You're listening to episode 8 on network effects in your life from the network effects master class Pete on the InFX podcast. This episode outlines how we see network effects impacting near every aspect of our life. And through that lens, it lays out a perspective on how to make the 7 most important decisions of your life. Our networks are our most valuable resource And this episode will hopefully help you make decisions that are more true to the kind of life you want to lead.
Your education about network effects, however, will not be complete without this section. And this section is not just about your startup. It's actually about your life and about the life of everyone you know. And as such, this is the section you should share with other people even if they're not startup founders. We've been working with founders building these network effect businesses for a few decades 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 and growing businesses, but in people's lives, pretty much everywhere we looked, the same patterns were showing up. And so we started to dig in and realized that while we seem in control of our own lives, we're actually much less so than we think. There's an unseen hand at work, and that's a network force.
Just like the network force is the unseen hand that makes the giant companies giant. And I wanna walk you through what we've seen so that you can understand the impact on your life and how it affects you and the people around you. So that you can better navigate and choose where to go within the network and play with the network force, use the network force, or fight against it, to try to drive your life to where you want it to be, to give you more options.
So you are being driven by these unseen mathematical principles, but we'll let's talk about your life in specific. So consider yourself a node in the network of people. 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 of things.
So let me give you a list of some of the things that might not have thought of actually travel 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 your dreams, monkey Pete monkey do. Right?
Other people will start to think like you do about what they should be doing with their life. Language is shared. You know, if I use a word like web 3 instead of crypto, then you might start saying web 3 instead of equipment. How language evolves. Request are shared. Standards like, you know, standards of cleanliness or standards of how close you stand to someone. Know, that really differs between cultures.
Expectations are shared, what you expect of each other, what you expect of life, 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 these nodes, that you think it's just sort of living, but these are actual mathematical values that are 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 to take or which school to go to or who to marry. Right? It's all in the interactions. It's almost as if You're walking around with a dashboard 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're making your own decisions, and you are but you're making those decisions based on whatever data is in front of you on your dashboard. Who's putting that information on your dashboard?
Your network. The network you were born into or that you moved to, who you work with, who you went to school with, they're the ones putting that data on your network, and then you make the best decision you can at that moment. So what we've seen is that there's about 7 crucible moments in your life. Where you're shifting networks. And therefore, you're shifting what's gonna be put on your dashboard and, thus, shifting where your life is gonna go.
And so if you can more consciously make the decisions about which networks to choose as you move through life, you will actually be impacting what data you're getting on your dashboard, and therefore, your decisions and how your life ultimately ends up. And and the spooky math actually extends to a much more tangible example, like how many people you have at a dinner party? If you have six people at a dinner party, it feels one way.
As soon as you get to 8 or 10, it's a very different dinner party. So most dinner parties end up being about 6 because it's based on how many one on one conversations, how many links between the nodes you can have at the dinner table. There's actually a formula that you can use that actually allows you to see how social interactions play out, and you're just walking through your day thinking you're just being a human and talking.
But in fact, there's math driving how all those interactions take place. It's crazy. Right? So so if you're a node on these networks, how do these network bonds form? How do these links get formed? Well, It's generally most intensely done sort of in 5 ways. 1 is geographic proximity, right, by seeing other people and interacting with them, physically, this tends to be the fastest way the humans bond.
Now with the digital world, this is starting to change, but in the past and and still today, physical connection is incredibly important. 2nd is frequency. What are the cerc circumstances of your life which cause you to be infrequent connection with another individual or set of individuals.
The third thing is when you get a high degree of overlap, so if you know this person and they also know another person, you know, that that density of the network ends up driving relationships and sort of driving a group identity and offers up trust and allows more information and resources to move across the links between you two. The 4th thing is a transition period.
Often, when we go through these transition periods, we're more open to forming identity to forming friendships to forming links within the network. And then the 5th thing is typically going through something hard or something that is fear inducing because, again, that opens us up You have new experiences, and then those new network links have a chance to form.
And as Stanley Milgram discovered in 1967 with his study of sending around Beller, that there's only about 6 degrees of separation between any 2 humans on the planet back at that time. Now with the internet, We're probably closer to about 3 a half degrees of separation between people, but the point is that we're all related in some way or can get connected in some way. And that data can flow that information onto your 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, Luke Skywalker says, oh, I could feel something. And and Obi wan says, oh, welcome. You've you've joined the force. He says, Luke says, does it does it obey my commands? 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 network force. This is what we're talking about. Many of the puzzling things you see other people doing are not because of them, but because of the network wanting something from them. 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 where you live, okay, who's in your apartment building, who's in your office, you're in a physical space, you are put together with other nodes in the network and connecting with them because of the physical topology of the world. And that itself is sort of a network fractal thing 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 are another network and those networks form more network nodes. And then the last one, the newest one in the last 30 years has been the digital realm.
There's a whole lot going on that we're just beginning to explore at gonna play out over the next 200 years, which is that 3rd layer of where you are gonna be getting information on your dashboard. We are gonna finding your network nodes. Okay? You have to understand the structure of your brain is also mathematic. Right? So we, as homo sapiens, we have been so good at bonding with people that we've made huge pack and survived, and now here we are.
Well, it turns out that a 150, it's called Dunbar's number, is about the limit of names you can know, relationships you can have, And so humanity existed in groups of 150 quite often, and you'll see corporations break themselves into groups of 150 for this very reason. That within that, you have concentric circles of intimate. So you might be intimate with 3 people and be close friends with 15. And these numbers tend to be persistent throughout cultures across the globe.
So these are the mathematical limits of the human brain in terms of his social interaction. So let's go through the 7 crossroads. There are moments in your life, which stand out as moments when your life can take different paths. Okay. So let's the first one is is one you don't choose, unfortunately, which is the family you're born Flint. In this sense of having a big impact on your values and what you think your life is supposed to be about, what job you're supposed to do.
I mean, the biggest predictor of whether someone's an entrepreneur is whether one of their parents was an entrepreneur. The biggest predictor of being a doctor was if one of your parents was a doctor. This, you know, the biggest prediction of what religion you is based on which religion you were born into.
So this is not, however, of your choice, but realize that you've been plopped into a network and that is exacting its force on you very strongly and that you need to be able to choose what you like and don't like about that network. And that's all it is is a network. The first time you might have a choice about your network is probably when you go to high school. Okay? Because when you go to high school, that's where you get your James.
That's where you start to really develop your identity and your team years. You're you're physically merged with a lot of people. You interact with them frequently. You're gonna build a lot of bonds where you potentially could. And so choosing which high school you go to can be a big decision and Morgan decision that will set you on a particular trajectory.
One thing that I've seen kids and parents not do is think to themselves how big is the high school I'm going to Morgan they think how good are the teachers and how good is the curriculum. But high school is about so much more than the curriculum. I mean, Let's be honest. We're teaching the wrong things badly the way the education system works.
What we're really learning is how to have character, how to make friendships, you know, what to aspire to, how hard to push, like, all the subtle metal learnings are what you're learning in high school. So going to a bigger network, all things being equal is gonna be better for you. There's more choice of who's friends with.
There's more choice about what, you know, what somebody's being excellent at, and you could follow them into a particular interest category that you might not see at a smaller school. And thinking through the density and the size of that network can be a really important factor in choosing where to go to high school. The 3rd crossroads, of course, is college. And everyone knows about college, right, the big James. Right?
Use all of your health points and all your grades and everything you've determined, you throw it at the colleges to see where you're gonna get in. You're gonna go. One thing I really love about college a college is in a is in a geography. And so when you're picking your college, you're not just picking your classes. You're not just picking the size of it.
You're actually picking where your friends are most likely gonna live after college, and they're gonna want you remember, your network wants something from you. They're gonna want you to move to Manhattan with them. They're gonna want you to stay in Des Moines with them. Okay? A girlfriend or a boyfriend that you're coming out of school with might guide you to live in a certain place or take a particular job. The 4th Crossroads moment in your life is your first job.
That job is sort of imprinting its way of thinking on you. You have chosen a geography where to have that job, and that's gonna determine both your physical and some of your social network. Your job is picking both your physical and your social networks. That job is gonna put a lot of information on your dashboard about what to do next with your life. Who you should be. The 5th Crossroads moment is who you marry. What's interesting about this is that that person also has their own network.
Their family, their high school, their college, their job. And when you merge the 2, you're gonna have to adjust to his or her network. Just as they're gonna have to adjust here. The merging of the 2 is quite an activity. And most people think, oh, it's our relationship 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 have on you, it's actually easier to navigate. But when you're making the choice of someone to marry, don't just pick them by whether you think they're attractive. Pick them by their network as well because that'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 live in. So now let's say you've picked a career, you've picked, a spouse. Now you need to decide where you're gonna live. This, again, influences who you're gonna Pete, what activities you do. If you go to Seattle, you're gonna be doing a lot of mountain biking, a lot of hiking, a lot of camping. Right? If you go down to Houston, you're gonna be doing something you go to Florida, you're gonna be boating or something.
Where you go ends up determining a bunch about how your life goes because of the people around you. And then the last Crossroads moment is what we call reassessment. At any time, you can look at your network situation. You can look at your life, and you can reassess and 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 of the 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. 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 your city 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 or the money you're gonna make. Choose by the people you're gonna be with. The people who light you up, they are your network, and they will likely be introducing you to your spouse. They will likely be introducing you to your activities. Okay. So if you pick the people who light you up, no matter 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 someone says, you're gonna make a decision about which job to take. There's only one good answer, and that's people. I'm gonna choose by people. It's your Stay tuned to the NFX podcast as we'll post 1 episode per week until we complete the course. You can also watch this entire master class online atnfx.com/masterclass, where you can log in, track your progress, and watch full videos, retranscripts, and find other related material.
Thanks for listening to the NFX podcast.