How valuable is your online following? A question we often get asked.
Well, it seems Venture Capitalists value networks using different formulas (as outlined in this slide from the deck below).
Essentially they argue that a broadcast network's value is a function of its size (1 to many). A peer-to-peer network is a function of a square of its size (many to many) and a peer-to-peer network that facilitates sub-groups' value is a function of the power of the number of participants (many to many, in many ways).
So the answer to how valuable your network is depends on what kind of a network you have. If you are broadcasting from your ivory tower, the value of your network is going to be far lower than if you participate in a network of peers with similar interests, whether that be built around a rolodex, breakfast seminars or online networks.
What's more, the value of these networks is not just intangible "good will" benefit, participating in discussions with peers is where business begins. Instructions and tenders are offered to people you have a connection with; to your peers, not to "gurus" preaching from on high.
3 common laws for assessing Network Effects