In this episode, James Currier delves into the concept of network effects, its impact on status, wealth, and power, and the emergence of the network economy. Using Facebook as a case study, he discusses the dominance of network effect businesses. He also explores the acceleration of the network economy through cryptocurrency. The episode further examines the Matthew Principle and how network economy influences various fields, including education and real estate. James concludes with a discussion on the evolving social contract in the network economy and the roles of governments and companies.

This is The Founders’ List – audio versions of essays from technology’s most important leaders, selected by the founder community.

Network effect businesses are reshaping the world. Network effects are still the best and most powerful force we know to create persistent value for billions of people. However, we think that too little has been said about how society should adapt to these new network effect behemoths we’re helping create.

NFX Partner James Currier outlines how the network economy works, and how power, wealth, and status all flow on the network. He then looks at the implications of this and finally specific ideas for Founders about what these new social contracts could look like.

Read the full NFX essay here - https://www.nfx.com/post/network-economy/

(0:00) Introduction to the episode (0:14) Exploring network effects: Status, wealth, and power (1:44) Understanding the network economy and its emergence (4:05) Dominance and power of network effect businesses: Facebook example (6:17) Acceleration of the network economy through cryptocurrency and its impact (11:06) The Matthew Principle and examples of the network economy in various fields (14:15) Influence of the network economy on education, real estate, and Uber drivers (18:11) Positives and negatives of the network economy: Improved odds, access, and challenges for edge nodes (20:10) The evolution of the social contract in the network economy (24:52) The role of governments and companies in the network economy (30:06) Conclusion: Responsibility of world-class founders in setting new social contracts