Metcalfe's Law is a mental model that posits the value of a network grows exponentially with each new connection. It emphasizes the importance of network effects in business growth.
Metcalfe's Law, named after Robert Metcalfe, is a principle used in computer networks, economics, and business, particularly relating to technological companies and platforms. The law states that a network's value increases exponentially as more users or nodes are added to it. Take, for example, the social media platform, Facebook. Each user who joins the platform adds value not just by their presence, but by their interactions, connections, and content shares. Therefore, the overall value of Facebook grows at an accelerated rate with each new user addition.
The value of a network is not merely the number of users, but the potential connections it facilitates - Reed Hastings
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