Sketchplanations

Explaining one thing a week in a sketch

The ‘Virtuous Cycles’ of Amazon and Uber - Sketchplanations

The ‘Virtuous Cycles’ of Amazon and Uber

Networks effects can lead to massive, rapid growth. Amazon has leveraged this little sketch by Jeff Bezos in 2001 for mega growth — Amazon calls it a virtuous cycle — and, more recently, the Uber variation, by David Sacks explains much of Uber’s wild ride.

When you build a platform that leverages network effects right it can enable growth way beyond what has historically been possible. Also, see Metcalfe’s Law.

HT: Slava Kremerman

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