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Actually I would argue that 37signals thrives on the network effect. A network of anti-enterprisey, web-savvy, tech trendy folks but still the network effect. I think maybe joel was wondering is if they were in danger of falling behind in their particular network.

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This reminds me of something I heard about Motorola, and their decline after the Razor phone peaked. They learned that the phone business is more like the fashion business than the electronics business.

With software related to the dev process, look how fast Subversion went from cool to uncool. It took just one viral Linus video.

I think there IS a bit of a network effect and Joel is correct to have concerns.

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