The Network Effect, also called Metcalfe’s Law, was originally used to describe the value of a telecommunications network. The original law was that the value of a network is proportional to the square of the number of people in that network.

For those of you less math inclined, that just means that a network is more valuable with more people in it. It’s also what has allowed social media companies to grow to such massive valuations. One person’s personal data isn’t very useful for selling advertising, but 1 billion people’s personal data is exponentially more valuable.