Andrew Chen has a post about Metcalfe’s Law and corollary Eflactem’s Law (M-E-T-C-A-L-F-E backwards, you can probably figure this one out).
“In fact, you see this happen all the time at dinner parties or events. Things are great until one or two people announce the intention to leave. If those folks are fun and entertaining, there’s an immediate realization that the quality of the experience is about to go down. And yet more people announce their intention to leave, and so on, until you are left with the party hosts and a big mess ;-)”
Essentially, he posits that while adding a user increases value exponentially, losing users shrinks value by the same order.
Anna and I were discussing this phenomenon:
Anna: Awww, the Friendster party hosts must be so sad.
Teague: (laughs) Yeah.
Anna: It’s such a sad mental image, ’cause it was like they had this sort of okay party with Bud Light and Sun Chips but then Facebook came along with its local microbrew and cru de te and it was all over.