you can only capture the value in the long term if you design for durability from day one.

Durability = Network Effects + Economies of Scale + Brand + Embedding + IP

A network effect is when one user makes the service more valuable for every other user. Once your company gets ahead, users won’t find as much value in your competitors’ smaller networks.

1. Is your product a “single-player game” or a “multi-player game?” Make it a multi-player game if you can. We say “Make it a network,” or “Make it a marketplace.”

2. Does the value of your product or service increase, decrease, or mostly stay the same as new users join the network?

5. Do you have two different types of users (e.g. supply-side and demand-side users) who come to the network for different reasons and produce complementary value for the other side?

Homo sapiens are tribal and emotional. They identify themselves with brands.

15. Do you have a well-established brand identity, which would trigger psychological switching costs for users leaving your product or service for a lesser-known brand?

Embedding works when you integrate your product or software into a customer’s operations so the customer can’t rip you out and replace you with a competitor.

22. Are there low or no costs to simultaneously using your product, along with other competing products at the same time? Would you consider your product a “database of record?”

be very clear – in order to capture all of the compounding value in your business, you need to start at the beginning to position for long-term durability.

Founders who win big spend more time at the beginning, earlier than you might think, on creating products and business mechanisms that follow these five durability factors and thus drive increasing returns at scale.