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a16z Podcast

Network Effects, Moats, & the Business of web3

a16z Podcast

a16z

Science, Innovation, Business, Entrepreneurship, Culture, Disruption, Software Eating The World, Technology

4.41.1K Ratings

🗓️ 23 June 2023

⏱️ 78 minutes

🧾️ Download transcript

Summary

A deep dive and tour through key business concepts -- from competitive advantage and Porter's Five Forces, to network effects and moats -- as builders of all kinds navigate business strategy in open source, and especially web3. How does one compete when you're building (and competing) in the open?

Transcript

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0:00.0

How strong is the network effect? How much pull do users sort of exert on each other

0:06.2

does the platform sort of achieve over time? There's a much greater threat in Web 3

0:11.1

that like your entire network could just get like moved to a competitor

0:14.6

could even be like a copy. There's an opportunity when convert your users into

0:19.1

people who have a true preference for your platform. They actually want to use your platform over competitors.

0:25.4

The ideal of Web 3 is not that you sort of have these platforms

0:29.6

that have locked in a bunch of users

0:31.0

and are just extracting value from them.

0:33.0

To the contrary, you have engaged users who are sort of in a real sense like part of the platform.

0:39.2

In web one, you were the consumer.

0:41.4

In web two, you were the product, and in web three you are the consumer. In Web 2 you were the product and in Web 3 you are the brand.

0:45.9

Hey A16C podcast listeners, this is Steph, but today we actually have a very special treat

0:51.9

which is longtime showrunner, Sodom Choxi returns for this episode and

0:55.9

she is joined by Scott commoners and together they discuss a subject very near and dear to

1:02.4

A16C network effects.

1:05.6

They discuss so much, including the misconceptions

1:08.8

when it comes to network effects,

1:10.4

how to effectively kick-start them

1:12.2

and bring in the right types of users early,

1:14.0

and also how competitive forces change with web 3.

1:18.0

For example, protocols can be immediately forked

1:21.0

and users can exit more easily. So how do you build something that's really... immediately for

...

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