Invest Like the Best with Patrick O'Shaughnessy Bill Gurley – All Things Business and Investing - [Invest Like the Best, EP.137]
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Jul 2, 2019 
In this insightful discussion, Bill Gurley, a general partner at Benchmark Capital known for his sharp investment acumen, delves into the power of network effects in business. He explores how increasing returns reshape traditional investment strategies and highlights the importance of team dynamics in fostering these effects. Gurley also shares his fascination with user-generated content platforms and the evolving landscape of marketplaces, emphasizing their potential for growth and the significance of adapting revenue models in a rapidly changing market.
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Increasing Returns
- Increasing returns in business defy traditional economic thinking based on diminishing returns.
- Companies achieving significant scale find it easier to grow further, like Microsoft's OS and app ecosystem.
Network Effects Spectrum
- Network effects, while powerful, are often overused and misunderstood in startup pitches.
- They exist on a spectrum, with varying strengths and eventual decay points, like LinkedIn's diminishing value per new member.
Identifying Network Effects
- Analyze potential network effects by plotting value to the customer against market penetration.
- If the value increases with higher penetration, you likely have a network effect.
