In practice, most of the valuable insights you will glean from a scaled-up dataset in a particular domain will come early on. More data just confirms those insights. Further, the number of insights that will matter enough for customers to pay you or choose you over other providers is typically small. So data scale can give you these early 1-3 key... See more

5. Data Is Central to Customer ValueNetflix’s core product value, it turns out, is content licensing and content production. Recently, they have even dropped the long tail of titles they used to match you to. The data network effect they thought they had turned out to be peripheral to the real value of the product.

3. Data ThresholdHow much data do you need to make your product valuable to users? How hard is it to get that dataset — or a dataset like it? If you need a lot of data that is hard to get, that creates a barrier to others competing with you in the future... most Founders overestimate how unique and valuable their dataset is. 

Data Network Effects, 6 Elements

Data Isn’t Always Valuable

Many Founders have a fantasy that data will be an ongoing insight engine — that as they collect more and more data, they will get more and more insights that will give their startup an ongoing advantage.

Data Scale Can Give Your Startup Some Defensibility

Data embedding is the idea that by holding more and more of your clients’/users’ data, the harder you are to remove, and that gives you some defensibility.

Founders overestimate the point of diminishing returns for data in their own market category. The asymptote is usually not that high — perhaps thousands or even hundreds of data points are often enough to get 90% of the product experience value.