Recently, I snuck into a conference room (at a Kauffman Foundation event, the organization behind Startup Weekend) where I accidentally had the pleasure of listening to a talk given by Robert Metcalfe, the man whose law I actually built my startups upon. Metcalfe is attributed and famous for a law that we know today as the Metcalfe’s Law. The law says that the value of a telecommunications network is proportional to the square of the number of connected users of the system.
What this means is that if you come up with a new phone system and only two people are using it, the value of it is X. If you have four people using it, the value is not 2X because you have twice as many people using it, but actually 4X because each person can communicate with each other and the number of unique connections possible. The more people connected to a network, the higher its value, and as the formula shows, it grows exponentially. As you can see in the image, two telephones can make only one connection, five can make 10 connections, and twelve can make 66 connections. Although initially, Metcalfe’s Law was applied to telecommunication networks, it also applies heavily to many things that we do online––like Facebook for example.