Letter no. 123

In economics, the network effect refers to the phenomenon where the value of the product or service rises disproportionately with the increase in number of users.

In our moneycontrol article today, we look at how this effect helps generate huge shareholder value (Microsoft, Facebook), let an inferior product retain market-leader status (PS2 vs. Xbox) and imparts huge pricing power (Apple music vs. Big Four record labels).

However, the existence of regulatory authorities possessing overriding powers can significantly disrupt the network effect’s influence and impact, as IEX is finding out off-late.

Read here: https://tinyurl.com/32cjj8dd

Our previous articles can be found here: https://www.buoyantcap.com/our-memos/

Disclaimer:

Information in this letter is not intended to be, nor should it be construed as investment, tax or legal advice, or an offer to sell, or a solicitation of any offer to make investments with Buoyant Capital. Prospective investors should rely solely on the Disclosure Document filed with SEBI. Any description involving investment examples, statistical analysis or investment strategies is provided for illustration purposes only – and will not apply in all situations and may be changed at the discretion of the principal officer. Certain information has been provided and/or based on third-party sources and although believed to be reliable, has not been independently verified; the investment managers make no express warranty as to its completeness or accuracy, nor can it accept responsibility for errors appearing herein