Network Effect Scorecard
Score how strong a company's network effects are and whether they are likely to compound, using a structured checklist.
Questions this answers
- Does this company actually have a network effect, or just looks like one?
- Is Bitcoin or Ethereum a stronger network than Visa or Meta?
- Why does OpenAI score lower than people assume on network effects?
- Which dimensions are doing the heavy lifting in this moat?
- How does Metcalfe’s n² growth compare to Reed’s 2ⁿ?
- Should I value this business linearly or with a network premium?
What is a network effect?
A short primer before you score.
A network effect company gets more valuable to each user as more users join. A telephone with one user is useless; with a billion users it is essential. That non-linear relationship between users and value is the moat. Metcalfe’s Law captures the rough math: value scales with users squared (n²), not just users (n).
Linear business
Each customer is roughly independent. 10x the customers, 10x the value. Examples: a regional grocery chain, a law firm, a custom furniture maker.
Network effect business
Each new user makes the product more valuable for existing users. 10x the users, ~100x the value. Examples: Visa, WhatsApp, Ethereum, the App Store.
Why it matters
Network effect companies tend to win their categories outright and command premium valuations because the moat compounds. Mistaking a linear business for a networked one (or vice versa) is a common analysis error.
What are you scoring?
Optional. Used only to label the results and chart.
Score the ten dimensions
For each dimension, score 0–10 based on how strongly it describes the business. Adjust the priority dropdown if some dimensions matter more for your judgment.
The verdict
Updated live as you score.
Some platform traits, but mostly scales like a normal business.
Strongest dimensions
Network DNA
The shape of this business across all ten dimensions. Compare it to a benchmark to see how differently network effects manifest.
Network effect engine
Plug in a real user count and watch the network value explode.
See connections explode
Every new user creates a connection with everyone already there. Drag the slider to watch why n² gets out of hand.
Growth curve shape
The shape of compounding, with a critical mass ignition point.
Where to go next
Learn
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Frequently asked questions
Why is my score lower or higher than I expected?
The total score is a weighted average across ten dimensions, scaled to 0–100. A common surprise is that a famous company like OpenAI or Walmart scores in the 30–50 range: not because they aren’t valuable, but because their moat is something other than a pure network effect (capital, brand, data, distribution). Look at the radar shape and the Strongest Dimensions list to see what is actually driving the score. If a single dimension feels too low, raise its Priority dropdown to “High” and see how the total moves.
What’s the difference between Metcalfe, Reed, and Sarnoff?
Sarnoff (V = n) describes one-to-many broadcast networks like TV and radio: each new viewer adds a constant amount of value. Metcalfe (V = n²) describes peer-to-peer networks like phones, email, or Bitcoin: every user can connect to every other, so value scales with the square. Reed (V = 2ⁿ) describes group-forming networks like Discord or Slack, where users can form arbitrary subgroups and the number of possible groups grows exponentially. These are theoretical ceilings, not market caps: real networks usually land somewhere between Sarnoff and Metcalfe.
What does the “network effect surplus” on the chart mean?
The pink shaded area between the linear baseline and the scored-company curve is the extra value created by the network effect: what this business produces above and beyond what a comparable linear business would produce at the same user count. A wider surplus area means a stronger moat. Note the units are relative, not dollars; the chart is about curve shape, not absolute valuation.
How should I think about the Priority weights?
The Priority dropdown lets you weight dimensions you think matter more for your judgment of this specific business. For a crypto protocol, you might raise Protocol and Developer Ecosystem to “High” and drop Local Density to “Low.” For a rideshare app, you’d do the opposite. The default of Normal across all ten is a fine starting point: don’t over-engineer the weights. The shape of the radar matters more than the exact total.
Why do some dominant companies score lower than I’d guess?
Dominance is not the same thing as network effects. Walmart dominates retail through scale, supply chain, and real estate: not because each new shopper makes the store more useful for everyone else. Google dominates search through data and capital, with weaker direct user-to-user effects than Facebook. The score is measuring the network part of the moat, not the moat itself. A business can be a fantastic investment without being a network effect business.
Where do the preset scores come from?
The presets are opinionated estimates built from the published characteristics of each network: they are starting points for discussion, not authoritative ratings. Bitcoin’s protocol score is high because it is a shared monetary standard; its density score is near zero because Bitcoin doesn’t care where users live. OpenAI’s data and developer scores are high; its marginal cost score is low because GPU inference is genuinely expensive. Tweak any preset after loading it to reflect your own view.
What does this calculator NOT include?
Quite a bit. It doesn’t model anti-network effects (congestion, spam, harassment, declining quality at scale: the “Eternal September” problem). It doesn’t account for regulatory or geopolitical risk, which can break a network overnight. It doesn’t weigh how easily the network can be displaced by an adjacent platform. It doesn’t separate domestic from global effects. Use the score as a structured prompt for analysis, not as a decision rule. A high score is necessary, not sufficient, evidence of a real moat.
Want to really understand what you just calculated?
Everything below was picked for this calculator specifically.

What this means
Reading the verdict in plain language.