Monday, July 9, 2007

Competition vs. network effects

On Saturday, I got an invitation to join Doostang. My initial impression was that it was something like LinkedIn, to which I already belong.

After reading a little further — including a semi-official self-promotion — I concluded that Doostang is something like LinkedIn, except later and smaller. (They would say “more exclusive”). A little googl’ing showed that blogger Matt Huggins did a great job (last week, as it turned out) comparing LinkedIn, Orkut, Doostang and other similar business/career networking sites.

I like competition in dot-com commodities. I have logons for Travelocity, Orbitz and even Expedia; if I don’t like the Amazon price, I check B&N. It goes without saying that I check multiple news sites.

But, as I concluded in my dissertation, Herb Simon is right when he says humans make decisions based on bounded rationality. (This is a bit of an obvious conclusion since he won the Nobel Prize for this finding). In particular, I found that computer users satisfice rather than optimize on their computer choices: if a software package is good enough, they don’t bother to look for the best possible one. And if they have enough software, they don’t look for more software just because it’s there. (Games or movies with novelty-seeking would have a different dynamic).

So why would I want Doostang if I already have LinkedIn? I already turn down Plaxo requests for contact maintenance because I use LinkedIn for that purpose instead. Although he doesn’t list his sources, Huggins estimates LinkedIn at 11 million members and Doostang at 125,000; since the value of being a member of a network grows with the size of the network, LinkedIn is potentially 90x more valuable.

Various sites say Doostang has been around since 2005, but this week is my first invitation. So right now it doesn’t look all that valuable. And for me LinkedIn is more a way to stay in touch with friends than pursue career opportunities, since job mobility in academia is roughly one new job every 10-40 years.

Technorati Tags: ,


Hui said...

True, network effects is everywhere. I use MSN although it is slow and silly.
I think, before,network effects links machines, now, it links brains and people. That comes innovation.

Anonymous said...

Belonging to several networks may put you in a better position since people tend to be rather segmented in the social networking world..geographically, by age, profession etc... So depending on your objectives, perhaps small networks are not so bad afterall ?!