INCREASING RETURNS

Check for externalities.

The initial stages of exponential growth looks as flat as any new growth. How can you detect significance before momentum? By determining whether embryonic growth is due to network effects rather than to the firm’s direct efforts. Do increasing returns, open systems, n2 members, multiple gateways to multiple networks play a part? Products or companies or technologies that get slightly ahead–even when they are second best–by exploiting the net’s effects are prime candidates for exponential growth.

 

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This is a blog version of a book of mine first published in 1998. I am re-issuing it (two posts per week) unaltered on its 10th anniversary. Comments welcomed. More details here.
-- KK