The Network Effect Myth: Why More Users Won’t Save Your Platform
- Alan Williams
- Apr 1
- 2 min read
By Alan W
Content here.....One of the most persistent myths about platforms is that they win simply by having more users. The belief goes: get enough people onto your platform, and success is inevitable. But reality tells a different story.
A large user base means nothing if those users don’t stick around and contribute value. True platform success isn’t about hitting big numbers - it’s about engagement and retention. Without these, scale is meaningless.
Engagement → Retention → Scale
Think of a platform as a marketplace. Imagine a shopping mall filled with thousands of stores, but customers only visit once and never return. Would that mall be successful? Not likely.
A platform thrives when users actively participate, find value, and return. This cycle - engagement leading to retention, which then enables sustainable scaling - is what makes platforms defensible.
The Pitfall of Chasing Vanity Metrics
Many platform founders fall into the trap of chasing user acquisition without ensuring that users are staying engaged. They spend heavily on marketing to bring in new users but neglect the core experience that keeps them coming back. The result? High churn, wasted ad spend, and a platform that looks big but lacks real value.
The Real Network Effect
A true network effect happens when each new user makes the platform better for existing users. But for this to work, the existing users must already be engaged. If they aren’t, new users will arrive, find an empty or ineffective experience, and leave.
Think about successful platforms like Airbnb or Uber. They didn’t just attract users; they ensured both sides of their marketplace (hosts and guests, drivers and riders) had meaningful interactions that kept them engaged and coming back. This built retention, which allowed them to scale sustainably.
How to Build Engagement and Retention
If you’re building a platform, focus on:
Solving a real problem – Ensure your platform delivers tangible value to its users.
Creating a habit loop – Design incentives or experiences that make users return naturally.
Facilitating interactions – A great platform makes it easy for users to engage with each other meaningfully.
Measuring the right metrics – Track engagement and retention, not just sign-ups.
Final Thought
Platforms don’t win because they have more users. They win because their users keep coming back and making the platform better. Prioritise engagement and retention first - scaling will follow naturally.
Work with Alan W
“Solving niche challenges founders face”.
illustrator: Lisa Williams (Instagram: @artist_llw)
