Achieving Network Effects: The Case of Katoo

Products are said to exhibit network effects if a user’s utility increases as more users adopt the same good. Network effects are a characteristic of information technology and communications products, and as the business environment becomes more heavily based on information systems, it is relevant to distinguish the specificities of network effects products and how a rigorous tracking of its key performance indicators may be critical to their success. This report results from an internship at Katoo, a Spanish start-up that recently expanded to Portugal, which provides digital procurement tools to ease the communication between restaurants and their suppliers, bringing accuracy to their transactions. The main objective of the internship was to acquire the company’s first Portuguese clients and to achieve an initial user base that would allow network effects to flow. Going over to a literature review concerning the benefits of the food supply chain’s digitalization and network effects’ particularities, followed by an extensive description of the company’s products and processes, it was possible to analyse some of the strategies used by the company and its pertinence in the context of the Portuguese market, through the internship experience.