act

1. That which is knowingly performed by a person, or which is deliberately omitted.

2. Alternative term for act of parliament or statute.

Network effects is the term given to systems in which the value of each user is increased as the number of users goes up. Such network effects are common on the internet; for example, eBay and Facebook. The value of some such systems is roughly in proportion to the number of connections between users, meaning that if the user base doubles, the value of the system quadruples. This also acts as a barrier to new competitors, since new users are much more likely to join your system than a smaller one that doesn't offer the same value. If your company believes it will able to leverage such network effects, it often makes sense to treat the first users as a loss leader and get big as fast as you can.

• Same Business, Two Different Leaders