Yes I'd call it a network effect, and the author does as well later in the article. The point is that the network effect is required for the idea to work. It doesn't have to be a network effect though. Other examples he gives:
> Third, how synchronous and mission critical is it? Be skeptical if it going down would cause interruption to workflows that couldn't be worked around or deferred. Be incredibly skeptical if this is true round the clock and on weekends. That kind of service level implies significant and robust automation and support, which require scale.
> Fourth, how much does the business model depend on volume? Losing a bit of money on first customers as you bootstrap and learn is not an issue. Be skeptical, though, if this would need to be sustained to bootstrap your way to some required volume which is quite a way beyond those first few customers.
Generally I also think of technical scale first, but I think using it more generally here is valid.
I thought scale meant you could run your service for 1 million users just as easily as you can run it for 1,000 users.