The network effect is the idea that the value of a product or service is dependent on the number of others using it. If you are breaking ground on a new business area that depends on the network effect, this anecdote offers some terrific insight.

The anecdote goes this like: One telephone has no value. Two telephones have a wee bit of value. After 100 phones, you may know someone with a phone, and if so, then there is value in you signing up for telephone service. After 100,000 phones, you very likely know many people with phones. And at 1,000,000 phones, many of your friends, colleagues, and family will have phones, making the service highly valuable.

Interesting read, especially if you’ve got a bit of the entrepreneur in you.