Network effects and early stage startup ecosystems

(Featuring Sam Altman, Naval Ravikant) Collecting cases to make a point about the indirect and potentially direct network effects in startup ecosystems — add your input for mgalli at mgalli dot com or here as comments. Example:

Case 2: You know something about Angellist?

[Naval Ravikant pending] Send to me mgalli at mgall dot com

Case 1: YC is a network-effect business

From the Blitzscaling talk [Sam Altman @ Greylock], John Lilly introduces the topic of Y Combinator being a network effect business — he points the article [Elad Gil]. Sam agrees, and first presents

2015 presented striking statistics:

  • 2500 accelerators in the world;
  • 8 billion+ dollar companies that have ever being created in any accelerator, and all of it from YC;

His explanation for such condition being that the early stage is a network effect business. “We have been very fortunate to pretty much dominate our stage of investing.” And, “the difference between number one and number two in our stage is like the difference between Facebook and like.. I don’t even know what is number two is anymore.”

The core point of value being:

  • The value you get is the network you get from YC alumni and other companies;
  • Sam recognizes the advice from partners as a more formal yet seems to be secondary;

Sam Altman @ Greylock. (Sep 30, 2015.) Blitzscaling 02: Sam Altman on Y Combinator and What Makes The Best Founders [video]. Retrieved from https://www.youtube.com/watch?v=CxKXJWf-WMg

Elad Gil, YC Is A Network Effect Business. (Sep 3, 2017). Retrieved from http://blog.eladgil.com/2014/09/yc-is-network-effect-business.html