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Network Effect Definition
- Network effects make a product more valuable as more users join.
- A classic example is Facebook, where more friends enhance the network's value.
Virality vs. Network Effects
- Virality focuses on the speed of growth, often unpaid, like word-of-mouth.
- Network effects focus on value and are indicated by increased user retention.
Examples of Viral Growth
- Facebook and Skype had viral growth because their use required other users' participation.
- Airbnb had viral word-of-mouth growth, but using the app didn't inherently require other users.