When asked about the quality of his tanks, Joseph Stalin famously quipped, “Quantity has a quality all of its own.” Today most people running social networks and communities have the same outlook. The value of the network is measured solely on the number of members -- and bigger is always better. These networks pay very little attention to user profiles or to the quality of the communications.

While clearly there is value in user adoption, many social networks generate far more value by limiting the size of the community. For this reason, smaller communities are an emerging trend on the consumer Internet. For instance, the popular photo-sharing app, Path, limits the number of connections for each user to 50. Moreover, according to the tech rumor mill, the new Google social service will also cap the number of connections to create “circles” of your closest friends and family. By limiting the size of the community, these services hope to increase the quality of the experience and the richness of the connections.

When planning a business community site, managers need to evaluate the model to determine whether to focus on user adoption or interaction value. In many cases, business communities may be best served by keeping membership exclusive to increase the value of the connections and interactions.

How We Got Here

The driving force in the growth of the Internet has been Metcalfe’s Law, or what is often referred to as the Network Effect. From the early dot-com bubble to the recent heady valuations of services like Facebook, LinkedIn and Zynga, the value of social services has been measured with the assumption that every new user of a service adds exponentially more value.

Originally designed to measure the value of telecommunications networks, Metcalfe’s Law simply states the "value" of a network increases proportionally to the square of the number of connected users, or “n2.” The classic example is a telephone. If one person owns a telephone, the value is zero. For each additional person with a telephone, the value becomes proportionally larger. Similarly, a social network with one user has no value. But with each additional user, the value grows exponentially.

Metcalfe’s Law has been adopted to reflect a wide range of services on the Internet. It has also evolved with new forms of analysis, such as Reed’s Law that focuses on social networking specifically to quantify growth, and to borrow from Stalin, the “quality of quantity.”

Why the Network Effect Does Not Apply to All Communities

While Metcalfe’s Law is great for measuring the number of connections on a network, it does not measure the value of the interactions. It assumes that each connection has the same value, when in fact the majority of the value of the network may come from only a handful of connections.

In recent years, many people who study social networking have turned to the writings of British anthropologist Robin Dunbar for guidance. Dunbar theorizes that human beings can only maintain stable relationships with a finite number of people. Although there is no precise measure, Dunbar’s Number is generally thought to be about 150 relationships. People cannot cognitively sustain meaningful relationships with a network of people beyond this number, and as the network grows, it needs to apply more and more rules to govern the interactions.

Moreover, if you look at how economies actually operate, value is not created by quantity, but by scarcity -- or supply and demand. When there is demand for a product but limited supply, the value goes up.

New Rules for Business Communities

Businesses need a new set of rules to measure value from communities and social services. Rather than focusing solely on the number of users, businesses should focus on the transaction value of each interaction and build value by limiting the size of the community to amplify the interaction value.

The term I use for measuring social value is Return on Interaction (RIN). The idea behind RIN is that you are trying to get the most value from every interaction in the network. To do so, you need to make sure that the community is populated by people who can contribute meaningful content and have the ability to act on ideas and initiatives. Keeping the community or groups within the community limited provides more trust in the network. Generally, RIN value is amplified when you know the members of the community, have trust in the network, and each member has the ability to act on the information shared within the community.

Several of our customers at Ingeniux have developed communities that maximize RIN value.

A good example is Massachusetts College of Art and Design (MassArt). Recently, MassArt launched a college governance community. The community is limited to board members and trustees of the college, as well as the required faculty and administration. Prior to the community, all interaction occurred in personal meetings and was managed in print and on email. By creating a closed and secure community, MassArt has shifted much of the communications and interactions around the governance of the college online. Because it is a private network, each member has the trust to share important ideas and information, and members of the community actually have the power to act on those ideas to initiate change.

The Impact of Small Communities on Your Community Software Selection

Not all business social and community platforms are designed the same. If your focus is creating higher interaction value by limiting the size of the community, there are several key features and capabilities to focus on.

  • Authentication and member management: Private communities require more powerful authentication and member management. Unlike traditional social networks where every member has equal rights, private communities often have roles that govern what each member can do in any given area of the community. Moreover, membership goes beyond simple registration to a managed process.
  • Asymmetric sharing: Traditional social networks are like an email with one address, “send to all.” In a community that focuses on interaction value, you need to support much more granular sharing. Asymmetric sharing provides the ability to share content and communications with select users, whether specific friends and followers, larger groups or the entire community.
  • Groups and workspaces: Communities can be organized in specific groups and workspaces. This creates a private space within the larger community that allows for richer interactions and a smaller overall size of the community.
  • Documents and business content: In a smaller community, people can share rich content, such as documents and other business communications. The software platform needs to store and manage this information appropriately.


The Internet has been built on the principles of open access and the Network Effect, both of which assume mass adoption. However, today people are realizing that what really drives value for most businesses and organizations is the trust and rich connections that come from smaller, private communities.

The value of a community should not be measured on the size of the membership but on the total value of the interactions, or what I call Return on Interaction (RIN). RIN value is amplified when you know the members of the community, have trust in the network, and each member has the ability to act on the information shared within the community.

Businesses should build their communities to maximize RIN by establishing value in the communications and closely managing membership to keep quality ahead of quantity.

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