Network effects: value grows as the square of the customers - Deepstash
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Network effects: value grows as the square of the customers

Bob Metcalfe, coined Metcalfe’s Law: the value of a network is proportional to the square of the number of nodes in the network.

If a network of size 10 would have a value of 100, a network of a size 100 would have a value of 10,000. It’s not just 10 times more, it’s 100 times more, because of the square.

A network effect is when each additional user adds value to the existing user base. Your users themselves are creating some value for the existing users. Things that have zero marginal costs of reproduction very often tend to have network effects. Money and language are great examples.


1.29K reads


Product Leverage is Egalitarian

Product Leverage is Egalitarian

It’s the nature of code and media output that the same product is accessible to everybody. Status goods are limited to a few people.

The best products tend to be at the center, at the sweet spot, the middle class, rather than being targeted at the upper class.

If you care about eth...


1.65K reads

Labor and Capital are Old Leverage

The oldest form of leverage is labor, which is people working for you. It is the worst form of leverage that you could possibly use.

You want the minimum amount of labor that allows you to use the other forms of leverage.

Capital is a powerful form of leverage. It can be converted to ...


2.9K reads

Pick a Business Model with Leverage

Pick a Business Model with Leverage

An ideal business model has network effects, low marginal costs, and scale economies.

Scale economies: the more you produce, the cheaper it gets. This builds up an automatic barrier to entry against competition and getting commoditized.

Technology products especially, and m...


1.62K reads

Eg: From Labourer to Entrepreneur

From low to high specific knowledge, accountability, and leverage. Laborers get paid hourly and have low accountability.

General contractors get equity, but they’re also taking accountability and risk.

Property developers pocket the profit by applying capital leverage. More specific k...


1.21K reads

Paul Graham

You should be working on your product and getting product-market fit, and you should be exercising and eating healthy. That’s about it. That’s all you have time for while you’re on this mission.



1.34K reads

Judgment Is the Decisive Skill

In an age of infinite leverage, judgment becomes the most important skill

Everything else that you do is actually setting you up to apply your judgment. That's why CEOs get paid more. If you’re steering Google or Apple, and your judgment is 10 percent better than the next person’s, society...


1.12K reads

Set an Aspirational Hourly Rate

No one is going to value you more than you value yourself. Set a high personal hourly rate, and stick to it.

Say you value your time at $100 an hour. If you decide to spend an hour driving across town to get something, you’re effectively throwing away $100. if you want to get rich, it has t...


1.05K reads

Product and Media Are New Leverage

Product and Media Are New Leverage

Product leverage is where the new fortunes are made

The new generation’s fortunes are all made through code or media. Joe Rogan making 50 to 100 million bucks a year from his podcast, Jeff Bezos and Mark Zuckerberg are all code-based leverage.

Add in Capital and you...


2.11K reads

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The value of NFTs

NFTs have no physical or tangible value. The technology of NFTs codifies and enforces a metric of scarcity on a digital file.

  • Functional value (What can I use this for?)**:** Most of the discussion around NFTs is about how you will use the ...

time for a black hole to dissapear

time for a black hole to dissapear

A black hole the mass of our sun has a lifetime of 10^67 years. Which means that it would take:

  • 10,000 billion, billion, billion, billion, billion, billion years, to lose 0.0000001% of its mass.
  • But most black holes are way more massive than our s...

Blockchain: The Engine Of The New World

Blockchain: The Engine Of The New World

Many of us have heard of cryptocurrencies (like Bitcoin), which have exploded in value in the last ten years. The underlying technology, blockchain, is the heart of crypto and many other new digital applications and ecosystems.

Blockchain is a digital archive or registry, w...


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