Fin-tech reflections-1: Thoughts about Network Effects

After the lectureand the reading about network effect, I found these two things most inspiring.Firstly, the very idea of network effect or “Metcalfe’s Law”. Secondly, thefact that you can be the leader and only survivor in the competition even ifyour product is not the best in the market.

So, the very ideaof network effect opens the door for me to really appreciate the E-economy.Before this lecture, I did not know the idea, that the value of a product orservice increases as its number of users expands. This idea explains whycompanies like JD, Amazon are popular among investors, even when they fail to makea grand profit in the early years of their emergence. It must be the networkeffect! This idea is so popular that investors evaluate the company’s value bythe number of users’ expansion rate instead of the profitability of thecompany. From now on, I really will observe the E-economy from another angle.

What’s more, itastonished me that even if your product/service is not the best, you may still manageto be the winner in the market. I love this realistic, because my own mostdistinguish personality is that I persist. So, this is an sign that if you workhard enough and you are working towards the right way, you will succeed in theend.

Also, with thehelp of network effect and the financing ability of Qing Liu (the CFO of Didi),Didi became the monopoly in the travel management industry in China. No wonderthe press made such a fuss about Qing Liu. It is because she is so talented infinancing for Didi, so that Didi managed to subsidize the two-sides of themarket, and succeeded in the competition with Uber China. Well, it is a win-winsolution for Uber afterall, because after the merger, Uber can get investmentbenefits from Didi, now.

I also learnedabout the Moore’s Law and the Optical Law when I google for Metcalfe’s Law. Andaccording to the article I read, these three laws are the most fundamental lawsgoverning the Internet.

Last, I discussed with my classmate about ICBC’s

new product,” AI Investment”. We believe this product is aiming at our long

tail customers. And from the studying of long tail, I think I will be better

motivated to promote this product to our customers.