How Instagram, Uber and Bitcoin dominate their markets

written by JOSH GESSNER | The Curious Competitor

I just read about a crazy phenomenon...

Instagram, Uber and Bitcoin used it to dominate their markets.

Network Effects:

In 1876, Alexander Graham Bell invented the telephone.

Even though it was a ground breaking invention:

It wasn't useful to most of the population.

Why?

The earliest phones were connected in pairs...

Which meant you needed a new line installed for each person!

On top of this - owning a telephone wasn't cheap.

It's pretty easy to see why people didn't make the investment.

It wasn't valuable enough.

So Bell came up with a solution:

He created a central switchboard.

Now, multiple phone lines were connected to a single hub.

This way, people could communicate with every other person in that hub.

(It was manually operated! ⬇️)

Now people started to take notice.

With each user that adapted the telephone:

The more people they had access to, and the more valuable the phone became.

This is the network effect in action.

The Network Effect:

When each new user adds value to the existing user base.

An example with the phone: [img:JA6SOVxDs]

If there were 2 users - You'd only have 1 person to call.

With 1 million users, you have 999,999 people to call.

With each added user, the value of the phone increases because you can reach more people.

Instagram is an obvious example.

The more users that join, the more content is available, making the platform more engaging.

We see network effects everywhere...

Amazon: More buyers mean more sellers are attracted to list their products.

Uber: More riders mean more drivers, reducing wait times.

Bitcoin: The more people that use and invest, the more valuable it becomes.

So how can we apply this to our lives?

I started to think more about how network effects can show up in my daily life.

And what I've realized:

The power of building relationships.

Each added person in your network benefits you and everyone around you.

An increased network leads to:

• Opportunities

• Diverse Perspectives

• Increased surface area of luck

What does this look like in action?

In the digital world, we have better reach than ever before.

2 ways to take advantage:

1) Build a personal brand

2) DM cool people

1) A personal brand acts as a magnet for like minded people.

When you put your ideas and insights out into the world:

You create energy for opportunities and luck... to find you.

2) DMs are your super power.

I've sent DMs to those with 300k+ followers - who've become friends.

DMs have asymmetrical upside:

Connecting with amazing people, for 30 seconds of your time.

Main Lesson:

Take advantage of network effects by expanding your network and building relationships.