Monday, October 13, 2008

It's the Law!!!

Ignorance of these is no excuse

Thanks to social media expert Dave Evans for throwing the book at me on these inviolable business principles in his recent article.

Metcalfe's law states that the value of a network is proportional to the square of the number of users of the system (n²). First formulated by Robert Metcalfe in regard to Ethernet, Metcalfe's law explains many of the effects of networks such as the Internet, social networking, and the World Wide Web. It is related to the fact that the number of unique connections in a network of a number of nodes (n) can be expressed mathematically as n(n-1)/2, which is proportional to n² asymptotically.

Are you saying "Tim, what are you talking about?"

Bottom line: Just invite your friends and customers to connect with you on You'll be glad you did.

Reed's law is the assertion of David P. Reed that the utility of large networks, particularly social networks, can scale exponentially with the size of the network. The reason for this is that the number of possible sub-groups of network participants is 2^N - N - 1 \, , where N is the number of participants.

This grows much more rapidly than either
* the number of participants, N, or
* the number of possible pair connections, \frac{N(N-1)}{2} (which follows Metcalfe's law)

so that even if the utility of groups available to be joined is very small on a peer-group basis, eventually the network effect of potential group membership can dominate the overall economics of the system.

In other words, the bigger, the better.

Hey! The article's over. What are you still hanging around for?

Log on and grow your Connection Engine!