Negative Network Effects

Everyone is obsessed with network effects in the digital/tech business world—and rightly so. Once they kick in, a platform business model starts to shape up.

After a threshold of these network effects, it can give so much momentum to a platform business to enable it to gain most of the market shares in an industry!

That’s how powerful they can be. However, there is also the bad side, which is the negative network effects.

In the platform business model issue I’ve explained how platform businesses operate, and why network effects is the main driver for a business to turn into a platform.

Yet when negative network effects, that is when a platform's value might shrink rapidly!

Thus, any platform business, who has gone so far to be able to kick off network effects will be spending massive internal resources to monitor for negative network effects!

Before I dive in negative network effects, step by step, below a visual representation of what I’ll cover in this issue!