> Network effects mean that most internet platforms form natural monopolies
I'm not entirely convinced. I think it's more "unlimited VC money so platforms could operate at a loss for a decade" had way more to do with entrenching these "natural" monopolies.
I recall plenty of social media/video sharing/etc. sites back in the day. I hosted a number of them. They did not die due to lack of popularity, but due to lack of ability to pay for bandwidth and server costs. VC funded folks could just spam money for free, while being told to not even worry about revenue or monetization.
This is around the time the word "startup" became a joke - and instead described a vastly funded corporate enterprise vs. a couple guys in a garage.
Network effects are certainly a thing, but they are so warped by cheap money and the ability to operate for years at huge losses that I'm not convinced they are as strong as suggested. You had no way to compete with Youtube back then backed by Google money. They effectively had free bandwidth for a decade while they figured things out. Competitors actually had to pay bills and staff with actual revenue. The game was over before it began.
I'm not entirely convinced. I think it's more "unlimited VC money so platforms could operate at a loss for a decade" had way more to do with entrenching these "natural" monopolies.
I recall plenty of social media/video sharing/etc. sites back in the day. I hosted a number of them. They did not die due to lack of popularity, but due to lack of ability to pay for bandwidth and server costs. VC funded folks could just spam money for free, while being told to not even worry about revenue or monetization.
This is around the time the word "startup" became a joke - and instead described a vastly funded corporate enterprise vs. a couple guys in a garage.
Network effects are certainly a thing, but they are so warped by cheap money and the ability to operate for years at huge losses that I'm not convinced they are as strong as suggested. You had no way to compete with Youtube back then backed by Google money. They effectively had free bandwidth for a decade while they figured things out. Competitors actually had to pay bills and staff with actual revenue. The game was over before it began.