Martin Casado: 'Network effects' may be the most abused term in business — data moats decay
andrewchen · x · 2026-10-19
a16z partner Martin Casado (boosted by Andrew Chen) argues 'network effects' may be the most abused term in business. A true network effect means the marginal cost of adding users relative to a smaller competitor goes down—the network's value grows exponentially with users (telcos being the classic example), giving leaders a structural edge.
Self-reinforcing properties like 'we get more data per customer' don't qualify: data value grows sublinearly over time, not exponentially, so the leader is strictly disadvantaged versus a challenger. Many things commonly labeled network effects fall into this category.
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