Cloud 210: Exam Results

Here’s hoping you haven’t lost your taste or touch for our regular weekly class quiz. Today, we are reviewing the fundamentals of the network effect and the value propositions that are so critical to the success of network payments models.

Question 1: Which of the following is NOT a key component of the basic network effect?


a) Positive Externality (14%)

b) Positive Feedback Loop (0%)

c) Self-Perpetuating Motion (57%)

d) Ancillary Attraction (29%)


Question 2: What is the most important and fundamental driver of the network effect?


a) Growth in participants (43%)

b) Transactions between participants (43%)

c) Technology driving the network (0%)

d) New competitors disrupting the ecosystem (14%)


Question 3: According to the basic definition of networked businesses, which of the following is a true network business?


a) Electronic payments program (71%)

b) Social media platform (29%)

c) Technology driving the network (0%)

d) New competitors disrupting the ecosystem (0%)


Question 4: Which of the following strategies is the most critical to successfully growing a network-effect business?


a) Attract Participants (29%)

b) Drive Interactions (14%)

c) Add Value (57%)

d) Maximize Profits (0%)


Question 5: Which of the following payments ecosystem participant groups is best-positioned to adapt to change, as described by Charles Darwin in evolutionary theory, when considered in the context of change in the payments industry?


a) Third-party processors (issuer, acquirer, etc) because they are most attuned to financial institution needs (14%)

b) Payments networks, because they are ruthlessly focused on maximizing the benefits of the network effect (14%)

c) Emerging online payments competitors, because they have most rapidly adopted open-platform, distributed innovation disciplines (29%)

d) Banks, because they have exhibited the best combination of reliability, perseverance, and relevance over the past several hundred years (14%)

e) None of the above. The next generation of payments leaders will come from networked businesses outside of the current payments industry (14%)