So Groupon is a real company. But it seems unlikely that it’s going to become a revolutionary company, along the lines of YouTube, Facebook, Twitter, and Google. Most of the companies that have transformed the Web have certain things in common. They have distinctive technologies. They benefit from what are usually called network effects: the more people who use the service, the more valuable the service becomes. (You’re more likely to use Facebook or Twitter when lots of your friends have signed up, and the more people there are who use Google the more accurate its searches become.) Most important, they scale easily, meaning that they can grow very big without much additional effort. To be sure, the more users Twitter and Facebook have, the more servers they have to buy, and so on. But the genius of these companies is that their users do most of the work and create most of the value; once the ball is rolling, it’s the users who keep pushing it along. “Groupon, Google, and value on the internet”, James Surowiecki in The New Yorker
Tags: business 4 notes | | Jan 11, 2011
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