Robert Metcalfe, co-inventor of the Ethernet in 1973, suggested the value of a network of computers was a function of the number of nodes, or members, connected to the network. Metcalfe later formulated his theories on network growth into Metcalfe’s Law.

For the network marketer his law is important because it illustrates the power of a network of motivated entrepreneurs to create significant income from group sales volume.

What Is Metcalfe’s Law?

Metcalfe’s Law basically states the number of possible cross-connections in a network, and its inherent value, grows as the square of the number of computers in the network increases. In simpler terms, the value of a network with 2 members is equal to 4. And the value of a network with 4 members is equal to 16.

By adding two additional members, the value of the network jumped from 4 to 16. This geometric growth in value is what makes Metcalfe’s Law so intriguing, and potentially profitable to the network marketer.

Why Networks Grow Exponentially

Metcalfe postulated the value, or power, of a network increased geometrically in proportion to its membership growth because of group interaction.

For example, when the fax machine first became widely available, sales representatives had a difficult time convincing offices to buy fax machines.

“What good is it?” managers would ask. “Who would I send a fax to?” And they were right. At that time, having the only fax machine in town was as valuable as owning a saddle, with no horse to put it on.

But then Metcalfe’s Law kicked in. The number of fax owners gradually increased, while the value of using the fax machine to communicate with others began to grow exponentially.

Suddenly, it made sense to buy a fax.

Metcalfe’s Law And Your Business

You are alone on the day you start a network marketing opportunity-a lone voice crying in the wilderness.

Working alone, the growth of your network is like the proverbial rocket ship leaving the launch pad. Your progress is slow, lumbering, and sadly, precarious. It’s easy to quit at this early stage, and hard to see the potential for making money.

But once you land your first new member, your network has two people making sales and recruiting new members. The excitement builds and you find yourself with a network power of 4, rather than 1.

Eventually, with a handful of distributors in your downline, your group value and activity becomes virtually self-sustaining. Metcalfe’s Law in action.

Maximizing The Potential of Metcalfe’s Law

A critical part of Metcalfe’s Law that you must understand is the role of staying in contact with your team members.

Metcalfe applied his law to physical phone networks, and described network value in terms of potentialities. That is, the physical phone structure may exist, but it is only valuable when people use it to connect with one another.

Likewise, your MLM business is a social network, and its potential value is only realized when people within your group work together to train, motivate, and generate interest for new prospects. If you have 5 members in your downline working as individuals, the value of your network is 5. Get everybody on the same page, working towards a common goal, and that value explodes to 25.

If nothing else, remember this one thing about Metcalfe’s Law: One additional new member on your team can make a huge difference in your success potential and the overall value of your network. Go forth and multiply.
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