Network Effects And Scale Economies (aka Spolsky vs. Heinemeier) | Hacker News Reader

Network Effects And Scale Economies (aka Spolsky vs. Heinemeier)

continuations.com

24 pointswheels7 comments

Hardly any software company would be willing to share such stats. I like the marketplace idea tho.

Sometimes growth is the problem. I've worked for companies who were great when they were small, eager companies with solid products, and screwed everything up trying to "go big".

That is not exactly what the article is about though. It's talking about the positive network externalities involved in tech products, and the conclusions that you need to draw from that. In other words, in some cases you have to go big, at least in terms of market share. Think about eBay - everyone sells there because everyone buys there and vice versa. Unless they shared data, it would be difficult/inefficient to have 100's of small eBays, whereas with a bug tracker, it's not really that big a deal if I use redmine and someone else uses JIRA and someone else uses spolsky's thing.

The network affect of a bug tracker is that having a larger user-base means:

(a) more people have run into the same problems as you, and have either posted their own solutions or pressured the company into fixing them (b) more people may have built extensions on the product (c) more people may have written helpful tutorials on the product (d) more people will know what you're talking about when you speak in the product's language.

I think there needs to be more 'marketing' around the idea of simple software that's easy to use and doesn't screw up. Not enough people really appreciate these things in the quest for more features.

The network externalities are not nil for a bug tracker, but most of the value you get out of it is the value you get out of the product itself. "Externalities" refers to value that's not included in the transaction: buying the software, in other words.

For instance, a cheap land line style phone is basically completely worthless without a phone network to hook it up to - the value is entirely in the network. You'll get some small benefits out of your bug tracker having more users, but they don't seem all that large when compared with more network-centric products like eBay or facebook.

Agreed. But the amount of value you get out of the product vs network is subjective to the user and to the product. It depends on how independent you are as a product user, and how easy the product itself is to use.

Take Microsoft Windows for example. Regardless of its own intrinsic value, I think that a lot of people would chose it over, say, a Mac (or Linux) purely based on their own social network, due to the ease of which they might be able to get help and share experiences. The opposite is also probably true (if everyone you know uses a Mac, you'd be more inclined to use one yourself).

For those that like what some other OS has to offer, and they aren't afraid of figuring things out for themselves, then they would go with that regardless of any network effect, because they're more interested in the value of the product itself.

In the spolsky article referred to by the top post, spolsky says "I had to wonder. We do have a large competitor in our market that appears to be growing a lot faster than we are. The company is closing big deals with big, enterprise customers. And the wheels are falling off the donkey cart over there as the company stretches to fulfill its obligations. Meanwhile, our product is miles better, and we're a well-run company, but it doesn't seem to matter. Why?"

Does anybody know what fogbugz-competitor product Joel is referring to?

UPDATE: probably jira.

Reply on news.ycombinator.com