One thing that is different about airbnb vs. the companies you mention is the amount of interaction as well as the transaction size and importance. The network effect at, say ebay or amazon, is bolstered by repeated interaction of small (and of course some large) transactions. That repetition is important because it keeps the service in the forefront of your mind as the go to place for many things, not just one thing. I am in the habit of using amazon so it's my go to place for things. I just bought a ladder from Lowes only after checking amazon first. Because I buy all sorts of small things from Amazon and rarely need to visit the Lowes site. Airbnb otoh has the same thing but to a much lesser degree. The habit part in other words. Because the amount of time you need a room is less there is less reason to think about it and more of a chance that (because of the lack of habit) you might try something else. Habits (and small transactions) are very important. Starbucks for example hates to close their locations for renovation because they have found that once people break the habit many times they fail to return (finding another acceptable morning place to get coffee.)

by nikcub 13y ago

larrys 13y ago

"eBay, Amazon, Paypal, Google, Alibaba etc" One thing that is different about airbnb vs. the companies you mention is the amount of interaction as well as the transaction size and importance. The network effect at, say ebay or amazon, is bolstered by repeated interaction of small (and of course some large) transactions. That repetition is important because it keeps the service in the forefront of your mind as the go to place for many things, not just one thing. I am in the habit of using amazon so it's my go to place for things. I just bought a ladder from Lowes only after checking amazon first. Because I buy all sorts of small things from Amazon and rarely need to visit the Lowes site. Airbnb otoh has the same thing but to a much lesser degree. The habit part in other words. Because the amount of time you need a room is less there is less reason to think about it and more of a chance that (because of the lack of habit) you might try something else. Habits (and small transactions) are very important. Starbucks for example hates to close their locations for renovation because they have found that once people break the habit many times they fail to return (finding another acceptable morning place to get coffee.)