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November 30, 2022 15 mins
What city you live in. Who you date or marry. Which job you choose. What clothes you wear. We all think we make these choices ourselves. It certainly feels like we’re in full control. The unseen hand in them all is the networks that surround us and the powerful math they exert on us. This episode outlines how we see network effects impacting nearly every aspect of your life. It will hopefully help you make decisions that are more true to the kind of life you want to lead. This is an audio version of episode 8 from The Network Effects Masterclass, curated for audio and listening on the go.
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Episode Transcript

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(00:00):
You're listening to episode 8 on networkeffects in your life from the network effects
master class Pete on the InFX podcast.
This episode outlines how we see networkeffects impacting near every aspect of our
life.
And through that lens, it lays out aperspective on how to make the 7 most important
decisions of your life.
Our networks are our most valuable resource Andthis episode will hopefully help you make
decisions that are more true to the kind oflife you want to lead.

(00:25):
Your education about network effects, however,will not be complete without this section.
And this section is not just about yourstartup.
It's actually about your life and about thelife of everyone you know.
And as such, this is the section you shouldshare with other people even if they're not
startup founders.
We've been working with founders building thesenetwork effect businesses for a few decades

(00:47):
now.
We've seen how they work, what the forces are,what the math is, And we started to notice the
same Pete showing up not just in start ups andgrowing businesses, but in people's lives,
pretty much everywhere we looked, the samepatterns were showing up.
And so we started to dig in and realized thatwhile we seem in control of our own lives,

(01:13):
we're actually much less so than we think.
There's an unseen hand at work, and that's anetwork force.
Just like the network force is the unseen handthat makes the giant companies giant.
And I wanna walk you through what we've seen sothat you can understand the impact on your life
and how it affects you and the people aroundyou.

(01:36):
So that you can better navigate and choosewhere to go within the network and play with
the network force, use the network force, orfight against it, to try to drive your life to
where you want it to be, to give you moreoptions.
So you are being driven by these unseenmathematical principles, but we'll let's talk
about your life in specific.

(01:57):
So consider yourself a node in the network ofpeople.
Okay?
You're in a particular city.
You're on a particular social network.
You are connected to other nodes.
100 of them, thousands of them.
And there's links between each of you.
And on those links, travel a whole bunch ofthings.
So let me give you a list of some of the thingsthat might not have thought of actually travel

(02:19):
between you and other notes.
So ideas or capital, right, money.
You can exchange money.
Connections.
You can share a connection you have with them.
James are shared.
Status is shared.
You know, you're invited to a party.
Aspirations are shared.
You know, if you share your aspirations in yourdreams, monkey Pete monkey do.
Right?
Other people will start to think like you doabout what they should be doing with their

(02:40):
life.
Language is shared.
You know, if I use a word like web 3 instead ofcrypto, then you might start saying web 3
instead of equipment.
How language evolves.
Request are shared.
Standards like, you know, standards ofcleanliness or standards of how close you stand
to someone.
Know, that really differs between cultures.
Expectations are shared, what you expect ofeach other, what you expect of life,

(03:02):
affirmation, You give each other affirmation.
You share belonging.
You might share real estate.
Someone can come and stay in your apartment.
So so many things are shared between thesenodes, that you think it's just sort of living,
but these are actual mathematical values thatare being shared that cause you decide to move
to Cleveland or to move to Seattle.
Or or what to do with your life or which job totake or which school to go to or who to marry.

(03:24):
Right?
It's all in the interactions.
It's almost as if You're walking around with adashboard in front of your face, giving you
data, and you feel like you're in control.
Right?
You feel like you have free will and you'remaking your own decisions, and you are but
you're making those decisions based on whateverdata is in front of you on your dashboard.
Who's putting that information on yourdashboard?

(03:47):
Your network.
The network you were born into or that youmoved to, who you work with, who you went to
school with, they're the ones putting that dataon your network, and then you make the best
decision you can at that moment.
So what we've seen is that there's about 7crucible moments in your life.
Where you're shifting networks.
And therefore, you're shifting what's gonna beput on your dashboard and, thus, shifting where

(04:11):
your life is gonna go.
And so if you can more consciously make thedecisions about which networks to choose as you
move through life, you will actually beimpacting what data you're getting on your
dashboard, and therefore, your decisions andhow your life ultimately ends up.
And and the spooky math actually extends to amuch more tangible example, like how many
people you have at a dinner party?

(04:31):
If you have six people at a dinner party, itfeels one way.
As soon as you get to 8 or 10, it's a verydifferent dinner party.
So most dinner parties end up being about 6because it's based on how many one on one
conversations, how many links between the nodesyou can have at the dinner table.
There's actually a formula that you can usethat actually allows you to see how social

(04:52):
interactions play out, and you're just walkingthrough your day thinking you're just being a
human and talking.
But in fact, there's math driving how all thoseinteractions take place.
It's crazy.
Right?
So so if you're a node on these networks, howdo these network bonds form?
How do these links get formed?
Well, It's generally most intensely done sortof in 5 ways.

(05:15):
1 is geographic proximity, right, by seeingother people and interacting with them,
physically, this tends to be the fastest waythe humans bond.
Now with the digital world, this is starting tochange, but in the past and and still today,
physical connection is incredibly important.
2nd is frequency.
What are the cerc circumstances of your lifewhich cause you to be infrequent connection

(05:39):
with another individual or set of individuals.
The third thing is when you get a high degreeof overlap, so if you know this person and they
also know another person, you know, that thatdensity of the network ends up driving
relationships and sort of driving a groupidentity and offers up trust and allows more
information and resources to move across thelinks between you two.

(06:03):
The 4th thing is a transition period.
Often, when we go through these transitionperiods, we're more open to forming identity to
forming friendships to forming links within thenetwork.
And then the 5th thing is typically goingthrough something hard or something that is
fear inducing because, again, that opens us upYou have new experiences, and then those new
network links have a chance to form.

(06:24):
And as Stanley Milgram discovered in 1967 withhis study of sending around Beller, that
there's only about 6 degrees of separationbetween any 2 humans on the planet back at that
time.
Now with the internet, We're probably closer toabout 3 a half degrees of separation between
people, but the point is that we're all relatedin some way or can get connected in some way.

(06:46):
And that data can flow that information ontoyour dashboard to help influence your decisions
and how your life goes.
So you want things from your network.
You want this information on your dashboard,but remember, your network wants something from
you too.
There's a push and pull.
Right?
Remember in Star Wars where you know, LukeSkywalker says, oh, I could feel something.
And and Obi wan says, oh, welcome.

(07:07):
You've you've joined the force.
He says, Luke says, does it does it obey mycommands?
And Obi wan says, yes, it does.
But it also commands you.
It also influences how you behave.
And it's the same thing with your networkforce.
This is what we're talking about.
Many of the puzzling things you see otherpeople doing are not because of them, but
because of the network wanting something fromthem.

(07:28):
And that's going to be true for you too.
Where do these networks form?
They form basically on three layers.
One is the physical layer of your city whereyou live, okay, who's in your apartment
building, who's in your office, you're in aphysical space, you are put together with other

(07:50):
nodes in the network and connecting with thembecause of the physical topology of the world.
And that itself is sort of a network fractalthing that's evolving mathematically by itself,
and you're in it.
On top of that, you have your social there.
Who do you know?
Who's family, who's your friends from school,who are the who are the friends, who are the
people you go cacking with, or whatever.
These are now your social layer, and they areanother network and those networks form more

(08:13):
network nodes.
And then the last one, the newest one in thelast 30 years has been the digital realm.
There's a whole lot going on that we're justbeginning to explore at gonna play out over the
next 200 years, which is that 3rd layer ofwhere you are gonna be getting information on
your dashboard.
We are gonna finding your network nodes.
Okay?
You have to understand the structure of yourbrain is also mathematic.

(08:35):
Right?
So we, as homo sapiens, we have been so good atbonding with people that we've made huge pack
and survived, and now here we are.
Well, it turns out that a 150, it's calledDunbar's number, is about the limit of names
you can know, relationships you can have, Andso humanity existed in groups of 150 quite
often, and you'll see corporations breakthemselves into groups of 150 for this very

(08:59):
reason.
That within that, you have concentric circlesof intimate.
So you might be intimate with 3 people and beclose friends with 15.
And these numbers tend to be persistentthroughout cultures across the globe.
So these are the mathematical limits of thehuman brain in terms of his social interaction.
So let's go through the 7 crossroads.

(09:21):
There are moments in your life, which stand outas moments when your life can take different
paths.
Okay.
So let's the first one is is one you don'tchoose, unfortunately, which is the family
you're born Flint.
In this sense of having a big impact on yourvalues and what you think your life is supposed
to be about, what job you're supposed to do.
I mean, the biggest predictor of whethersomeone's an entrepreneur is whether one of
their parents was an entrepreneur.
The biggest predictor of being a doctor was ifone of your parents was a doctor.

(09:43):
This, you know, the biggest prediction of whatreligion you is based on which religion you
were born into.
So this is not, however, of your choice, butrealize that you've been plopped into a network
and that is exacting its force on you verystrongly and that you need to be able to choose
what you like and don't like about thatnetwork.
And that's all it is is a network.
The first time you might have a choice aboutyour network is probably when you go to high

(10:05):
school.
Okay?
Because when you go to high school, that'swhere you get your James.
That's where you start to really develop youridentity and your team years.
You're you're physically merged with a lot ofpeople.
You interact with them frequently.
You're gonna build a lot of bonds where youpotentially could.
And so choosing which high school you go to canbe a big decision and Morgan decision that will
set you on a particular trajectory.

(10:27):
One thing that I've seen kids and parents notdo is think to themselves how big is the high
school I'm going to Morgan they think how goodare the teachers and how good is the
curriculum.
But high school is about so much more than thecurriculum.
I mean, Let's be honest.
We're teaching the wrong things badly the waythe education system works.
What we're really learning is how to havecharacter, how to make friendships, you know,
what to aspire to, how hard to push, like, allthe subtle metal learnings are what you're

(10:50):
learning in high school.
So going to a bigger network, all things beingequal is gonna be better for you.
There's more choice of who's friends with.
There's more choice about what, you know, whatsomebody's being excellent at, and you could
follow them into a particular interest categorythat you might not see at a smaller school.
And thinking through the density and the sizeof that network can be a really important

(11:11):
factor in choosing where to go to high school.
The 3rd crossroads, of course, is college.
And everyone knows about college, right, thebig James.
Right?
Use all of your health points and all yourgrades and everything you've determined, you
throw it at the colleges to see where you'regonna get in.
You're gonna go.
One thing I really love about college a collegeis in a is in a geography.
And so when you're picking your college, you'renot just picking your classes.

(11:31):
You're not just picking the size of it.
You're actually picking where your friends aremost likely gonna live after college, and
they're gonna want you remember, your networkwants something from you.
They're gonna want you to move to Manhattanwith them.
They're gonna want you to stay in Des Moineswith them.
Okay?
A girlfriend or a boyfriend that you're comingout of school with might guide you to live in a
certain place or take a particular job.

(11:52):
The 4th Crossroads moment in your life is yourfirst job.
That job is sort of imprinting its way ofthinking on you.
You have chosen a geography where to have thatjob, and that's gonna determine both your
physical and some of your social network.
Your job is picking both your physical and yoursocial networks.
That job is gonna put a lot of information onyour dashboard about what to do next with your

(12:14):
life.
Who you should be.
The 5th Crossroads moment is who you marry.
What's interesting about this is that thatperson also has their own network.
Their family, their high school, their college,their job.
And when you merge the 2, you're gonna have toadjust to his or her network.
Just as they're gonna have to adjust here.
The merging of the 2 is quite an activity.

(12:36):
And most people think, oh, it's ourrelationship or it's your mom, your mom doesn't
like me, blah Beller.
It's really if you just think of it as math,you think of it as the nodes between people and
and and the impact that that math is gonna haveon you, it's actually easier to navigate.
But when you're making the choice of someone tomarry, don't just pick them by whether you
think they're attractive.

(12:58):
Pick them by their network as well becausethat's what you're buying into for the rest of
your Pete, potentially.
And most people don't think about that.
The 6 Crossroads is the city you choose to livein.
So now let's say you've picked a career, you'vepicked, a spouse.
Now you need to decide where you're gonna live.
This, again, influences who you're gonna Pete,what activities you do.

(13:18):
If you go to Seattle, you're gonna be doing alot of mountain biking, a lot of hiking, a lot
of camping.
Right?
If you go down to Houston, you're gonna bedoing something you go to Florida, you're gonna
be boating or something.
Where you go ends up determining a bunch abouthow your life goes because of the people around
you.
And then the last Crossroads moment is what wecall reassessment.
At any time, you can look at your networksituation.

(13:39):
You can look at your life, and you can reassessand make logical conscious decisions about
where you wanna continue to grow your network,who you wanna be around.
Some people say, you're you you are the sum ofthe five people you spend the most time with.
That's another way of saying what I'm saying.
So choose carefully who you wanna be around.

(13:59):
What type of interest do you wanna be in?
People say me, James.
I'm coming out of college.
Where should I go work?
How much money should I make?
What skills should I be getting?
I don't like, heck with that.
Choose your city.
Consciously choose what personality of yourcity you wanna be in because that's gonna lead
you to people that you like.
People who are like you.
Also, don't choose your job by the skills orthe money you're gonna make.

(14:23):
Choose by the people you're gonna be with.
The people who light you up, they are yournetwork, and they will likely be introducing
you to your spouse.
They will likely be introducing you to youractivities.
Okay.
So if you pick the people who light you up, nomatter what industry they're in or what city
they're, you're gonna do right by yourself.
So if you're in a job interview and someonesays, you're gonna make a decision about which

(14:45):
job to take.
There's only one good answer, and that'speople.
I'm gonna choose by people.
It's your
Stay tuned to the NFX podcast as we'll post 1episode per week until we complete the course.
You can also watch this entire master classonline atnfx.com/masterclass, where you can log
in, track your progress, and watch full videos,retranscripts, and find other related material.

(15:09):
Thanks for listening to the NFX podcast.
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