5.2 Why Some Things Get More Valuable When More People Use Them - Network Effects
A social media app with one user? Lame. A club with only two members? Meh. Welcome to network effects - the reason some things explode in popularity!
Have you ever been on a new social media app that none of your friends use? Kinda boring, right? But once a bunch of friends join, suddenly it's fun and buzzing. That's because of network effects. Simply put: some things become more valuable or better when more people use them. It's like a party – the more people show up (up to a point), the better the vibe.
What are Network Effects?
Network effects happen when each new user of a product or service adds value to the existing users. Imagine a phone: one person with a phone is useless (who can they call?); but if all your friends have phones, each phone becomes super useful because you can call or text anyone. The "network" of users creates the value.
In teen lingo: stuff is more fun or useful when your crew (or a big crowd) is on board.
Real-Life Network Effects Examples
Social Media & Messaging: Think about a messaging app like WhatsApp or a platform like Instagram. If you were the only user on Instagram, it would be the lamest app ever: no posts except your own, no one to like or comment. As your friends join, your feed fills up, you get comments, DMs, etc. Instagram becomes more valuable to you. The app didn't change – the number of users did. Same with any game with an online community: a game like Among Us or Fortnite is only fun if other players are online. More players = quicker matchmaking, more diverse gameplay, maybe even bigger tournaments or community content. The network of players adds to everyone’s experience.
School Clubs or Group Projects: A club (say drama club or science club) might start with 3 people. With just 3, you can't do much of a play or a big science project. If 10 more join, now you have enough actors for a play or enough brains and hands to launch a big science experiment. Each new member adds ideas and effort, making the club better for all members. That's a network effect in your school! (Of course, if it gets too huge maybe it's chaotic, but generally up to a point more people = more fun events, more resources.)
Online Platforms & Games: Some platforms literally rely on network effects to exist. For example, TikTok: the more creators on TikTok, the more content for users, which attracts more users, which attracts more creators... it's a positive feedback loop. Or trading card games: if more people in your area collect and play, your own cards become more fun and maybe more valuable because you have people to trade with or compete against. If only you collected Pokémon cards in your school, you'd have no one to battle or trade with (sad!). But if half the school collects, it's a thriving scene and your collection is part of something bigger.
Network effects can also have a downside: if something becomes too popular, it might get crowded or laggy (like a server overloaded with too many players). But the key idea is that popularity can make a product/service inherently better for everyone using it.
Challenge: Leverage Network Effects
Time for a social experiment. Your challenge:
Identify something in your life that would be better if more people joined or used it. (Is there a new app or game you're on that few friends know about? A club that could use more members? A group project where more help would be awesome?)
Do one thing to encourage network growth. For example, invite a friend to the app/game or promote your club at school to get newbies. Even convincing your family to all use a shared to-do list app can be an example.
Observe and note what changes as more people get on board. Did the app/game become more engaging? Did the club manage to plan a cool event with extra members?