Not all network effects are created equally

Key question:

Does 1 more connection create value for ALL other users,

or just some?

Ex:

Ex: $FB

If 1 more user joins $FB,

it creates value for a few hundred other users that want to be friends and connect,

but not for all 2+ billion users

($FB still benefits hugely from network effects)

Ex: $WU

Western Union can send money from anywhere to anywhere,

which sounds great,

until you learn that a few connections REALLY matter,

and many other connections don't

(to say nothing of the fact that it has been disrupted by electronic payments)

Ex: $CRWD

Every new user makes the threat graph bigger,

which gives it more data,

so it learns faster and grows stronger,

so every existing user benefits from ALL other users who join the network.

That's powerful!