What makes a platform

In other words, the average linear unicorn is valued at a little more than half of comparable platform companies. Not surprisingly, platform businesses also have most of the funding raised by these unicorn startups. To top it off, platforms also got more favorable terms from investors. The next wave of large public companies worldwide will be dominated by platforms. Platform unicorns were valued about 12 percent higher relative to the funding they received when compared to linear platforms, indicating that investors are more confident in the upside of their platform investments.

Obviously, not all of these unicorn companies will survive. But the trends in both public and private markets show that platform businesses are quickly overtaking linear companies. In particular, the huge shift toward platforms among unicorn startups suggests that the next wave of large public companies worldwide will be mostly platforms.

A platform ultimately enables this value creation by facilitating transactions. Getting the core transaction right is the most important part of platform design. It is the process that turns potential connections into transactions.

Getting the core transaction right is the most important part of platform design, as the platform business will need its users to repeat this process over and over to generate and exchange value. The four steps of the core transaction. The challenge is a unique one: how to get potentially millions of people to behave the way you want them to.

The four functions of the platform business model. First you must attract users to join, then you aid them by matching them together, providing the technology to facilitate the transaction and establishing the rules that govern the network in order to build trust and maintain quality. These are the f our core functions of a platform :. For more on platforms, read Modern Monopolies. I was in charge of Facebook Platform.

We trumpeted it out like it was some hot shit big deal. A platform is when the economic value of everybody that uses it, exceeds the value of the company that creates it. A platform, according to Gates, is any company that creates more economic value for its customers than it captures for itself.

There are bound to be exceptions to this rule, and its terminology could be explained better. But if you include profitability or business model sustainability, things start to look worse.

Nonetheless, this definition provides me a good starting point as I explore what it means for a company to be a platform. But the major difference between the two is that disruption already has an academic definition. Clayton Christensen wrote three books about it! After achieving success in the market, incumbents get locked into serving their most profitable customers. They tend to foster deep, trust-based relationships, as participants have the opportunity to realise more potential by working together.

Business leaders who understand this will likely increasingly seek out platforms that not only make work lighter for their participants, but also grow their knowledge, accelerate performance improvement, and hone their capabilities in the process.

Our message to you is, a platform business is not opportunity, it is an imperative! We hope that this blog gives you some insights in the world of platform businesses.

Jeroen Hermans Manager jhermans deloitte. Contact us More future focused conversations in under words. Did you find this useful? Yes No. The robots are ready, are you? The 3rd Annual Global Robotics Survey.

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