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cdixon | Six strategies for overcoming “chicken and egg” problems

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Products with so-called networks effects get more valuable when more people use them.  Famous examples are telephones and social networks. “Complementary network effects” refer to situations where a product gets more valuable as more people use the product’s complement(s). Two products are complementary when they are more (or only) useful together – for example, a video game and video game console, or an OS and an application for that OS.  Microsoft Windows gets more valuable the more apps are made for it, which in turn makes Windows more popular, which in turn leads to more apps, and so on.  Microsoft Windows is not more valuable simply because there are more copies of Microsoft Windows in the world, but because there are more complements to Windows in the world. Network effects can be your friend or your enemy depending on whether your product has reached critical mass.  Getting to critical mass in complementary network effect markets is sometimes called overcoming the “chicken and e

Products with so-called networks effects get more valuable when more people use them. Famous examples are telephones and social networks. “Complementary network effects” refer to situations where a product gets more valuable as more people use the product’s complement(s). Two products are complementary when they are more (or only) useful together – for example, a video game and video game console, or an OS and an application for that OS. Microsoft Windows gets more valuable the more apps are made for it, which in turn makes Windows more popular, which in turn leads to more apps, and so on. Mic

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