The phenomena where every new user of a products adds value to the product for other users
Think of telephones: the value increases when a new number is added because all the existing customers can call that number and the new user can call any of the existing numbers.
Where network effects apply, value grows exponentially with each user.
Network effects are particularly important because they are one of the four main ways to get ahead of your competitors.
The three other defensibilities are:
Large companies can generally offer more competitive, bulk pricing
When companies embed themselves in users' lives, it can become costly to stop using that product and switch to another product
Users build habits around brands they trust
Ultimately, the marginal benefit of increasing any of these three defensibilities begins to decrease and reach a plateau.
Because network effects increase exponentially, they will not reach a plateau and are, therefore, the most effective defensibility.
The past month there have been crazy events occurring around the world that make it feel like we are in a sci-fi universe. People are going space, and valuations are consistently in the billions. In another decade things today will seem normal and the new things will be crazier.
Die Progress Units and the Law of Accelerating Returns
Human progress is exponential
The law of accelerating returns suggests that the rate of change of progress accelerates because humans can use technology at their disposal to progress faster than previous generations could without technology
We often think of history as straight line which is an incorrect assumption
The trajectory of a very recent history often tells a distorted story
Our own experience makes old men stubborn about the future
Human knowledge compounds
The Venture Funding Rorsach and $320T Global Markets
More VCs are investing in startups than ever
All of the unicorn startups in the world are now worth more than the total market cap of Apple
All of the world’s equities have 100x since 1970s in market cap
The Compounding Colossus
Every invention is apart of the latest chain of compounding inventions
AI and the future of scaling will be interesting
Starlink may allow everyone in the world to get wifi for $5 a month