Network Effects
Definition
Network Effects: Network effects occur when a product becomes more valuable as more people use it. Direct network effects mean users benefit from other users (social networks). Indirect effects mean more users attract more complementary offerings (marketplaces, platforms).
Example Usage
“Slack's network effects meant that once a few team members adopted it, everyone else had to join.”
Common Misconceptions
Related Terms
Moat
A moat is a sustainable competitive advantage that protects a business from competition. Moats can come from network effects, switching costs, brand,...
Viral Coefficient
The viral coefficient (K-factor) measures how many new users each existing user brings in through referrals. A coefficient above 1 means viral growth,...
Explore More Resources
Browse Tools
Discover 100+ vetted tools for every stage of your startup journey
Explore all toolsBuild Your Stack
Take our personalized quiz to get tool recommendations for your startup
Start the checklistRecommended Reading
Curated books to help you learn, grow, and succeed as a founder
View book recommendationsListen & Learn
Top podcasts covering startups, product, growth, and entrepreneurship
Discover podcastsHelp us improve this definition
See something that could be clearer or more accurate? Let us know.