Thread by @JamesCurrier

1/ Viral Effects are NOT Network Effects. Even experienced Founders conflate them. Missing the difference leads to colossal failures in strategy.

Here’s what to know:

nfx.com/post/viral-eff…

2/ Viral effects are about growth. They happen when existing customers get you NEW customers for free, accelerating growth.

Network effects are about DEFENSIBILITY. They happen when customers add incremental value for other customers, making it hard to compete with your product

3/ Part of the confusion between the two comes from the fact that recent iconic network effect companies - TikTok, Facebook, Twitter, etc. - also happened to have rapid viral growth.

Because they coincided in these cases, they're perceived as two sides of the same coin.

4/ This is misleading because viral effects can exist without network effects (e.g. Zynga, JibJab, BuzzFeed) and network effects can exist without viral effects (e.g. Microsoft OS, B2B marketplaces).

5/ That said, there can be a relationship between the two. Firstly, it's easier to build viral language into products with network effects. Words like "share", "see", "get" comes more naturally when you have a networked product.

6/ It's also easier to go viral when you have a network effect because nonlinear value creation from network effects *can* lead to higher word of mouth (but doesn't always).

7/ Further, viral effects can help build network effects because it helps you get to critical mass faster than other networked products, helping you overcome the chicken-or-egg problem.

8/ There are many other contrasts and comparisons between the two to help you build good strategy. For a deep dive, as well as playbooks for building virality now, see the full essay:

nfx.com/post/viral-eff…