Netflix founder Reed Hastings on the strategy of economies of scale vs network effects

A company can get started two or three years before us in Germany and we can knock them out in 12 months because we have great scale. And it's not a network effect where when ebay tried to knock out Yahoo Japan, they didn't succeed. And that's been permanent. And so if you're in a network effect business, then you get more of first is forever because the barriers are really strong. But if you're just in a scale business, Amazon, how quickly did they wipe out CD now? You know, in like 1999, like really quickly. It didn't matter that CD now had started earlier or something like. Or had more scale on that side. So again, I think it's really related to barriers. And these network effect barriers are so strong. There are scale economies. They're just not as strong as a barrier. So you can think of barrier as how much pricing power do you have, which could either be how much advertising or what the literal price is. And if you've got a ton of pricing power, then you can raise prices a lot. And it's still very hard to come after you because you've got that network.