Page - 91 - in Digital Entrepreneurship - Impact on Business and Society

market entry. It helps furthermore tocopewith thechicken-eggproblembecause it indicateswhat side needs to be addressed first to gain traction on the platform. In addition, earlyevidenceon thestrengthof thenetworkeffects canhelp todesign the platform accordingly to reach a critical mass. The stronger the dependency of one user side on the other, the greater is the chance of a lock-in situation where users are kept in the system because of its inherent attractiveness. These lock-in situations can turn into winner-takes-all/- most situations where one company dominates the market. Conditions of winner-takes-all or -most scenarios can be characterized by single-homing on a market side (e.g.,Google for searchengines).Here,usersof theplatform(applies to all sides) only use one platform to get their job done. In amulti-homing scenario, users use different alternatives to fulfill their jobs (e.g., fashion e-commerce). It is very important for a platform business to knowwhether it provides its service to single-homing users or multi-homing users as it impacts the company’s need for Fig. 3 Venture pyramid for platform businessmodels Table 2 Risky assumptions on network effects SideA (demand side) Side B (supply side) Same-side network effects 1.We believe that users of SideA are attracted by the number/quality of relevant users of SideA 2.We believe that users of Side B are attracted by the number/quality of relevant users of Side B Cross-side network effects 3.We believe that users of SideA are attracted by the number/quality of relevant users of SideB 4.We believe that users of Side B are attracted by the number/quality of relevant users of SideA Development and Validation of Platform… 95