Girls Who Invest: A Road To Success
A network effect is a concept whereby the value of the service provided by a platform increases as more users join. Consider a platform like Facebook as an example. For each additional user joining Facebook, Facebook becomes more valuable to advertisers as they can find diverse individuals interested in their advertisements. This is an illustration of a two-sided network effect.
Many platforms have or will h
ave a strong network effect, but they might be hard to see initially. Because the advantages aren’t immediately apparent, people frequently underestimate these platforms with slower networks. In typical circumstances, such as social media platforms, network effects are readily perceived and recognized. In this article, I use network effects to examine Girls Who Invest, an educational non-profit, assessing the types of nodes and the total value of its network as time passes.
In order to increase the number of women in senior leadership and portfolio management positions in the asset management industry, a nonprofit organization called Girls Who Invest (GWI) was established in 2015 [1]. The organization’s summer program offers four weeks of educational training led by prominent university professors to sophomore women in college interested in investment management. This is followed by a seven-week paid internship with a partner company. This program has a strong emphasis on empowering women from socioeconomically disadvantaged backgrounds and those who belong to historically underrepresented minorities.
We observe three things when we analyze how network effects fuel this educational program. GWI’s user base of students and partners demonstrates classic network effects. As Girls Who Invest gains students of high caliber, they would, in return, be able to:
- Expand their network value since more alumni lead to prospective connections who may give current students mentorship on job opportunities or professional advice.
- Find more partner companies who want to choose to hire GWI scholars as interns or full-time employees.
- Gain partnerships with universities and educational institutions who are willing to host education sessions to educate GWI’s students further
GWI gains credibility by accepting highly qualified sophomore women interested in a career in finance. These sophomores apply to the GWI application, which opens once a year. These women showed promising futures as they would then gain internship experience at firms that partnered with GWI. Interns would then go on to accept full-time roles later on in their careers at reputable companies, which is where GWI closes a singular loop.
Here we can see that programs such as GWI or educational organizations have long feedback loops and user cadence spans over two years. In contrast, social media platforms like Facebook have fast networks where users can gain access to the forum and see the value of their participation immediately.
GWI benefits from its ability to identify students that are made to succeed in asset management. This loop further plays into the ability of GWI to maintain and grow a solid alum base, as alums can help incoming GWI members and encourage others to also find reputable full-time offers. Companies that partner with GWI would want to continue this collaboration, and more firms would want to join as they feel candidates are highly skilled and may add to their company’s value. Colleges would continue to support GWI’s educational presence on their campus as they would feel as though they are contributing to this social goodness. It takes two years for GWI to close its loop, as that is when its members would get full-time positions. This added value, while delayed, is able to give the non-profit quality connections.
GWI’s network is characterized by a lag between the creation of the network and the emergence of value. Higher education and other programs of education progress considerably more slowly than even GWI since their benefits are seen over a much longer period of time. The benefit of GWI networks is that, once established, it would be typically difficult to replace. This reality can be seen as it has partnered with several prestigious colleges including Notre Dame and the University of Pennsylvania since 2015 [2]. In the end, GWI’s business model is able to not only create a reputable brand for itself but also empower women’s voices across corporate America.
Reference:
- https://www.girlswhoinvest.org/sip
- https://news.nd.edu/news/notre-dame-girls-who-invest-partner-to-advance-women-in-finance/