Compounding Series — Knowledge and Metcalfe’s Law

I’ve always been a keen consumer of information, regardless of medium. I lean more towards text but the amount I learn from videos and audio has increased as it’s become more popular recently. I pride myself on having good general knowledge as well as some deep understanding of certain subjects. This was not by design, originally, if I thought something was interesting I would consume as much information as possible on the subject, really go down the rabbit hole until I either lost interest, or found something which was more exciting to learn about.

As you grow older, you notice connections in many aspects of your life. As you know, applying certain information from one area to another is very helpful. Connection of information is knowledge It can help you grasp concepts really quickly, despite having very limited comprehension. Effectively this is one piece of information interacting with another. The more information you hold in your head, the more interactions that information can have and as soon as your brain receives a new piece of information, it’ll connect the dots, consciously or subconsciously. This is an extremely powerful mechanism, the more you put in, the more you receive back.

If you’re having a hard time visualising this idea, don’t worry, Metcalfe’s Law can be applied to this concept and really help to show examples of what I mean. Firstly, what is Metcalfe’s Law?

“Metcalfe’s law states the effect of a telecommunications network is proportional to the square of the number of connected users of the system (n2). First formulated in this form by George Gilder in 1993, and attributed to Robert Metcalfe in regard to Ethernet, Metcalfe’s law was originally presented, c. 1980, not in terms of users, but rather of “compatible communicating devices” (for example, telephones). Only later with the globalization of the Internet did this law carry over to users and networks as its original intent was to describe Ethernet purchases and connections. [1]

As you can see from the image, the network increases dramatically with each new user. So with two users, there’s one connection. 5 Users, 10 connections. 12 users, 66 connections, ect ect. I visualise information in our brains almost identical to Metcalfe networks. Instead of telephones or computers, imagine each user as a piece of information, fact or figure ect. This should start to conceptualise this theory in your head.

Of course, with Metcalfe networks, each user is identical and is treated as such (telephones, for example) however, our knowledge is not identical. Certain pieces of knowledge are going to connect more frequently within the network compared to others. For instance, understanding of a basic principle in Economics can be applied to 100’s of situations and scenarios, or other “Users” within the network. Whereas the history of the colour red will only be able to interact with a few other “Users” of the network. Therefore, within this model, systems are far more important to know than individual facts as they network better.

Lastly, this model has one more alternative attribute compared to Metcalfe’s Law. In Metcalfe’s Law, the two users (Telephones) are connected and share information. Whereas in this knowledge model, sometimes, a connection between two “Users” in the network will occur but will also create a new piece of information or “User”. For instance, for years, people were opening up loafs of bread and cutting them everytime they wanted a slice, until in 1928, Otto Frederick Rohwedder invented a machine that pre-sliced bread before it was packaged. Everyone knew about bread and knew how to cut it, but Otto’s invention was conceived after two “Users” came together. I know this is a trivial example but I think it does the trick.

Hopefully by now you’re able to see that information isn’t all equal and that accumulation of information can be extremely powerful. However, it is limited based on A) how good your memory is and B) how well you read patterns and can relate information. This might be something you need to work on to reach the full potential of this model, but once that happens, you’ll see information in a new light.

About the Author

James Allen is the co-founder of embrk.online, where he makes videos based around providing high value to entrepreneurs and small business owners through leverage.

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