Crossover network effects are when buyers in a marketplace also become sellers, and sellers become buyers, creating a rich, interconnected ecosystem 🔄

For example, Depop is a used clothing marketplace, and many people who sign up to buy clothes on the platform end up selling their own clothes on Depop later 🛍️

Within marketplace businesses, crossover network effects are a superpower that can accelerate growth and create an even stronger competitive advantage than network effects alone 📈

This is because marketplaces need to acquire both buyers and sellers in order to grow, so acquiring one user who can do both is usually cheaper than acquiring two different users!

In addition, this overlap can foster a strong sense of community.

Users who are both buyers and sellers tend to be more invested in a platform's welfare and reputation 🤝

Marketplaces benefiting from crossover network effects also tend to have better user engagement and retention than marketplaces without them 🛡️

This is because users who are both buyers and sellers just have more stuff to do on a marketplace, so they’ll spend more time on the platform.

As an investor, recognizing crossover network effects is crucial, as their presence can suggest a higher potential for growth, user engagement, and long-term value 🚀