Network Effect vs Trend

I’ve seen well known tech people across the industry (mostly on X or tech podcasts) often conflate network effects with trends and wanted to write down a quick thought about it.

Network effects mean a product becomes more useful as more people use it. A phone is useless if no one else has one. Instagram isn’t fun if your friends aren’t there. The value grows with the network.

Trends, on the other hand, are about popularity, not utility. A product like Photoshop or a Nespresso machine might be trendy, but its usefulness is mostly independent. It works just as well whether a million people use it or just you.

Take TikTok. Its value depends on a large, active user base. No users means no content, no feed, and no reason to open the app.

Now take Nespresso. Your espresso tastes exactly the same whether you’re the only person using the machine or everyone you know has one. You might buy one after seeing it at a friend’s house, but the value it gives you doesn’t depend on their ownership. It keeps delivering even if no one else uses it.

These concepts are related, but not interchangeable. I often see people blur the line when a product grows virally (like ChatGPT or Hey.com). The mistake is calling it a network effect just because people want it after seeing others use it.

Here’s the clearer test:

“People want this product because others use it” = trend “People only want this product if others use it” = network effect