Professor Julian Wright, Associate Professor Andrei Hagiu & ScholarSite Present
INVESTING IN
NETWORK EFFECTS
Your chance to engage live with leading network effects professors and investors, as well as a cohort of driven investors and founders
4 x 2 hr sessions
4pm PST; February 7, 9, 14 and 16
Early Bird Price: $700 per seat (expense through L&D)
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Angel investors, venture capitalists and private equity
What private market investors will learn:
How to evaluate the defensibility and upside potential of early-stage marketplaces or SaaS, AI and web3.0 businesses that leverage network effects
How to evaluate the potential of a regular product or service to become a platform with network effects
What pitfalls to be aware of when evaluating such investment opportunities
Analysts at institutional funds, hedge funds and investment banks
What public market investors will learn:
How to evaluate the future prospects of mature platforms or SaaS and AI businesses built on network effects
How to evaluate the opportunities created by mature platforms for “rolling up” sellers on those platforms
How will blockchain technologies and big tech regulation affect competitive dynamics with network effects?
Early-stage start-up founders and their teams who are building network effects businesses
What founders wil learn:
What are the factors that determine the defensibility of the network effects their business is attempting to leverage?
How to best frame the competitive advantage of their business in order to attract investors?
What key metrics to look at in order to judge the progress of their network effects?
Andrei Hagiu and Julian Wright are leading experts on platform businesses and network effects, on which they have done research, consulting and investment work for over twenty years.
Together, they have published dozens of professional economics articles, nine Harvard Business Review articles, and a Substack newsletter, all focused on various aspects of platform strategy. They are also active angel investors in platform businesses, having invested in hundreds of startups (including Dapper Labs, Grin, OpenSea, Papa and Turing) and provided advice to many.
Andrei has taught MBA and executive education courses on platform strategy at HBS, MIT and Boston University for over 15 years. He has also consulted with ADP, Equifax, Hearst and Intuit – all on the topic of how to transform products into platforms.
Julian has taught executive courses on platform strategy and on winning with data at NUS and has consulted with Facebook, MasterCard and Visa, as well as competition authorities and regulators interested in digital platforms.
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The instructors of this cohort have been doing research on network effects and platform businesses for over two decades, have consulted for Fortune 500 corporations (including ADP, Facebook, Intuit, Mastercard and Visa), and have angel invested in over 200 startups that leverage network effects (including Dapper Labs, Grin, OpenSea, Papa and Turing).
This cohort makes you a part of a growing community of investors and founders passionate about funding and building the next big network effects businesses. Even after the cohort ends, you will continue to interact and learn with each other.
Get access to exclusive content through live sessions, Q&A with experienced venture capitalists, meetups, interactions with the instructors, and our student portal (even after you finish the cohort).
Platform businesses leveraging network effects have become the most powerful businesses in the world. Indeed, today they include many of the world’s most valuable companies. Not surprisingly, there are thousands of early-stage startups attempting to leverage network effects in order to become the next Airbnb, Alibaba, Facebook, Google or Uber. A few will succeed and most will fail. Partly because of poor execution, and partly because of unrealistic claims and expectations about the defensibility that network effects can create for their specific businesses.
Participants in this course will learn how to rigorously evaluate the upside potential and defensibility of business opportunities with network effects. What separates network effects that can support defensible businesses from those that do not? What are the key metrics to look at when evaluating businesses with network effects? How do competitive dynamics work in the presence of network effects and what are the key risks of disruption? What are the common pitfalls to avoid when evaluating investment opportunities with network effects?
To answer these questions, we will leverage economics concepts and frameworks that we have developed during our over 20 years of research on platform businesses, and that we use extensively in our own consulting and angel investing activities. We will apply these frameworks to discuss a wide range of startups and mature tech firms.
Session 1 - Network Effects and Defensibility
Today, almost everyone knows that network effects, when present, can be a great source of defensibility and unfair competitive advantage. However, most investors and entrepreneurs do not recognize there is huge variance in terms of how weak or strong network effects are, which ultimately determines whether or not they create defensible competitive positions. Accordingly, in the first session we will answer the following questions:
• What are the various types of network effects?
• What factors determine whether they are strong/weak and whether they create defensible moats?
• How can network effects be enhanced by product design?
Session 2 - Data Network Effects
Similar confusions and hype abound about the role of data and AI in creating sustainable competitive advantage. Accordingly, in the second session we will address the following questions:
• What are the different types of data-enabled learning and what factors determine the extent of compounding competitive advantage businesses can obtain from data?
• Under what conditions does data-enabled learning lead to network effects and how do data network effects compare with regular network effects?
• What are the most promising business applications of data and AI?
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Session 3 - Evaluating businesses with network effects
While the first two sessions focus on analyzing the potential for network effects and data to create competitive advantage, this session will focus on how to evaluate whether specific businesses are realizing that potential.
• What are the key metrics to look at when evaluating businesses with network effects?
• How to evaluate the platform potential of a business?
• How to evaluate the opportunities created by mature platforms for “rolling up” sellers on those platforms?
• What are the common pitfalls to avoid when evaluating businesses with network effects?
Session 4 - Looking ahead
New technologies like the blockchain and AI will usher in the next wave of platform businesses with network effects. Meanwhile, the unprecedented power of some of the large established platforms is creating resentment by their participants (e.g. Epic Games vs. Apple, restaurants vs. DoorDash and Grubhub) and attracting increased regulatory scrutiny. In this last session, we will address the following questions:
• What will the next wave of platforms look like?
• What will be the impact of web 3.0 on today’s large, centralized digital platforms?
• What new opportunities are being created by mature platforms that attempt to extract too much value from their participants?
• What will be the impact of big-tech regulation on the attractiveness of investing in network effects businesses?
Enrollments to the program end on February 2!
