Platform Dominance Shifts from Network to Cognitive Effects, Argues Kirsten Green

Venture capitalist Kirsten Green, a prominent figure in the tech investment landscape, has outlined a significant shift in how companies achieve and maintain platform dominance. In a recent analysis, Green posits that the long-standing reign of "network effects" is giving way to "cognitive effects," fundamentally altering competitive advantages for digital platforms. This perspective, shared by investor Kevin Gee on social media, highlights Green's continued influence in identifying emerging market trends.

Historically, platform success was largely predicated on network effects, where a product's value increased with the number of users, as seen with social media giants like Facebook or e-commerce platforms like Amazon. However, Green argues that the new frontier is "cognition," referring to a system's ability to deeply understand and anticipate individual user needs, making switching services "painful and often unjustifiable." Examples like Spotify's personalized Daylist, Google Maps' predictive navigation, and Oura's health insights demonstrate this evolving moat.

Green, the founder of Forerunner Ventures, emphasizes that cognitive effects are personal, cumulative, and align with individual users, creating millions of "microsystems" rather than a single dominant ecosystem. This deep understanding fosters loyalty and makes a product irreplaceable over time, as each interaction sharpens intelligence and improves predictions. The technology, user readiness, and aligned business models, including subscription and privacy-first approaches, are converging to make this shift possible.

The "art of cognitive design" involves principles such as bringing customers along, selectively showing how the system works, and prioritizing depth over breadth. Green suggests that startups are particularly well-positioned to leverage cognitive effects, as they can design for cognition from the ground up without the architectural constraints of incumbents. This approach allows companies to build an "unassailable position one user at a time," rather than needing to win the entire market simultaneously. The ultimate vision includes a "Portable Cognition OS," enabling personal intelligence to travel securely across various applications.