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How Alibaba, Android and Airbnb change the geometry of business

How Alibaba, Android and Airbnb change the geometry of business

| November 21, 2014 | 1 Comments

One of the central concepts I talk about on this blog is the shift from linear business models to networked business models: from Pipes to Platforms. The business priorities while building these two contrasting forms of businesses are very different and I’ve explored that in detail in an earlier essay here. We also note that [...]

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Why social networks that pay you may be a bad idea

Why social networks that pay you may be a bad idea

| November 1, 2014 | 17 Comments

One of the most common questions I get asked, while talking about platforms, relates to the issue of labor on platforms. Facebook and Twitter, among others, get a lot of value from their users and make billions of dollars, but the users don’t see much kickback.   The economics of free-labor platforms Social networks like [...]

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Why New Payment Mechanisms Fail To Take Off

Why New Payment Mechanisms Fail To Take Off

| October 16, 2014 | 13 Comments

Note: This is a guest post by Karthik Shashidhar, a reader of the Platform Thinking blog and a Bangalore-based quant consultant. Karthik is a Resident Quant at the Takshashila Institution and is fascinated by the concept of liquidity, outside the financial markets, and particularly applied to platform markets.   Kenya’s hugely successful payments platform m-pesa [...]

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An 8 minute primer on Platform Thinking

An 8 minute primer on Platform Thinking

| October 11, 2014 | 2 Comments

What happens when industries start moving towards platforms? Which kinds of firms manage the transition well and which ones get left behind? What are the key factors that drive success for a firm moving towards platforms. At SIBOS 2014 in Boston last week, I was invited to deliver a short keynote on applying Platform Thinking [...]

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City-as-a-platform: Applying platform thinking to cities

City-as-a-platform: Applying platform thinking to cities

| September 27, 2014 | 8 Comments

Note: This is a guest post by Barbara Thornton. Barbara attended my lecture at Harvard Business School in July and has been applying principles of Platform Thinking to her work with cities and municipalities. This post leverages the Magnet – Tools & Rules – Data framework that I first alluded to in my Harvard Business [...]

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Engineering-as-marketing: How startups transform marketing

Engineering-as-marketing: How startups transform marketing

| September 9, 2014 | 1 Comments

This is a guest post by Justin Mares, the co-author of  Traction: A Startup Guide to Getting Customers. Get the first 3 chapters free here.   You (or your team’s) engineering talents can get your startup traction directly by building tools and resources that reach more people. We call this traction channel engineering as marketing: [...]

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Uber: The feedback loop disrupting transportation

Uber: The feedback loop disrupting transportation

| September 1, 2014 | 3 Comments

When Uber was valued at tens of billions of dollars, there was significant criticism from valuation experts (Aswawth Damodaran, no less) and an equally compelling response from one of Uber’s earliest investors, Bill Gurley. One of the best things that emerged from these discussions (in conjunction with a back-of-the-napkin sketch tweeted by David Sacks, founder [...]

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Will peer lending platforms disrupt banking? Feedback loops may hold the key

Will peer lending platforms disrupt banking? Feedback loops may hold the key

| August 14, 2014 | 2 Comments

Earlier this week, I had an interesting tweet exchange with Giles Andrews, the founder of Zopa, one of the leading peer lending platforms. Clearly, Zopa and peer lending platforms of its ilk are going strong. The strong growth notwithstanding, they are a drop in the ocean of traditional lending models, as is often the case [...]

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The Lepore-Christensen Debate: A repeatable pattern for Platforms and Disruptive Innovation

The Lepore-Christensen Debate: A repeatable pattern for Platforms and Disruptive Innovation

| July 27, 2014 | 8 Comments

Airbnb was recently valued at an eleven figure sum, which overshadows all, except the largest hotel chains. The usual criticisms to tech valuations aside, the impact of Airbnb on the traditional hotel industry is definitely being felt. But why did the industry fail to spot this threat for so long? How does something like Airbnb [...]

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From Twitter to Tinder: Why you should stop launching at tech conferences

From Twitter to Tinder: Why you should stop launching at tech conferences

If you’re running a tech startup, you’ve probably tried to (or would love to, if you could) do at least one of the following: – Get TechCrunch to cover you – Launch at SXSW Unfortunately, as launch channels go, the more unimaginative the channel, the less successful it is at getting you traction. This is [...]

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From Social Media to the Sharing Economy: The Three Drivers of Business Disruption

From Social Media to the Sharing Economy: The Three Drivers of Business Disruption

First we went wild about social media disrupting the world of business communications and media. Then the Sharing Economy sprang up and we talked about how the traditional ownership model was getting disrupted. We’re looking at the 3D printer as the democratization of manufacturing much like Twitter and blogging democratized publishing and YouTube democratized broadcast. [...]

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A SCALING FRAMEWORK FOR NETWORK EFFECT PLATFORMS

A SCALING FRAMEWORK FOR NETWORK EFFECT PLATFORMS

One of the most common misconceptions about running a platform business is that it’s all straight and easy once the initial chicken and egg problem of getting both producers and consumers is solved. Ironically, in an age where kicking off new platforms isn’t quite as difficult as it used to be, the most important platform [...]

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ANNOUNCING: THE PLATFORM THINKING WORKSHOP

ANNOUNCING: THE PLATFORM THINKING WORKSHOP

I am pleased to announce that the first open Platform Thinking Workshop will be held in San Francisco on 12th June. The workshop is being held in partnership with 500Startups at their SF office. Tickets and Details available here. About the workshop How does one go about building the next Pinterest, Airbnb, Uber or Coursera? [...]

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Piggybacking Mechanics: WhatsApp, Instagram and Network Effect Marketing

Piggybacking Mechanics: WhatsApp, Instagram and Network Effect Marketing

| April 29, 2014 | 10 Comments

Welcome to the age of the zero-dollar marketing startup. WhatsApp, and earlier Instagram, have officially become a permanent part of startup lore for having built multi-billion dollar businesses without (reportedly) spending a dime on marketing. Meanwhile, Airbnb has grown from a hipster community of mattress-renters to the world’s largest provider of accommodations without spending even [...]

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Platform Metrics: The core metric for platforms, networks and marketplaces

Platform Metrics: The core metric for platforms, networks and marketplaces

| April 17, 2014 | 14 Comments

You become what you measure. From my experience working with clients across enterprises and startups, the most common reason for failure and inefficiency is the focus on convenient, but inappropriate, metrics. Your technology doesn’t determine the business you build. Neither does your organizational capability. The metric you optimize for is the single biggest factor that [...]

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The Core Interaction: What Platforms and Marketplaces can learn from Super Mario Bros.

The Core Interaction: What Platforms and Marketplaces can learn from Super Mario Bros.

| March 27, 2014 | 17 Comments

This essay is part of the ongoing series on The Fundamentals of Platform Thinking. A good part of my childhood was spent glued to the Telly playing Super Mario Bros. A generation that never swiped screens spent its childhood wielding joysticks and clicking on handheld controls. Try as she might, my aunt never understood what [...]

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How to design the Airbnb for X, the Uber for Y and the Twitter for Z

How to design the Airbnb for X, the Uber for Y and the Twitter for Z

| March 12, 2014 | 25 Comments

This is post #6 in the ongoing series on Platform Design Principles.  Are you building the Airbnb for X, the Uber for Y or the Quora for Z?  Well, then this article might just be for you. I work a lot with startups/enterprises building marketplaces and platforms to solve diverse problems. But these startups often [...]

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How small ideas like Twitter, WhatsApp and Airbnb create large value through network effects

How small ideas like Twitter, WhatsApp and Airbnb create large value through network effects

| February 26, 2014 | 12 Comments

This is post #5 in the ongoing series on Platform Design, and is probably the most foundational post for all the work on this blog.     Twitter: You can use this to type 140 characters WhatsApp: Just like SMS but doesn’t cost much Airbnb: Rent out your spare mattress Uber: Just another taxi company [...]

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How Google’s crawlers, Uber’s drivers and Instagram’s selfies power the platform economy

How Google’s crawlers, Uber’s drivers and Instagram’s selfies power the platform economy

| February 5, 2014 | 19 Comments

This article is #4 in an ongoing series on the design of platform business models.  What do Google’s crawlers, Uber’s drivers and Instagram’s selfie-clickers have in common? Or for that matter Elance’s freelancers, Dribbble’s designers and Twitter’s tweeters.  In a world of platforms, they create the fuel needed to facilitate economic and social exchanges that [...]

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Uber, Etsy and the internet of everybody: A visual guide to networked businesses

Uber, Etsy and the internet of everybody: A visual guide to networked businesses

| January 23, 2014 | 14 Comments

This post is part of an ongoing series on the fundamentals of Platform Thinking.    The natural purpose of a network is to connect. Fax machines, telephone networks, stock exchanges and credit card networks have done exactly that . With the internet, we now have a universal network that connects everyone with everyone (well, almost). [...]

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The Three Design Elements for Designing Platforms

The Three Design Elements for Designing Platforms

| January 17, 2014 | 14 Comments

This article is #2 in an ongoing series on Platform Thinking.  What does the traditional world of manufacturing have in common with the way networked platforms work? How can a basic understanding of factory design help us change the way we think about designing internet platforms, marketplaces and social networks? I’ve written previously about the distinction [...]

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Platform Thinking Roundup: The best articles of 2013

Platform Thinking Roundup: The best articles of 2013

| December 28, 2013 | 6 Comments

2013 started with JP Rangaswami declaring it the year of platforms. It’s ending with a piece I wrote for WIRED titled “Platforms are eating the world”. A lot has happened in between. We saw the proverbial final nails in the coffin of an industry that has been tellingly transformed by platform business models with Nokia [...]

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Disruption, Failure and Metrics: Explaining Platform Thinking

Disruption, Failure and Metrics: Explaining Platform Thinking

| December 9, 2013 | 13 Comments

Excerpts from an interview with YourStory.com earlier this year. The original interview is available here. Also, Part 1 is available here. Disruption: What advice would you give to startups and entrepreneurs starting a business today? How can they identify industries that are ripe for disruption? The best way to identify an industry for disruption is [...]

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The Creator Web: The Dribbblisation of work platforms

The Creator Web: The Dribbblisation of work platforms

| November 26, 2013 | 9 Comments

Note: This article first appeared in Fast Company. I am pleased to have co-authored with TED Books Author Damon Brown.  The Internet has powered the rise of a new creative class. Global reach, real-time feedback, and reputation building have redefined the creator. Today, the Instagram-wielding teen is as much a member of this burgeoning creative class [...]

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Owning The Transaction – Why Marketplaces Need To Think Like SAAS Businesses.

Owning The Transaction – Why Marketplaces Need To Think Like SAAS Businesses.

| November 12, 2013 | 13 Comments

Marketplaces are difficult businesses to get off the ground. A marketplace without buyers cannot attract sellers and vice versa. In fact, the infamy of this proverbial chicken and egg problem detracts entrepreneurs from the challenges that a marketplace presents after it has successfully gained adoption and is successfully matching buyers with sellers. After all, marketplaces for [...]

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The Waze-ification of the Physical World

The Waze-ification of the Physical World

| October 29, 2013 | 3 Comments

This article first appeared on Harvard Business Review. I’m delighted to have co-authored this with Mark Bonchek.  We are moving from a world in which physical products are separate to one in which they are connected.  Computers were just the beginning.  Appliances and engines now send alerts when they need to be serviced.  Cameras upload [...]

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The Rise of the Platform: A seismic shift in business models

The Rise of the Platform: A seismic shift in business models

| October 19, 2013 | 24 Comments

Note: A variation of this article appeared as an op-ed on The Wall Street Journal’s MarketWatch. This was co-authored with Geoffrey Parker (@g2parker, Tulane Univ.) and Marshall Van Alstyne (@infoecon, Boston Univ.). They currently serve as research scientists at the MIT Sloan School of Management.   Nokia just sold to Microsoft. Blackberry announced that it is considering putting [...]

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Trolls, Vandalism and Report Abuse: A Framework for Online Community Management

Trolls, Vandalism and Report Abuse: A Framework for Online Community Management

| October 12, 2013 | 1 Comments

Online platforms work on principles similar to offline communities. The onset of crime and vandalism in a community can lead to large-scale abandonment. The same applies to online communities and marketplaces, especially as they grow in size. Network effects make a community more valuable as it scales. However, the onset of vandalism could make network effects work [...]

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Platform Thinking and Disruption: Interview with YourStory

Platform Thinking and Disruption: Interview with YourStory

| October 6, 2013 | 6 Comments

I was recently interviewed by YourStory, a leading Asian startup blog on how Platform Thinking changes the way we build businesses. The following post is the first part of my interview. This was first published here. —- Sangeet writes the blog Platform Thinking, which has been recommended by All Things Digital, GigaOm, Inc. Magazine and the HBS Centre for [...]

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Platform Thinking – MIT Media Labs talk covering key concepts

Platform Thinking – MIT Media Labs talk covering key concepts

| September 28, 2013 | 15 Comments

I’d visited MIT this summer for some research collaborations at the MIT Centre for Digital Business and for speaking at the Platform Strategy Conference at the MIT Media Labs, which attracted C-suite execs from leading technology companies, both as speakers and audience. This is the video of my talk where I explore key concepts of [...]

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When Social Fails: How Sampling Costs Kill Social Curation

When Social Fails: How Sampling Costs Kill Social Curation

| September 14, 2013 | 5 Comments

Social curation is a great way to scale any business relying on user-generated content. YouTube and Quora enable the community to create value through upvotes/downvotes and the ability to report abuse. Startups that rely on user generated content often scale when they unlock social curation. For all its benefits, social curation isn’t fool-proof. Curation may [...]

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The secret to scaling social networks and local marketplaces

The secret to scaling social networks and local marketplaces

| August 29, 2013 | 6 Comments

We often associate social networks with hyper-growth, a perception largely fostered by growth infographics of Facebook, Twitter and Pinterest that get shared all around. But not all social networks scale that easily. There are three patterns that I often see across the growth of most social networks (and most platform business models, for that matter). [...]

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How startups compete with friction in product design

How startups compete with friction in product design

| August 14, 2013 | 10 Comments

Startups need Traction. A startup which doesn’t get discovered doesn’t go anywhere. This is all the more critical for platform businesses which rely on their users to create value and network effects. In the specific case of platform businesses, Traction dictates the value that is created. A social network without enough users or a marketplace [...]

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The One Feature That Changed Social Networking Forever

The One Feature That Changed Social Networking Forever

| August 4, 2013 | 17 Comments

What is the single most important innovation that Facebook ever came up with? Before I answer that, let’s think of the real value for users on a social network. Social networks are a classic example of the platform business model where users create all the value and there is very little value until users come [...]

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The First-Mover Disadvantage: Why Startups Fail

The First-Mover Disadvantage: Why Startups Fail

Amazon is entering India. The timing, and not the move in itself, catches the eye. 2010-2011 was a period of rampant funding and hazy valuation calculation for Indian e-commerce. Flipkart was widely celebrated as the first mover that got most things right. Amazon is, of course, coming to the party once it’s over and done with. Cash [...]

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The Scalable Startup Test: Bumps vs. Engines

The Scalable Startup Test: Bumps vs. Engines

“A startup is a company designed to grow fast… The only essential thing is growth. Everything else we associate with startups follows from growth.” – Paul Graham   Paul Graham differentiates between startups and new businesses on one particular parameter, the potential for scale and hyper-growth. A startup’s potential to achieve hyper-growth and rapid scale is largely [...]

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Why #Hashtags are the future of monetizing social media

Why #Hashtags are the future of monetizing social media

| June 26, 2013 | 2 Comments

You can’t invite people to a party and try to sell them stuff. Pretty much every starry-eyed startup that went after eyeballs gets it by now. Over the last seven years the web has moved away from a consumption medium (think NY times) to a creation-consumption medium (think Twitter, Facebook). But we’ve been very tardy [...]

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How to disrupt Craigslist

How to disrupt Craigslist

Craigslist, that ugly set of electric-blue links that still stands around like an exhibit from the museum of early web design. Poor design and a general lack of features haven’t come in the way of the site’s popularity. Not only is the site an eyesore, it’s a regular destination for scammers and spammers, alike. How [...]

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So you think you can go viral? Three reasons you may be kidding yourself!

So you think you can go viral? Three reasons you may be kidding yourself!

Startups often wonder why investors can’t see how viral they’re going to get. I met an entrepreneur yesterday who confidently stated that his product was going to grow ‘virally’ because it was the best in its category. That was essentially the optimism that powered the growth slide in his investor deck. (To see why this [...]

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Marketplace Metrics: The three success factors

Marketplace Metrics: The three success factors

Note: This article was originally published on TheNextWeb Marketplaces are difficult businesses to run. Like all multi-sided platform businesses, they suffer from the classic chicken and egg problem: the technology has no value unless buyers and sellers are present and you can’t get the buyers on board unless you have sellers and you can’t bring in sellers [...]

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Dissecting Amazon’s Platform Play

Dissecting Amazon’s Platform Play

Question: Is Amazon a Pipe or a Platform or both? Short Answer: It’s complicated! Long answer follows… Pipes and Platforms are two contrasting business models, as we noted in the last post. However, the internet itself is a platform on which others (you, me, web developers, app makers, everyone) create value. By virtue of this [...]

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Why Business Models Fail: Pipes vs. Platforms

Why Business Models Fail: Pipes vs. Platforms

| April 24, 2013 | 14 Comments

Why do most social networks never take off? Why are marketplaces such difficult businesses? Why do startups with the best technology fail so often? There are two broad business models: pipes and platforms. You could be running your startup the wrong way if you’re building a platform, but using pipe strategies. More on that soon, [...]

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Users or Customers?

Users or Customers?

| April 13, 2013 | 6 Comments

 If you’ve been around the internet startup world for long enough, you’ve probably engaged in the user-customer debate at least once. Who’s the user? Who’s the customer? Who should we be focusing on? I’m going to start off a series of posts talking about the basic elements of Platform Thinking and this being the first, [...]

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Building Online Marketplaces: A checklist for Disruption

Building Online Marketplaces: A checklist for Disruption

Marketplaces employ the platform business model by connecting buyers and sellers and enabling them to transact. I have written a lot about marketplaces in earlier posts on this blog. Nir Eyal and I have collaborated in the past and we got together again to make this post happen. Bill Gurley had written an interesting post [...]

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The network effect playbook: Social products win with utility, not invites

The network effect playbook: Social products win with utility, not invites

| March 27, 2013 | 2 Comments

Note: This essay was first featured as a guest post on Andrew Chen’s blog. It’s one of the best resources out there for internet startups. The proverbial chicken and egg problem of building a new social product is well understood among tech startups, and it’s been commonplace to follow two contrasting mechanisms for getting traction. Traditionally, startups [...]

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