Network Affect

We don’t see it on the calendar, but it sure seems like someone declared this National Network Week.*  One of the country’s most thought-provoking writers just released a book on the vast potential of peer networks.  In the finance space, two of the premiere investor networks announced significant new features – the StockTwits Social Sentiment Indicator and eToro’s Social Index – to unleash more of that potential, while a newer network completed beta and yet another announced its arrival.  And one of our favorite VCs mused about the strategic strengths and weaknesses of a cross-network utility – essentially, attempting to construct a new network by leveraging existing networks.

Part of the increasing interest in networks is likely due to economic and technological “supply” factors we’ve addressed in this blog before, and part may be a sociological “demand” factors for experiences offering trust and transparency on an Internet that is better known for volatility and anonymity.  Regardless of the cause, it’s important amidst the popular interest to keep in mind that all networks are not created equal; rather, networks have different strengths and weaknesses that stem from their varied physical and logical topologies, and ensuring alignment between a network’s design and the problem you’re trying to solve will make your life a lot easier. 

A good first question to ask yourself is whether the end relationship you are looking for is most likely 1:1, n:n or n:1 – what may be termed a connection, a clique or a council.  One-to-one connections will generally be facilitated by a more centralized network (think of a job search or dating site that does initial matching – or at least allows you to put a number of filters on results).  Many-to-one advisory councils are better enabled by a more distributed approach that keeps inputs flat and open within basic processing and participation guidelines (prediction markets, Wikipedia).  Many-to many cliques (such as a Meetup group) are generally less-defined in this regard and (perhaps consequently) can be difficult to maintain very long (as there seems to be a narrow sweet spot of scale that rewards such ambiguity).

Of course, even bigger (and more interesting) than the challenge posed by a variety of network structures is the fact that network boundaries are manifold, fluid and often unknown – including to the members themselves.  Even from the narrow perspective of an investing platform, you might trade forex more adventurously when your account is up and equities more conservatively when your account is down (and might be getting better at commodities in the meantime).  That is why Array dynamically reconstitutes networks while solving different problems rather than locking them in.

* It isn't National Network Week, but it IS International Talk LIke a Pirate Day.  Have fun!