Data network effects in B2B occur when each customer’s usage generates data that makes the product measurably better for every other customer — creating a moat that compounds with scale instead of eroding. That is the definition. The reality on the ground is messier. You’ve hit product-market fit. You’re somewhere between $50K and $3M ARR.
Data moats are a mirage while network effects are a fortress—but most founders discover this after burning 18 months building the wrong defense. The difference between data moat vs network effect is simple: data moats rely on accumulation (which competitors can replicate), while network effects create exponential value through user interactions (which competitors can’t copy).