Diagnose a “Network Effect” That Is Actually Just Paid Demand
Diagnose whether a platform is compounding through network effects or merely through spend.
GMV is rising, but the team does not know whether the ecosystem is actually improving user outcomes or simply attracting paid traffic. Diagnosis: separate acquisition from interaction quality -> segment supply quality -> inspect demand-side outcomes -> connect governance to network health The shortcut is to treat top-line growth as evidence that the network is compounding. That makes the organization underinvest in the real issues: discovery quality, participant standards, and whether the marginal participant helps anyone else succeed. Check interaction outcomes Compare response quality, repeat purchase, and time-to-relevant-choice before and after the growth push. If the network effect is real,…
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