On this episode of Venture Stories, Erik is joined by James Currier (@JamesCurrier) and Pete Flint (@peteflint), of NFX. NFX is a great venture capital firm founded on the concept of network effects. Erik, James and Pete cover a bunch of fascinating topics in the interview.

Pete and James explain why network effects make such good businesses — so good in fact, that they don’t have to even be run particularly well to still have great revenue, as James found out when he sold to a big incumbent.

Erik asks whether it’s possible to add network effects to an existing business or whether they have to be baked into the business model from the beginning. He also runs through a variety of verticals like healthcare, real estate, education, travel and others, asking his guests to talk about where the opportunities are to build businesses that leverage network effects in those spaces.

James explains what he means by the phrase “the best entrepreneurs are going to be the best historians” and they talk about why “timing is everything” and why a startup like Airbnb can be founded based on an economic impetus rather than a technological catalyst.

They also talk about why network effects are so important within Silicon Valley and why NFX believes that the best startups will come from inside the Valley, despite efforts to spread the “secret sauce” to other geographies. James says that there might be a lot of failed startups outside of the Valley.

They also talk about distributed teams and whether it’s possible to build a really big business with a distributed team, as well as the often overlooked importance of the name of a company.

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Venture Stories is brought to you by Village Global and is hosted by co-founder and partner, Erik Torenberg. Colin Campbell is our audio engineer and the show is produced by Brett Bolkowy.