The Intentional Network Effects of Uber

NFX
NFX
Dec 20, 2017 · 2 min read

by James Currier (@JamesCurrier). James is a Managing Partner at NFX, a seed-stage venture firm based in San Francisco. NFX also builds free software tools for Founders, like Signal — the fastest way Founders find their intro paths to top VCs.

In light of Uber’s IPO, we’re releasing our Inside the Marketplace podcast about the 5 Lessons Founders can learn from their path to market dominance in addition to the in-depth teardown of Uber’s network effects strategy below.

Uber’s biggest asset is their network effects, and they know it. In their S-1 they emphasized that “the foundation of our platform is our massive network.” But there are cracks in that foundation.

Although network effects are the best type of defensibility still remaining in the internet age, Uber’s core network effects are deceptively weak. As we’ve described elsewhere, not all network effects are created equal. Uber’s network effects are asymptotic rather than true 2-sided marketplace nfx. Not nearly as strong.

Realizing this, Uber has made a series of moves to reinforce their core network with other defensibilities. Heading into their IPO, their success as a public company will depend on how effective those efforts prove to be.

In this essay, we look at Uber from a few angles:

This essay was originally posted on nfx.com. This is just a sample. Click here for the full essay.

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