Everything I Knew About Metcalfe's Law Turns Out To Be Wrong

In the recent Release 2.0, which covers the next generation of CRM, I invoke Metcalfe’s Law, which I’ve always understood to state that “the value of a telecommunications network is proportional to the square of the number of users on the system.”

Well, maybe not. Release 2.0 subscriber Simeon Simeonov, a partner at Polaris Venture Partners, sent me a kind letter about the issue, but he says I got Metcalfe’s Law wrong.

I also heard, and repeated, Metcalfe’s Law this way many times until I learned that the statement of the law had nothing to do with users. It’s not even about nodes per se. The original formulation was more subtle and had to do with the nature of the exchange between devices. Bob Metcalfe is one of my partners at Polaris so I got the straight scoop a few years ago, including seeing the copy of the original transparency that Bob used when he talked about what George Gilder later on called Metcalfe’s Law. Another thing that very few people know is that Bob was talking about very small network sizes–nothing like the size of the Net. I blogged about this in 2006. It would be really cool if you can use the platform you have to help set the record straight.

Consider it done.

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