Creating resilience in businesses

Asking Simon is Bitcoin really reliable when it's, when it's down 50%. Can I really be confident that I should invest in because it's around later on, that's based on belief and belief is not your thing, Simon can you show me the numbers or at least is, can you show me the thinking process? Why are you so confident? I want to answer that and take the chance to talk about network effects. Cause that's the main reason why things like Bitcoin, Google, Amazon are unstoppable is the network effect. And most people do not understand network effects. In fact, since 18 years, I'm a strategy advisor to the big companies of this world. And I have seen the network effects of Google, of Amazon firsthand at the very beginning. And I want to show you what the network effect is, why it creates resilience in businesses with a network effect are unstoppable, how you can use network effects for your small business microbusiness.


And then we go into the seven specific network effects that made up make up Bitcoin, right? So let's go into the network effects first. Why are some businesses not around anymore? That we're actually pretty cool businesses. Myspace, why is MySpace not around anymore? But Facebook is the answer is network effects. Why is Yahoo where it is and Google is dominating it. If you ask anybody what is Yahoo, they will say, well, it's this thing where you can Google stuff, okay. This is a network effect. And so let's go into some examples. We, we will identify 14 types of network effects, and I will give you an example. Each there are direct indirect and social network effects and the social network effects you can use, even if you are a free there or a so direct network effects are physical. Physical is for example, you are the, the German railways who is, who is a client of ours.


And you have literally rails railways. You have the physical infrastructure, same thing would be at and T when you have the physical infrastructure, you have a network effect because of course, when a train wants to move, they need your rails. They need rails. And who has rails? You have rails. Does your network effect. We call this E mode. It defends you against there. Competitors entering your field. If you have rails, it's harder to enter your field. If you have 300 Google reviews, it's harder for new firms to enter your field, right? That's why network effects are so relevant for you. Another direct network effect is a protocol. When the internet came, then there was this HTTPS protocol, and then it became a black hole for everything. And today, if you are CBS and you wanted, somebody sees your episode, where do you put it?

Effects in market networks

You have to put it on YouTube. Why? Cause it's on the internet. And the internet is where everything is. Why cause of network effects. So a protocol like Bitcoin is a layer on which upon network effects play. So if you can own parts of Paris, what would you like to, to own the streets, ground the buildings or the shops in the buildings, the streets, because upon the street is where things will change the street you will own for a hundred year. It will be appreciating in value because of network effects onto the streets. Things will change all the time. The buildings will change every 50 to 60 years inside the buildings. There will be companies, stores. They will change every couple months and years, but the street, if you own the street or the ground, that will be around a hundred years or more personal utility and and utilities, right?

Whatsapp, Twitter, specifically market networks, where you come for professional market like AngelList or LinkedIn, that's all direct network affects the more people on LinkedIn. The more value for you, right? As a new user to get onto LinkedIn. And if seeing has less users, then LinkedIn is more valuable. And if there is already a LinkedIn and you wanna start with a new LinkedIn, well, that's pretty hard to enter because they have already networked effects. Now let's go to the indirect ones. You have a two-sided marketplace, for example, eBay. And this is funny because people have tried to disrupt eBay and to, and to attack eBay. And it was impossible even with a better product than eBay because of the network effect. And it creates stickiness. Even when it is an indirect one, a, a flat or a marketplace, there are two sided.


They have two magnets and I will show you the two magnets in, in a moment in deep, when you have two magnets, for example, your Uber and Uber, even if it's an asymptotic marketplace, that means it is a network effect, but only until a certain point, let's say, let's take a city in New York and let's take a city Shanghai. All right. And you are Uber. So you have cars, you have drivers, you have the software, you are in New York. You need a cap. You wanna, you wanna get into a car now? How much more value is it? If they have 1000 users in Shanghai, maybe 1000. Okay. And then 1,300. Okay. Yeah. 1,400. Okay. Yeah. 1,300. No, I don't care. In New York. I want to get from this street to that street, there is a tipping point where having more users in Shanghai does not create more user value for me in New York.


When I need a cap that's tipping point. And if you have this tipping point, then you break the network effect. It's an asymptotic network effect where you just come up to a point and then it's, it's over still even with an asymptotic or indirect network effect. It's really hard. Imagine you, you have three billions us dollars and you wanna create the new Uber and you wanna enter it's it hard because of their network effects because the first user will measure your experience against the Uber experience. So you better have your very first ride happen in the first 10 minutes. Otherwise they will jump back to Uber. That's why the network effects protect your business and makes it resilient. You are much harder to copy, even if it's just data or tech effects like Skype, which are simple network effects. Now the social network effects, this is what everybody of you can implement.


And let me give you some examples. We had, we had the example of Yahoo. What is Yahoo? It's something that you can use to Google stuff, right? When you say Google as a verb, when your brand becomes the verb, now you have a social network effect. Meaning people will use it all the time. They will make your branding. They will make your marketing. They are your ambassadors now. And that's a strong network effect. It happens with Tesla. For example, Tesla has has small marketing, NPR budget. It's not true that they don't have budget. I, I know the PR people of Tesla, so they have a budget, but it's small compared to amount of people there who, who, who promote Tesla without being paid. And you have a couple of friends who talk Tesla all the time, or you have a couple of friends who talk Bitcoin all the time.

Why network effects

These are network effects and they are not paid by Bitcoin to do their marketing. And they're not paid by Tesla to do their marketing. They're not paid by CrossFit to talk about CrossFit all the time, but they're doing it. Why network effects. So that's the social part now that that's maybe hard for you to do, but something that is easier to do, people don't want to will be left out. For example when I was young the people who had a Ray band sunglasses were cooler than others or an Invicta Z Invicta a, a backpack from in, in Vita, in Italy would be cooler. You are in then if you don't have it that tells you how old, right? Nowadays you have beliefs. So you had the belief war in 2020, between the Bitcoiners and the gold people. And you had Peter, a Schiff believing in gold.


And you had Michael sailor believing in Bitcoin. Both are just beliefs at that moment in time. Cause we don't have the data for world. So both are beliefs, but they're strong. And they have moved millions of people to YouTube. And I was one of them. I was in the Michael sailor camp and it was strong and it created network effects. Now you have network effects in these court groups, in telegram groups. For example, I was researching if I should buy walks. And I had 10 things on my checklist. And if you know this channel, you know, the checklist one point was look at their community. So I went into their discord, I see 77,000 people in their discord. And that is a network effect. It was a, yes, let's buy some of these assets cause the product is good. The team is good. And now also 77,000 people in their discord.


It is validated to me, it's quite the risk of an investment, low risk high reward. Let's go. So telegram discord. This is something that you can do. Also the number of Google reviews we have 115 people on Google. When you look for a, a strategy consultant and you Google strategy consultant, you will find hundreds in your area, but you will probably find only one us strategy sprints that has 115 people, super fans they're writing, oh my God, I work with Stratis sprints. They doubled my revenue 90 days and they are real people. You can click on on them. They are real people. You can see what they're doing. What they're saying. There are videos on our website oh yeah. Website. So there are videos on our website where they talk about how this print was and how they doubled revenue days and how their team is now happier. And their life is better, et cetera. So that is a network effect. If you have 115 reviews raving about you and now somebody else says, oh, nice


Concept. Let me, let me use that concept. Let me build something similar. Well, they better have 100 reviews in the first week. Otherwise every new person on the internet reviewing goes, Hmm, that's the risk I go with these people. They have 115 yeses already. That's validated the other one. Yeah. Might be good. I don't know this one. Let's go. Same thing, like risk reward, risk reward. So these are the network effects. And this was part one of this video in part two, I will share the network effects of Bitcoin. The seven layers and of chilling is, and a couple other tokens. So stay tuned. Hope that help. Keep rolling.