All about Network Effects

Another unique thing about virality is that it comes and goes over time depending on the channels available. These viral channels are constantly in flux. Not true with network effects, which are more stable over time.

Network effects are defined as when the value of a company’s product or service increases as usage increases.That means the more users you have, the happier they are, and the cheaper it is to acquire new ones, which means your growth accelerates. Accelerating growth means exponential growth. You want to invest in and work at businesses that grow ex... See more

Network effects are about adding value and defensibility to your product. A network effect is when every customer of your product adds incremental value to all the other customers of your product so that it becomes difficult for customers to find any alternative product which gives them as much value.

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.