Nick Griffin, Head of Investments at Munro Partners, says network effects strongly dominate the digital business world. A network effect is when a good or service becomes more valuable as it’s more widely adopted, creating a virtuous cycle. Examples include Google, or closer to home, CarSales.com.au and RealEstate.com.au. “Once you have that network effect, for instance, with CarSales.com.au, it’s very hard to take it away… Ultimately, it’s not the customer who pays REA that is deciding whether to search at REA or not. It is the consumer, and the consumer is looking at it for free.” In this video, he explains why even Google has failed to compete against businesses with established network effects.
Nick is a founding Partner and the Chief Investment Officer of Munro Partners. He is responsible for the investment management of Munro’s key investment funds and the formulation and implementation of the proprietary investment process.
Good clip/article. Have you looked at ASX-listed Updater (UPD.ASX). Ticks a lot of the boxes to achieve network effect...