Bhaskar Adari

Viral effects are about getting new users to use your product. A product is said to be viral when existing users bring you more users for free. A product or service with viral effects has a “viral coefficient”, which is the number of new users that join as a result of each user. For example, if an average Facebook user in the early days invited enough friends to get two of the…

Network effects add value to a product when more people use it. The more people use a product with network effects, the more utility each existing user gains from it, so the less likely they are to switch to a competitor. Network effects are about retention and defensibility.

…often your users return to use your product, and this can make a big difference in network effects. If you have low retention, then it will be very difficult to capture any sort of network effects even as your userbase grows, because the overall usage of your product won’t increase and you’ll lose your defensive position.