The Empty Promise of Data Moats

Most data network effects are really scale effects

Most discussions around data defensibility actually boil down to scale effects, a dynamic that fits a looser definition of network effects in which there is no direct interaction between nodes. Unlike traditional economies of scale, where the economics of fixed, upfront investment can get increasingly favorable with scale over time, the exact opposite dynamic often plays out with data scale effects: The cost of adding unique data to your corpus may actually go up, while the value of incremental data goes down! A practical framework for understanding the data journey

Minimum Viable Corpus

When most people talk about network effects, they focus on overcoming the bootstrapping or cold-start problem (colloquially called the “chicken-egg” problem) of acquiring enough early nodes to make the network useful for all nodes (and make the economics of the business competitive).

Source: a16z.com