How to figure out whether a platform’s network effects are global or local when things are not as obvious as for Airbnb (clearly global) or TaskRabbit (clearly local)?
Nice to see my favorite substack active again. Two minor corrections. First, Bark has recently expanded to the US. Second, eBay Motors provides liquidity services of remote inspection and shipping via partnerships, expanding the scope of network effects. They may also have import brokers. This makes the the global vs local a choice variable, at least for some marketplaces.
Thank you for those! I updated the post to reflect your points. I like the second one in particular, that countries can take action to expand their network effects to some extent.
Hey Professor Hagiu! So happy to see new articles. My thoughts immediately turn to WeChat, an app that almost purposely limits their network effects to China by design. I don't know much about their global strategy, but I'm quite sure they don't see purpose in expanding to other regions deliberately. However, as someone with Chinese relatives, I find myself using the app quite often, and I'm sure other expats do as well, thereby creating global network effects. Perhaps with a company like WeChat, at its level as a mature company, it may even be smarter to limit network effects to the home region and improve upon its products to tailor to that region, rather than adapting to foreign markets.
What about reputation? Presumably experiences with a platform elsewhere can be communicated to potential users everywhere, slightly increasing the likelihood of use. Attenuated to be sure, but potentially not irrelevant.
Fair enough. I guess that would apply to any product, even without network effects: the more people use it (in more locations) , the more brand equity it builds. But that goes through brand. I'm not sure how a platform would communicate that users in a new country it opens up should trust it more because look at all these users we have in other countries. :) What would that even look like in a marketing campaign?
Nice to see my favorite substack active again. Two minor corrections. First, Bark has recently expanded to the US. Second, eBay Motors provides liquidity services of remote inspection and shipping via partnerships, expanding the scope of network effects. They may also have import brokers. This makes the the global vs local a choice variable, at least for some marketplaces.
Thank you for those! I updated the post to reflect your points. I like the second one in particular, that countries can take action to expand their network effects to some extent.
Hey Professor Hagiu! So happy to see new articles. My thoughts immediately turn to WeChat, an app that almost purposely limits their network effects to China by design. I don't know much about their global strategy, but I'm quite sure they don't see purpose in expanding to other regions deliberately. However, as someone with Chinese relatives, I find myself using the app quite often, and I'm sure other expats do as well, thereby creating global network effects. Perhaps with a company like WeChat, at its level as a mature company, it may even be smarter to limit network effects to the home region and improve upon its products to tailor to that region, rather than adapting to foreign markets.
Sure, WeChat may not be fully global but it certainly has country-wide network effects in China. Plus you in the US :)
And yeah, agreed that China is big enough so they can deepen their offering there.
What about reputation? Presumably experiences with a platform elsewhere can be communicated to potential users everywhere, slightly increasing the likelihood of use. Attenuated to be sure, but potentially not irrelevant.
Fair enough. I guess that would apply to any product, even without network effects: the more people use it (in more locations) , the more brand equity it builds. But that goes through brand. I'm not sure how a platform would communicate that users in a new country it opens up should trust it more because look at all these users we have in other countries. :) What would that even look like in a marketing campaign?
Or it goes through word of mouth, reviews online, etc. But I see your point.