Metcalfe's Law
Robert Metcalfe · 1980
"A network's value grows roughly with the square of its users, which is why the first users of a network are the hardest to get and the last are nearly free."
Metcalfe sketched this on a slide in 1980, years before anyone called it a network effect: a network's value scales with the square of its connected users, not linearly.
If a network has n users, possible connections grow as roughly n². Metcalfe used this to sell Ethernet: a network of 10 devices is worth far more than ten times one device, since value comes from connections, not nodes. George Gilder popularized the name in a 1993 Forbes piece, and it became the logic behind every platform's race to reach critical mass first — early users get a network nobody wants yet; late users get one everybody needs.
Why does Metcalfe's Law make a platform's early users disproportionately hard to acquire, and later users disproportionately easy?
Read more about the topic
The explanation above is written with AI assistance. These are the originals — go to them to check it.
- Metcalfe's LawWikipedia
- Beyond Metcalfe's Law for Network EffectsAndreessen Horowitz (a16z)
Six Degrees of Separation (The Small-World Experiment)
"Any two strangers are connected by a surprisingly short chain of acquaintances, because social networks are far more efficiently wired than their size would suggest."