Network Effects in SaaS : A Desired Moat (Part 1 of 3)
The final force I’ll discuss is the Economic network effect, which is how a business model—including profitability and unit economics—improves over time as a network grows. This is sometimes driven by what are called data network effects—the ability to better understand the value and costs of a customer as a network gets larger.
Andrew Chen • The Cold Start Problem: How to Start and Scale Network Effects
In contrast, the ones who used Dropbox for collaboration and sharing—the network features—became significantly more valuable over time. Dropbox’s users could be divided into High-Value Actives (HVAs) and Low-Value Actives (LVAs),
Andrew Chen • The Cold Start Problem: How to Start and Scale Network Effects
Network Effects are the foundation of many great Silicon Valley technology companies/ You need users to make a product work – network effects are the results of positively connecting people through technology which organically makes that technology better.