I have to admit, when I read this in Clara Shih’s book, The Facebook Era, I had one of those, “huh?” moments. Oh yah, right, Metcalfe…let’s see…oh wait, my memory doesn’t really go back more than a couple years and I last studied this in my MBA which was a decade ago, so I think it’s safe to say that Metcalfe’s Law needs to be revisited (thanks Wikipedia).
The idea here is that the value of a network increases exponentially as the number of members increase. It was initially applied in telecommunications, but works brilliantly in social networking. So two people can make one connection, but 5 people can make 10 connections…and so on.
Clara takes this law and turns it into what she calls, The Reciprocity Ring. This is so brilliant too! She uses this model as a way of demonstrating how social networks can create value for all those who participate in it.
I think I’ll save the details for an in-class exercise; it really is better explained interactively than via blogging. ;)