Valuable network businesses intermediate transactions without owning the underlying assets
Alex Lieberman · An Introduction to Network Effects · Apr 18, 2022 · at 7:42
Alex Lieberman, co-founder of Morning Brew, analyzes the core structural properties of modern marketplace and platform businesses based on Andrew Chen's book The Cold Start Problem.
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“The first really important point, networks, and especially the most valuable networks, are fascinating in that they connect millions or even billions of people, but they do not own the underlying asset that is exchanging hands. Airbnb doesn't own any homes, which is obviously very different from traditional hospitality, where Marriott or Hilton or Sheraton do own the hotels. Uber doesn't own any cars, which is very different from traditionally taxis and town cars. The companies own the cars. YouTube doesn't own creators. Apple doesn't own the developers that are creating games or apps that are offered on its app store, and so we live in this world where the value of the network is truly being the intermediary for exchanging value, but not actually owning that value yourself.”
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