I first realized the power of network effects from my experience at lastminute.com, a late 90s Web 1.0 company. I joined as part of the founding team in the travel space. We were providing a travel marketplace for everything from flights, hotels, tickets, to car hire. At the end, it was a phenomenal success. It sold for over a billion dollars in 2005. After lastminute.com, I moved to Silicon Valley to attend Stanford and stumbled across the real estate industry and ended up attending a real estate conference. Driving back that day, I started to connect the dots and see how what had happened in European travel was going to happen to the U.S. real estate industry, where there would be a marketplace that would provide transparency to the consumer as well as provide a platform to help the supply side market the goods and services. So I set out to build a marketplace in the U.S. real estate industry that became Trulia. I really thought about it from the principle of, how can I amass as much supply as quickly as possible and then track consumers on top of that? How do you find fragmented supply in this high-value transaction and build a better user experience on top of that to help consumers find exactly what they need?

My entire career has been about network effects. The three jobs, all of them fundamentally been network effect companies, two unicorn companies, and with NFX, helping to invest and help the next generation of phenomenal network effect businesses. The partners at NFX are focused on giving you the power of network effects, the insights, the tactics, the hidden secrets to enable you to incorporate those ideas into your startup from day one.

Why You Should Care About Defensibility From Day One

Defensibility really means resilience. And the fact that companies can survive against what the reality will be of any successful business is an onslaught of competitors and substitutes. Understanding how you can build defensibility early on means not only can you have a successful company, but also you one that can dominate the category it's executing in. You should care about defensibilities from the early stage of building a business. There's so many things as a startup founder you need to focus on and looking at how do you not just build an interesting product or an important company, but one that doesn't have substitutes at scale and thinking about the different types of defensibilities you can build in in a startup to ensure that you have the opportunity to become a category-leading company and to dominate your industry.

There are four major defensibilities in the digital world. Of course, there's network effects, but beyond that there's brand, embedding, and scale. You can build a really interesting business that's not number one, that doesn't have network effects, but the real opportunity is if you're able to incorporate these network effects early on and find industries where they can have massive defensibility at scale. That's the way to build category-defining companies with ultimately huge market valuations. But it's critical you think about network effects from the beginning. It's so much harder to add those in at a later stage, and picking businesses and markets and products that can have that network effect at the beginning is critical to enabling you to incorporate those later on.