Typically, a true economic effect is usually seen through average revenue per user going up (even adjusted for engagement) due to increased conversion rates largely due to the data network effect.

The engagement effect is best measured by looking at usage metrics such as time spent / posts made / transactions completed (or whatever the key atomic metric of engagement in the product is) and retention rates of various cohorts, with ideally later cohorts having higher retention rates off the bat, and older cohorts showing an uptick in retention... See more

The best way to measure the acquisition effect is usually by the percent of organically acquired users and the customer acquisition cost going down over time (within a network until a certain point).

Chen talks about how Network effects aren’t one singular effect, but rather made up of three distinct forces:- The Acquisition Effect which allows products to tap into their network to drive growth in users more cheaply as the network grows- The Engagement Effect which involves user engagement going up as the network grows- The Economic Effect whic... See more

Once you clear these five hurdles, however, there is more you can do to improve your probability of success at scale. You can design the right incentives, use marginal thinking to make the most of your resources, and stay lean and effective as you grow. You can make decisions based on the opportunity cost of your time, discover your comparative adv... See more

There are multiple ways an idea can fail at scale, and to achieve high voltage, you must check each of the Five Vital Signs: false positives, misjudging the representativeness of an initial population or situation, spillovers, and prohibitive costs. Any one of these alone can sink your ship.

Number two, I think, would be picking markets that don't exist

The first is probably not having a team that has the skills. You so often run into people who can't code, but want to do a startup and then don't have a co-founder who can code. That's probably the number one

What are the most common reasons for failure in this type of business that you've observed again and again?