Top Highlights

• When evaluating an opportunity involving a platform, entrepreneurs (and investors) should analyze the basic properties of the networks it will use and consider ways to strengthen network effects. It’s also critical to evaluate the feasibility of minimizing multi-homing, building global network structures, and using network bridging to increase scal...
• Anything that makes a platform more cumbersome to use can make it vulnerable to a competitor offering a streamlined experience.
• In other words, in the digitally connected economy the long-term success of a product or service depends heavily on the health, defensibility, and dominance of the ecosystem in which it operates.
• The reason that some platforms thrive while others struggle really lies in their ability to manage five fundamental properties of networks: network effects, clustering, risk of disintermediation, vulnerability to multi-homing, and bridging to multiple networks.
• When network effects are strong, the value provided by a platform continues to rise sharply with the number of participants.

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