Comments on: Elasticity for Entrepreneurs

By: Rob

Rob — Thu, 30 Mar 2006 15:52:03 +0000

LOL! It’s a body double. I have that clause in all my contracts.

By: David G

David G — Thu, 30 Mar 2006 01:23:59 +0000

BRILLIANT, simply brilliant.

Attention elasticity = Price elasticity in a “freemium” world. Why web2 VC’s are not beating a path to your door, I don’t know (maybe they are).

Now, is that your finger or a body-double?

By: Rob

Rob — Wed, 29 Mar 2006 19:51:42 +0000

I think network effects will hold up in industries that hold up. What I mean is that if no one is interested in web auctions then ebay’s network becomes irrelevant. Of course, people will continue to be interested in web auctions, so ebay is fine. But, will they stay interested in these other new fads?

The problem with these social sites and online communities is that a small percentage of the community is responsible for the majority of the activity and page views. MySpace, Facebook, etc. aren’t as popular as the numbers that they quote would lead you to believe.

By: Mark

Mark — Wed, 29 Mar 2006 08:44:30 +0000

Hi Rob, I like your thoughts on elasticity. With social media abuzz, how do you think network effects will hold up?

They’ve been killer for web 1.0 inelasticity – consider how eBay outlasted free and more featured rivals – but most entrepreneurs now know their value. Competing social media companies that launched at similar times can’t rely on first-mover advantage to outpace rivals. I think that means satisfying users (!) will determine success more this time around.

An example is how MySpace entered late but trumped Friendster and Orkut with features, interface, and availability. Facebook also entered after MyCampusNetwork and earlier attempts, but is now dominant, arguably by limiting access. What will the web 2.0 lessons on network effects be?

By: triticale

triticale — Wed, 29 Mar 2006 04:51:45 +0000

Elasticity depends also on market sector. During the post-Katrina runup in gasoline price, sales at the gas station near my home in the inner city dropped significantly. A non-trivial percentage of driving around here is non-essential, and people decided to forego cruising the scene in their donks and hoopties until the cost came back down.