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How to use piggybacking to boost a lot the value of your social network.

Metcalfe’s law is a theoretical informatics statement that says that “the value of a telecommunications network is proportional to the square of the number of connected users”. It was first formulated in 1993 by George Gilder and is often used to describe network effects. Its name comes from Robert Metcalfe who created Ethernet. It basically means that the strength of a social network grows a lot when its number of users increases a little.

But why?

What you should care about when creating any kind of social network is not its number of users but the amount of connections between them. That is where the real value is. It is not obvious at first, but it is actually kind of logical after all. Facebook is not good because of its features, Facebook is great because all your friends are already on it. Having a phone is cool because you can actually call people with it and that is probably why the French Minitel (which was maybe better technologically speaking) has never been a success. Finally, if everybody had an email address but nobody sent any email ever, the value of “emailing” would be zero. The only growth rate you need to take into account to understand the engagement of your customers is not the increase in the number of users but the growth of the number of interaction between them.