Network Effects: Measure Them, Nurture Them (3 of 3)
, , and Frank Chen
Some of the most successful companies and products have been predicated on the concept of network effects, where the network becomes more valuable to users as more people use it… if managed well.
But you can’t manage what you can’t measure. So, what metrics should you look at to determine if you even have network effects in the first place? And how do you nurture and improve your network effects? Should product managers be looking at leading indicators (like retention cohorts and power user curves) or lagging indicators (like DAU/MAU ratio, pricing power, gross margins)?
In this final segment of our three-part mini-series on network effects, consumer deal & investing team partners D’Arcy Coolican and Li Jin — who recently co-wrote a pair of posts on the dynamics and metrics of network effects — discuss managing and measuring network effects with a16z operating partner Frank Chen.
-
D'Arcy Coolican Prior to joining a16z, he co-founded Frank, a social lending platform that used behavioral economics to make it easy to lend and borrow money with friends and family. He began his career at McKinsey & Co, where he was an engagement manager in the TMT practice.
-
Li Jin
-
Frank Chen heads our Early Stage Venture (ESV) Programs team and is responsible for developing company-building enablement products.
- Financial Tools for Solopreneurs (September 2021 Fintech Newsletter)
- As More Workers Go Solo, the Software Stack Is the New Firm
- a16z Slack Debate: Breakout Marketplace Companies and Categories
- The Next Wave of Marketplace Startups
- 16 Minutes #57: Semiconductor Shortage and the Global Supply Chain Squeeze