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Just because you have a huge base does not mean that you have a business that is going to create value. I'll refer you to Arthur and Moore once again.

Not all networks will turn into great businesses. What about Ka-zaa? That is a hugely powerful peer-to-peer network. But is it a great business?

Certainly there are first mover advantages in network effect situations. And its the first one into the "tornado" that usually wins. But not every network will turn out to be a great business.

If Skype was such a dominant force before eBay bought them, how come they could only create $1 of sales per user? I think it's because as a stand alone, it wasn't necessarily going to create tons of value.

BTW, first mover advantage is not baloney.

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