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Internet Maturity & the Growing Importance of Network Effects

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John Luttig, from Founders Fund, recently wrote a great post outlining the macro-level challenges facing the startup ecosystem. It is worth reading in its entirety, but here’s a summary for the purpose of this post: Over the past decade, the surge of consumer and enterprise software startups has been fuelled by rapid growth in internet adoption. Now as adoption nears saturation (or maturity, as described by Carlota Perez on her Technology Surge Cycle), the tailwinds pushing the market forward are getting weaker. At the top of this S-curve, there is less opportunity to create new markets by targeting “non-consumption”. Instead, startups will need to challenge incumbents who were themselves VC funded startups until recently. In other words, the pie has stopped growing (or its growth has slowed), so now everyone needs to fight for a slice. While there is certainly a lot of truth to this, it is in the nature of macro-level analyses to obscure micro-level details. And these details often present the most valuable opportunities.


Go to for more analysis on the mobile industry


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