Thanks for your answers. Let me be clear, I'm not talking about viral growth, I'm talking about the network effect (i.e. many people having the product / service and do or can interact because they do) being very very important to having and understanding the value of the product.
Rob, Your thought about starting with a segment is very good and I agree that's a good way once it's built. However, before creating the product and trying to sell it, my client would like to try to validate or invalidate the idea.That will help hone it or shut it down - which really is the best way to create a new company.
For example, I started a company a few years back that had provided a service to small businesses. We called small businesses with the original idea, before having a product, and interviewed them about it. Based on their responses, we modified the product. Then we called them and tried to actually sell it as if we were real salespeople with a product. Only when they said yes they'd like to buy it and were taking out their credit card did we tell them there really was no product like that yet, but when it was created, we would give them 6 free months. When we were hitting high percentages of "YES" we had our design and created the product - and it sold well.
If I had tried to create the product first based on our initial hypothesis, I would have wasted a lot of time and money.
So the question is, how can I do this same thing but where it's hard to validate without people understanding the value with the network effect? Put a phone in front of someone and if no one else has one, it's worth nothing. If one other person who you might want to call has one, it's worth something. If every person and every company has one, it's worth a lot.
(I guess I'm no longer anonymous)