Why platforms win: a field guide to building scalable businesses

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Photo credit: Sonja Guina.

In 2015, my mom and I became Airbnb hosts. The upper level of our house, which had become too big for her alone, is now inhabited by friendly visitors almost every other weekend.

As a traveller, I’ve used Airbnb for much longer. My booking history knows things I can’t recall – it says I used the site for the first time in 2011 to book a room in New York’s East Village.

I lived on this street once, says Airbnb. Photo credit: Google Street View.

The year 2015 swept another new habit into my routine. Now I pick up my phone several times a day to order a ride – or food – through an app. Because I live in Indonesia, this app tends to be Go-Jek, our local on-demand motorcycle transportation and delivery service. But I also use Uber and Grab on occasions.

Your own history with these companies is probably similar. Businesses like Go-Jek, Uber, and Airbnb are persuading people around the globe to adopt new behaviors. It’s happening at an astonishing pace.

These businesses have something in common: they’ve created digital infrastructures that help people connect and exchange goods and services. Neither Go-Jek nor Airbnb offer those goods or services themselves – the users do. They’re the motorbike riders or hosts.

The inverted company

Businesses of this type are called platforms – a business model that’s “eating the world.” That’s the premise of Platform Revolution, a book co-authored by Sangeet Choudary, Geoffrey Parker, and Marshall Van Alstyne.

It describes how platform businesses work, how to build and operate them, and their impact on society.

My first a-ha moment reading the book came as I understood that Airbnb, Go-Jek, and Uber are merely the tip of the iceberg, the most talked about apps.

Indonesia’s “Uber for motorcycles,” Go-Jek. Photo credit: Go-Jek.

The transformative power of this model goes deeper – and started much earlier. This is where traditional industry players should pay attention. If they understand what makes platforms so powerful, they can adopt some of their features. But radical changes are needed.

Winning formula

Next up in the field guide to the platform revolution