The Luxury Network
How Apple’s brand took the company to a trillion dollar market cap
This piece was updated on August 2, 2018 to reflect news of Apple’s $1 trillion valuation.
Over the past several decades, a unique phenomenon has arisen out of general societal connectivity: network effects. Their definition is simple — a network, unlike an excludable good, becomes more useful as more people use it. This is a historical anomaly. For millennia, humans fought over scarce resources to survive. Obtaining a scarce resource meant one unit of said resource that could not be used or consumed by another individual. The playing field was “zero-sum;” there would inevitably be a winner and loser in the fight over a scarce resource. As more people joined that fight, they became worse off. Networks flipped that idea on its head; instead of increasing competition over scarce resources, access to said resources improves as the network grows.
Uber is a perfect example. Their business model is to connect riders (consumers) with drivers (producers) as quickly and cheaply as possible. To do this, they must control one, fundamental piece of the equation: demand for rides. Once Uber aggregates a critical mass of riders (assumed, for the sake of the example, to be more than are using any other platform), their platform becomes objectively more valuable to…
