Think of a product that doesn’t have much in the way of network effects — say, a 2018 Nissan Rogue. Now, maybe you’d like it if a bunch of other people bought the same car, because it would be easier to find after-market parts, and you could give each other knowing waves as you drive past yet another “Roguey” on the highway. But if no one else buys the car, you’re still going to be able to make your morning commute just fine.
Compare that with how you’d feel if your friends started leaving Facebook. Probably you’d check the site less often, giving the company less opportunity to sell ads against your news feed. And maybe eventually you’d decide to delete your own account.
All of which means that as soon as a network-model firm stops growing, it starts facing the risk that it will shrink. And network effects are a force multiplier in both directions: When growth begins to contract, the same network effects that catapulted the company into market dominance can hurl it into the pit of extinction. Remember MySpace?