We always fail to estimate complex systems such as Platforms and one such platform where an interesting mental model is at play is Affle India Limited ! The mental model I am referring to is Network Effect .
The network effect is a phenomenon whereby increased numbers of people or participants improve the value of a good or service
. The Internet is an example of the network effect. Initially, there were few users on the Internet since it was of little value to anyone outside of the military and some research scientists.
However, as more users gained access to the Internet, they produced more content, information, and services. The development and improvement of websites attracted more users to connect and do business with each other. As the Internet experienced increases in traffic, it offered more value, leading to a network effect.
The chief hurdle for any good or service that uses the network effect is gaining traction or attracting enough users initially so that the network effect takes hold. The amount of users required for significant network effects is called the critical mass. After Critical mass is attained, the good or service attracts many new users because the network offers utility or benefits to the consumer. In this way, the prospect of the network effect helps companies strive to become self-sustaining.
Therefore, In this video I am demystifying the jargons of Digital advertising space for Investors so that you don’t miss out on the this Network Effect in action at this stock ! Don’t miss watching this threadbare analysis of this #multibagger from #SadhanPortfolio
Watch the video here