Your One Key Metric: Network Effects

Your One Key Metric: Network Effects

December 20, 2019 by investor

Every startup has one key metric to grow their business to the next level.

The one key metric for network effect businesses is organic vs. paid users.

The share of organic users relative to paid users should increase over time because as the network expands, more users want to join. Users can come from those who are friends and contacts of other users.

For two-sided marketplaces, users can come from both the supply side as well as the demand side.

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Hall T Martin is the director of Investor Connect, which is a 501(c)(3) nonprofit dedicated to the education of investors for early-stage funding. All opinions expressed by Hall and podcast guests are solely their own opinions and do not reflect the opinion of Investor Connect. This podcast is for informational purposes only and should not be relied upon for the basis of investment decisions.