Viral Effects Are Not Network Effects

However, it’s also true that a lot of network-based utility only is realized at some level of scale. (As per NFX: “The simplified definition of network effects is that they occur when a company’s product or service becomes more valuable as usage increases.)

One important lesson here is that engagement matters to network effects. A first level understanding of network effects is that they occur when more users = more value for existing users. That’s true, but go one level deeper, and you realize it’s actually the amount of usage that matters.

Network Effects are the foundation of many great Silicon Valley technology companies/ You need users to make a product work – network effects are the results of positively connecting people through technology which organically makes that technology better.

This is where the classical definition of a “network effect” is wrong. I redefine it so that it’s not one singular effect, but rather, three distinct, underlying forces: the Acquisition Effect, which lets products tap into the network to drive low-cost, highly efficient user acquisition via viral growth; the Engagement Effect, which increases inter

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Data Network Effects, 6 Elements