The Best Defensibility for Any Business
Why Network Effects Win in B2C – But Embedding Wins in B2B
Insights
Aug 31, 2025
For years, network effects were hailed as the ultimate moat in tech – the strongest form of defensibility any company could build. And in consumer-facing products (B2C), they still are.
A true network effect means that every new user increases the value of the product for every other user. Think of marketplaces like Airbnb, social platforms like LinkedIn, or messaging tools like WhatsApp. Once enough people are inside the network, the product becomes self-reinforcing – and nearly impossible to displace. No outsider can replicate that layer of interconnected users without rebuilding the entire network from scratch. That’s the magic of defensibility.
As NFX famously puts it:
“When a network effect is in place, the company gets stronger the more people use it. A competitor can’t just build a better product – they have to build a better product and a better network.”
But in B2B, especially in enterprise software – where I’ve spent the last decade – the game is different.
Onboarding Is the Moat
In B2B, the biggest bottleneck isn’t virality or reach. It’s onboarding.
Deploying a new tool inside a company means dealing with multiple stakeholders, permissions, integrations, change management, training, and trust. It’s not sexy – but it’s real. That long, manual onboarding process can feel like a disadvantage at first. But once you’re in, it becomes your biggest moat.
This is what I call embedded defensibility.
If your product gets deeply embedded into a company’s daily workflows, tech stack, or decision-making process – it becomes sticky. Not because it’s locked in by contract, but because it’s locked in by behavior. Removing it isn’t just uninstalling software – it’s untangling a part of the business.
Even if a competitor comes along with a better product, switching costs are high:
– Retooling internal processes
– Retraining the team
– Rebuilding trust
– Risking downtime or errors during transition
That’s enough to keep most B2B customers from churning – even if your product isn’t perfect.
Why Network Effects Rarely Work in B2B
In theory, network effects can exist in B2B too – for example, platforms where companies invite each other to collaborate, like Slack or Notion. But in most B2B workflows, you can’t rely on your customers to bring in more customers. Their partners might not want to switch tools. Their internal policies might block third-party data sharing. And unlike consumers, businesses can’t “just try it” – they need approvals.
So even if your product has network-like potential, you probably won’t reach that critical mass. And that’s okay.
You don’t need network effects to build a defensible B2B company.
You need to survive the brutal first onboarding – and then stay embedded.
The Takeaway
In B2C, build for virality. Defensibility comes from the network.
In B2B, build for onboarding. Defensibility comes from embedding.
Don’t try to force consumer-style growth dynamics into enterprise software. Focus on building something useful enough to justify the onboarding pain – and sticky enough to stay once you’re in.
That’s real defensibility.
More to Discover
The Best Defensibility for Any Business
Why Network Effects Win in B2C – But Embedding Wins in B2B
Insights
Aug 31, 2025
For years, network effects were hailed as the ultimate moat in tech – the strongest form of defensibility any company could build. And in consumer-facing products (B2C), they still are.
A true network effect means that every new user increases the value of the product for every other user. Think of marketplaces like Airbnb, social platforms like LinkedIn, or messaging tools like WhatsApp. Once enough people are inside the network, the product becomes self-reinforcing – and nearly impossible to displace. No outsider can replicate that layer of interconnected users without rebuilding the entire network from scratch. That’s the magic of defensibility.
As NFX famously puts it:
“When a network effect is in place, the company gets stronger the more people use it. A competitor can’t just build a better product – they have to build a better product and a better network.”
But in B2B, especially in enterprise software – where I’ve spent the last decade – the game is different.
Onboarding Is the Moat
In B2B, the biggest bottleneck isn’t virality or reach. It’s onboarding.
Deploying a new tool inside a company means dealing with multiple stakeholders, permissions, integrations, change management, training, and trust. It’s not sexy – but it’s real. That long, manual onboarding process can feel like a disadvantage at first. But once you’re in, it becomes your biggest moat.
This is what I call embedded defensibility.
If your product gets deeply embedded into a company’s daily workflows, tech stack, or decision-making process – it becomes sticky. Not because it’s locked in by contract, but because it’s locked in by behavior. Removing it isn’t just uninstalling software – it’s untangling a part of the business.
Even if a competitor comes along with a better product, switching costs are high:
– Retooling internal processes
– Retraining the team
– Rebuilding trust
– Risking downtime or errors during transition
That’s enough to keep most B2B customers from churning – even if your product isn’t perfect.
Why Network Effects Rarely Work in B2B
In theory, network effects can exist in B2B too – for example, platforms where companies invite each other to collaborate, like Slack or Notion. But in most B2B workflows, you can’t rely on your customers to bring in more customers. Their partners might not want to switch tools. Their internal policies might block third-party data sharing. And unlike consumers, businesses can’t “just try it” – they need approvals.
So even if your product has network-like potential, you probably won’t reach that critical mass. And that’s okay.
You don’t need network effects to build a defensible B2B company.
You need to survive the brutal first onboarding – and then stay embedded.
The Takeaway
In B2C, build for virality. Defensibility comes from the network.
In B2B, build for onboarding. Defensibility comes from embedding.
Don’t try to force consumer-style growth dynamics into enterprise software. Focus on building something useful enough to justify the onboarding pain – and sticky enough to stay once you’re in.
That’s real defensibility.
More to Discover
The Best Defensibility for Any Business
Why Network Effects Win in B2C – But Embedding Wins in B2B
Insights
Aug 31, 2025
For years, network effects were hailed as the ultimate moat in tech – the strongest form of defensibility any company could build. And in consumer-facing products (B2C), they still are.
A true network effect means that every new user increases the value of the product for every other user. Think of marketplaces like Airbnb, social platforms like LinkedIn, or messaging tools like WhatsApp. Once enough people are inside the network, the product becomes self-reinforcing – and nearly impossible to displace. No outsider can replicate that layer of interconnected users without rebuilding the entire network from scratch. That’s the magic of defensibility.
As NFX famously puts it:
“When a network effect is in place, the company gets stronger the more people use it. A competitor can’t just build a better product – they have to build a better product and a better network.”
But in B2B, especially in enterprise software – where I’ve spent the last decade – the game is different.
Onboarding Is the Moat
In B2B, the biggest bottleneck isn’t virality or reach. It’s onboarding.
Deploying a new tool inside a company means dealing with multiple stakeholders, permissions, integrations, change management, training, and trust. It’s not sexy – but it’s real. That long, manual onboarding process can feel like a disadvantage at first. But once you’re in, it becomes your biggest moat.
This is what I call embedded defensibility.
If your product gets deeply embedded into a company’s daily workflows, tech stack, or decision-making process – it becomes sticky. Not because it’s locked in by contract, but because it’s locked in by behavior. Removing it isn’t just uninstalling software – it’s untangling a part of the business.
Even if a competitor comes along with a better product, switching costs are high:
– Retooling internal processes
– Retraining the team
– Rebuilding trust
– Risking downtime or errors during transition
That’s enough to keep most B2B customers from churning – even if your product isn’t perfect.
Why Network Effects Rarely Work in B2B
In theory, network effects can exist in B2B too – for example, platforms where companies invite each other to collaborate, like Slack or Notion. But in most B2B workflows, you can’t rely on your customers to bring in more customers. Their partners might not want to switch tools. Their internal policies might block third-party data sharing. And unlike consumers, businesses can’t “just try it” – they need approvals.
So even if your product has network-like potential, you probably won’t reach that critical mass. And that’s okay.
You don’t need network effects to build a defensible B2B company.
You need to survive the brutal first onboarding – and then stay embedded.
The Takeaway
In B2C, build for virality. Defensibility comes from the network.
In B2B, build for onboarding. Defensibility comes from embedding.
Don’t try to force consumer-style growth dynamics into enterprise software. Focus on building something useful enough to justify the onboarding pain – and sticky enough to stay once you’re in.
That’s real defensibility.