The Power of Network Effects in Industry Growth

The narrative of Diners Club highlights the emergence of a network effect in the restaurant industry in New York. The initial 200 users of Diners Club, frequenting various restaurants, prompted other high-end restaurants to join the network to access these users. This led to a virtuous cycle, and in a decade, Diners Club had a million users. This power user dynamic is evident in various industries, where a small percentage of users drive the majority of expenses, such as in mobile gaming and healthcare.