Investment Approaches and the Benefits of Network Effects
Chris has invested in various areas such as hardware, energy, and advertising technology. Over the course of his investing career, he concluded that some things are more likely to succeed than others.
Network Effects is critical and has influence in every deal that Click Ventures makes. The company is focused on relatively asset-light companies that are either internet or mobile-based, and the company focuses on the highly scalable nature of these networks. This means they are able to build very strong barriers based upon network effects.
Understanding Network Effects
The Network Effect is simple phenomenon:
- The more people that you lure onto your platform, the more people you sell to
- The more customers you have → the better your product becomes which makes it easier to attract and retain new customers.
This leads to the flywheel effect – if you’ve invested then grow aggressively in the early stages, you can quickly globalize with relatively fewer assets.