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Networks

lighted city at night aerial photo

Humans are inherently networking species.

As a human, you have limited energy. In order to obtain resources, solve problems all by yourself would take months, years. But, if you are working in a group, each person picks the outcome they want to deliver.

We build this trust network where we allow people to deliver each other outcomes needed.

A network built on trust tends to create more value.

If you play co-op games, you might notice that teams which fight usually tend to lose quicker.

We share our experiences and understanding through language. We share our goods and services through roads, power lines, and the internet.

Society is a network.

A country is a network.

Traditionally opening a shop had an impact on the local network. A shop was as well known as the people in it. Now you can open a shop on the internet and provide value across a global network.

Through roads, airplanes we can acquire the joys of other networks apart from our home network.

The Internet is one such network that removes all physical barriers and allows me to meet everyone on the cloud.

With the internet connecting us all, creates a network effect.

Network effects = Value of goods and services increase as more people join the network

(Note: There can be negative effects after a certain point also called congestion, but I am avoiding that for now)

***In the context of startups,
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As a startup, you want to tap into these network effects.

Usually, startups use growth hacking techniques to acquire users to create this network effect. That is also why they focus on engagement, retention. In the hopes that in the long run, users will not abandon their network.

There is another way you can create this network effect, which is by providing value to every single person regardless of the network effect. Building trust with every single person in the network.

Word of mouth tends to fall in this category.

Social proof tends to create a similar network effect.