Nice one @Slomo.

Another type of network effect that isn't often talked about in the investing community is the one companies like Microsoft, Google, and Amazon have.

These companies have large cash reserves and a strong desire for innovation, allowing them to hire top-notch developers and engineers. This leads to the creation of excellent products, which then attracts even more talented developers and engineers wanting to work for them, creating a powerful cycle of growth and innovation.

If you ask any promising developer or engineer about their dream job, most of the time, they'll say it's Google or Microsoft.

Don't know if its consider Network effect or whatever effect but That is serving them so well.

@Strawman I don't know the FDV business as well as long term shareholders but when I have looked, it strikes me as a "gonna company". It's always "gonna" realise all this potential and become a profitable business just like REA or CAR has been for a long time.

The truth so far though, is the business has lost a lot of money, losing between 4% and 30% of shareholders equity every year since listing. In turn they have mined shareholders wallets with so many capital raisings that there are now almost twice as many shares on issue as when they listed. And even with sales increasing from $2 million to $67 million since listing, losses were $13 million two years ago and $6 million last year.

So, sorry to be a debbie downer but the summary below is food for thought...

I could be wrong of course and they are about to become the next big winner but the numbers paint a different picture, so far.

@Karmast - right on. For me the numbers speak volumes at $FDV. Not even on my watchlist. Stories are great, but stories without numbers, not so.

An excellent point, and well made @Karmast

Lots of market place businesses that SHOULD have great network effects have fallen short of expectations (Camplify a recent example perhaps) -- which is a good reminder that it often pays to wait until there is evidence that things are unfolding as you'd hope.

FDV has certainly had good revenue growth -- but blunted by share issuance and yet to see much evidence of effective scaling (some at the EBITDA line, but less so much in terms of cash flow).

Still, they do own the leading brands in some fast growing markets, so the potential is there. Maybe all the growth CAPEX will start to bear fruit, but until then it's a wait and see for me.

For comparison with Frontier Digital, MercadoLibre (US listed) is on my research list at the moment. Often referred to as the Amazon of South America, operating in about 15 markets in the region. $14.5B US of sales last year up 37% on the previous year! Consensus estimates of 25% CAGR growth for revenue and 40% CAGR for EPS (according to TIKR) over the next two years. Another great example of network effects and in this case based in emerging markets.

While not directly the same as Frontier Digital, with MercadoLibre being a marketplace rather than a classifieds business. Which is a better investment? On a risk adjusted basis (and potentially absolute) MercadoLibre seems like a much better investment, its easy to back a winner that's already winning especially in these types of markets where winner tends to take all.

I also came on here to echo similar sentiments.

Despite its promise and riding the coattails of what should be an attractive business model (as local successes have shown), Frontier is well and truly a "show me" story for the market - strong execution is paramount. Glossy slides and soothing words ain't gonna cut it no more.

Like and own MELI directly, though the current price accounts for a lot of its expected success. Subject to wild swings sometimes though, so hopefully there's a few more opportunities to accumulate!