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A small business can leverage the concept of direct and indirect network effects to grow by building a product or service that increases in value as more people use it. This is the direct network effect. For example, a social media platform becomes more valuable as more people join and interact on the platform. The indirect network effect can be leveraged by creating complementary products or services that increase the value of the original product or service. For example, a mobile operating system becomes more valuable as more third-party developers create apps for it. In a marketplace, increased use by one set of users (sellers) boosts the value to a complementary set (buyers), and vice versa.
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There are direct network effects, where increases in usage lead to direct increases in value (e.g., Facebook and WhatsApp); and indirect effects, where increases in usage prompt consumption of complementary products that in turn increase the value of the original product (e.g., iOS encouraging third-party app developers whose products boost the value of the operating system). Marketplaces such as eBay are two-sided networks where increased use by one set of users boosts the value to a complementary set.
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Blitzscaling is all about rapidly growing and scaling a business or product. Learn the techniques that digital companies like Google, Linkedin and Fac...
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