Unlearn what you thought you knew about network effects. This episode takes you to the very beginning and lays out network theory from square one. Listen in as James covers the basics of network principles to use as a launchpad for the rest of the course and see how your startup behaves as a network itself.

This is an abridged version of episode 2 from The Network Effects Masterclass, curated for audio and listening on the go. For the full video experience, transcripts, and recommended reading, join the free Network Effects Masterclass at - NFX.com/masterclass.

(0:00) Introduction to episode 2: The Underlying Properties of Network Theory (1:06) Fundamental properties of a network: nodes, links, and structures (3:22) Understanding network structures, shapes, and associated laws (6:07) Reaching critical mass in a network & building clustering coefficients (8:46) The importance and impact of real IDs in network properties (12:57) Example of a marketplace network: Outdoorsy and Lending Club (15:13) Avoiding negative network effects and dealing with network pollution (18:30) Overcoming business growth challenges: Chicken or egg problem and multi-tenanting (20:57) The difference between network effects and viral effects (24:39) Understanding viral growth: the concept of K factor and the need for constant reinvention (27:29) Announcement: Release schedule for upcoming NFX podcast episodes (27:35) Sponsor: NFX masterclass available online