Sarnoff vs Metcalfe vs Reed

A quick comparison of three of the most commonly discussed Law's of communication complexity.

Josh Ether

1/4/20182 min read

Sarnoff's law is named after David Sarnoff, the longtime head of the Radio Corporation of America (RCA). It states that the value of a communications network is proportional to the number of subscribers or "eyes" that are connected to it. This law is often invoked to explain why network effects are so important in the technology industry. For example, a social network like Facebook is more valuable to users the more people are on it since that increases the chances of connecting with friends and family. The same is true for a messaging app like WhatsApp or a ride-hailing service like Uber.

Sarnoff's law has been criticized by some as being overly simplistic since it doesn't take into account other factors that can affect the value of a network (such as the quality of content or the overall user experience). However, it remains a useful way to think about the importance of scale in the tech industry. In recent years, there have been several companies that have challenged Sarnoff's law. These companies, known as unicorns, are startups that have achieved billion-dollar valuations without reaching the same level of scale as the companies Sarnoff's law is typically applied. Examples of unicorns include Airbnb, Snapchat, and Pinterest.

It's unclear whether unicorns will be able to maintain their high valuations over the long term, or if they will eventually need to reach the same level of scale as the companies Sarnoff's law is based on. Only time will tell.

Metcalfe's law is named after Bob Metcalfe, the inventor of Ethernet and the co-founder of 3Com. It states that the value of a network is proportional to the square of the number of nodes or connections in the network. This law is also often referred to as Metcalfe's Law of Network Effects, Metcalfe's Law of Networks, or simply Network Effects. The law is typically used to explain the positive effects of network growth on the overall value of the network. For example, Facebook has been able to increase its value to users as it has grown in size because the number of potential connections that users can make on the platform grows at a rate that is proportional to the square of the number of users. This means that each new user that joins Facebook increases the value of the platform for all other users.

The law has been criticized for oversimplifying the relationship between network size and value, and for overestimating the value of networks with a large number of connections.

Reed's law is named after David Reed, a researcher at Xerox's Palo Alto Research Center (PARC). It states that the value of certain networks, particularly social networks, grows exponentially with the number of members in the network. In mathematical terms, this is known as Metcalfe's law.

Reed's law is often used to explain the success of social networking sites like Facebook and Twitter. The more people that join the site, the more valuable it becomes to users. This is because the site becomes a more useful tool for networking and communication. As more people join, the site also becomes more attractive to advertisers.

Reed's law has been criticized by some as being too simplistic. For example, it does not take into account the fact that not all members of a social networking site are equally active. Additionally, the value of a social networking site can also be affected by things like the quality of the content, the design of the site, and the security of the site.