The Network Effects Manual: 13 Different Network Effects
Source: https://www.nfx.com/post/network-effects-manual Author: James Currier (NFX) Date: 2025-10-07
Summary
NFX’s comprehensive taxonomy of network effects — 13 distinct types with different strengths and characteristics. Foundational reference for product moat analysis.
Key Claims
- 13 network effect types include: direct, indirect, two-sided, local, market network, language, belief, bandwagon, platform, asymptotic marketplace, data, tech performance, social.
- Strongest: direct network effects (phone, messaging) — each new user increases value for all.
- Data network effects: platform improves as it gets more data. Relevant for AI products — more users → more training data → better model → more users.
- AI products typically have: data network effects + potentially tech performance network effects.
Concepts
- Synthetic Data — data network effects are the AI moat