## Highlights - In its classic usage, a network effect describes what happens when products get more valuable as more people use them. ([Location 564](https://readwise.io/to_kindle?action=open&asin=B08W2ZSWRL&location=564)) - The “network” is defined by people who use the product to interact with each other. ([Location 615](https://readwise.io/to_kindle?action=open&asin=B08W2ZSWRL&location=615)) - Although the networks don’t own their underlying resources, it’s the connection that matters. The entire ecosystem stays on because the value is in bringing everyone together. That’s the magic. The “effect” part of the network effect describes how value increases as more people start using the product. ([Location 625](https://readwise.io/to_kindle?action=open&asin=B08W2ZSWRL&location=625)) - how do you tell if a product has a network effect, and, if yes, how strong is it? The questions to ask are simple: First, does the product have a network? Does it connect people with each other, whether for commerce, collaboration, communication, or something else at the core of the experience? And second, does the ability to attract new users, or to become stickier, or to monetize, become even stronger as its network grows larger? Does the user face a Cold Start Problem where retention is low when there’s no other users? ([Location 631](https://readwise.io/to_kindle?action=open&asin=B08W2ZSWRL&location=631)) - We are now in a zero-sum era of attention with minimal defensibility for a vast swath of mobile apps, software-as-a-service (SaaS) products, and web platforms. ([Location 654](https://readwise.io/to_kindle?action=open&asin=B08W2ZSWRL&location=654)) - When there are not enough meerkats in a mob to warn each other of danger, it’s more likely an individual in the mob will get picked off by a predator. After that, it’s a circular dynamic, because with even fewer meerkats, they are even less able to protect themselves, leading to a smaller and smaller population. This is an animal population under the Allee threshold—it tends to go toward zero. ([Location 774](https://readwise.io/to_kindle?action=open&asin=B08W2ZSWRL&location=774)) - On the other hand, what happens when there’s a nice, healthy mob of meerkats? They keep growing, reproducing, and perhaps creating multiple mobs. If you come in above the Allee Threshold, then the population will grow, because they can keep their mob healthy and protected. More meerkats then beget more, and even if predators occasionally pick one or two individuals off, as long as the overall population stays high, it will keep growing. ([Location 782](https://readwise.io/to_kindle?action=open&asin=B08W2ZSWRL&location=782)) - But that can’t last forever, because there’s only so many resources—like the meerkat favorites, bugs and fruit—to support a finite population. As the population increases, eventually there is a natural limit based on the environment—often called a carrying capacity. ([Location 785](https://readwise.io/to_kindle?action=open&asin=B08W2ZSWRL&location=785)) - The Cold Start Problem Tipping Point Escape Velocity Hitting the Ceiling The Moat ([Location 860](https://readwise.io/to_kindle?action=open&asin=B08W2ZSWRL&location=860)) - 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 interaction between users as networks fill in; and finally, the Economic Effect, which improves monetization levels and conversion rates as the network grows. ([Location 893](https://readwise.io/to_kindle?action=open&asin=B08W2ZSWRL&location=893))  ## Highlights - In its classic usage, a network effect describes what happens when products get more valuable as more people use them. ([Location 564](https://readwise.io/to_kindle?action=open&asin=B08W2ZSWRL&location=564)) - The “network” is defined by people who use the product to interact with each other. ([Location 615](https://readwise.io/to_kindle?action=open&asin=B08W2ZSWRL&location=615)) - Although the networks don’t own their underlying resources, it’s the connection that matters. The entire ecosystem stays on because the value is in bringing everyone together. That’s the magic. The “effect” part of the network effect describes how value increases as more people start using the product. ([Location 625](https://readwise.io/to_kindle?action=open&asin=B08W2ZSWRL&location=625)) - how do you tell if a product has a network effect, and, if yes, how strong is it? The questions to ask are simple: First, does the product have a network? Does it connect people with each other, whether for commerce, collaboration, communication, or something else at the core of the experience? And second, does the ability to attract new users, or to become stickier, or to monetize, become even stronger as its network grows larger? Does the user face a Cold Start Problem where retention is low when there’s no other users? ([Location 631](https://readwise.io/to_kindle?action=open&asin=B08W2ZSWRL&location=631)) - We are now in a zero-sum era of attention with minimal defensibility for a vast swath of mobile apps, software-as-a-service (SaaS) products, and web platforms. ([Location 654](https://readwise.io/to_kindle?action=open&asin=B08W2ZSWRL&location=654)) - When there are not enough meerkats in a mob to warn each other of danger, it’s more likely an individual in the mob will get picked off by a predator. After that, it’s a circular dynamic, because with even fewer meerkats, they are even less able to protect themselves, leading to a smaller and smaller population. This is an animal population under the Allee threshold—it tends to go toward zero. ([Location 774](https://readwise.io/to_kindle?action=open&asin=B08W2ZSWRL&location=774)) - On the other hand, what happens when there’s a nice, healthy mob of meerkats? They keep growing, reproducing, and perhaps creating multiple mobs. If you come in above the Allee Threshold, then the population will grow, because they can keep their mob healthy and protected. More meerkats then beget more, and even if predators occasionally pick one or two individuals off, as long as the overall population stays high, it will keep growing. ([Location 782](https://readwise.io/to_kindle?action=open&asin=B08W2ZSWRL&location=782)) - But that can’t last forever, because there’s only so many resources—like the meerkat favorites, bugs and fruit—to support a finite population. As the population increases, eventually there is a natural limit based on the environment—often called a carrying capacity. ([Location 785](https://readwise.io/to_kindle?action=open&asin=B08W2ZSWRL&location=785)) - The Cold Start Problem Tipping Point Escape Velocity Hitting the Ceiling The Moat ([Location 860](https://readwise.io/to_kindle?action=open&asin=B08W2ZSWRL&location=860)) - 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 interaction between users as networks fill in; and finally, the Economic Effect, which improves monetization levels and conversion rates as the network grows. ([Location 893](https://readwise.io/to_kindle?action=open&asin=B08W2ZSWRL&location=893))  ## Highlights - In its classic usage, a network effect describes what happens when products get more valuable as more people use them. ([Location 564](https://readwise.io/to_kindle?action=open&asin=B08W2ZSWRL&location=564)) - The “network” is defined by people who use the product to interact with each other. ([Location 615](https://readwise.io/to_kindle?action=open&asin=B08W2ZSWRL&location=615)) - Although the networks don’t own their underlying resources, it’s the connection that matters. The entire ecosystem stays on because the value is in bringing everyone together. That’s the magic. The “effect” part of the network effect describes how value increases as more people start using the product. ([Location 625](https://readwise.io/to_kindle?action=open&asin=B08W2ZSWRL&location=625)) - how do you tell if a product has a network effect, and, if yes, how strong is it? The questions to ask are simple: First, does the product have a network? Does it connect people with each other, whether for commerce, collaboration, communication, or something else at the core of the experience? And second, does the ability to attract new users, or to become stickier, or to monetize, become even stronger as its network grows larger? Does the user face a Cold Start Problem where retention is low when there’s no other users? ([Location 631](https://readwise.io/to_kindle?action=open&asin=B08W2ZSWRL&location=631)) - We are now in a zero-sum era of attention with minimal defensibility for a vast swath of mobile apps, software-as-a-service (SaaS) products, and web platforms. ([Location 654](https://readwise.io/to_kindle?action=open&asin=B08W2ZSWRL&location=654)) - When there are not enough meerkats in a mob to warn each other of danger, it’s more likely an individual in the mob will get picked off by a predator. After that, it’s a circular dynamic, because with even fewer meerkats, they are even less able to protect themselves, leading to a smaller and smaller population. This is an animal population under the Allee threshold—it tends to go toward zero. ([Location 774](https://readwise.io/to_kindle?action=open&asin=B08W2ZSWRL&location=774)) - On the other hand, what happens when there’s a nice, healthy mob of meerkats? They keep growing, reproducing, and perhaps creating multiple mobs. If you come in above the Allee Threshold, then the population will grow, because they can keep their mob healthy and protected. More meerkats then beget more, and even if predators occasionally pick one or two individuals off, as long as the overall population stays high, it will keep growing. ([Location 782](https://readwise.io/to_kindle?action=open&asin=B08W2ZSWRL&location=782)) - But that can’t last forever, because there’s only so many resources—like the meerkat favorites, bugs and fruit—to support a finite population. As the population increases, eventually there is a natural limit based on the environment—often called a carrying capacity. ([Location 785](https://readwise.io/to_kindle?action=open&asin=B08W2ZSWRL&location=785)) - The Cold Start Problem Tipping Point Escape Velocity Hitting the Ceiling The Moat ([Location 860](https://readwise.io/to_kindle?action=open&asin=B08W2ZSWRL&location=860)) - 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 interaction between users as networks fill in; and finally, the Economic Effect, which improves monetization levels and conversion rates as the network grows. ([Location 893](https://readwise.io/to_kindle?action=open&asin=B08W2ZSWRL&location=893))