platform business model!

One business model has defined, been defined, and it defined the tech space; that’s the platform!

Building a platform business model isn’t simple; it’s like winning a lottery ticket. Why?

Well, because platforms are built differently.

Indeed, whereas a regular/linear business model might have been built for profitability since day one, a platform business is built for market share domination!

As such, in the early years, especially when a platform is built in a new industry, it will need to be aggressive in ensuring it can gather as many market shares as possible.

This makes platform business models unique, as they follow what business lingo calls the “winner-take-all effect.”

In other words, when a new industry is developing, many players will try to become the platform that intermediates that industry, thus enabling it to expand to its largest possible size and, in the process, capture a lot of value and take rates!

This implies that when the industry moves toward a more mature stage, only a few (often 2-3) platform players will stay alive, with one or two dominating the markets.

Even if a few more survive, they will be negligible regarding market shares!

In exchange for being in such a tough place, the platform business becomes just like a state, able to capture monetary value on top of the activities happening on top of the ecosystem that the platform nurtured in the form of a take rate (pretty much a tax!).

Now that I’ve clarified the above let me bring you toward building a platform business model.

If you choose that journey, at least you know which kind of challenges you’re going through!

In the end, you will find an infographic breaking down some of the key aspects of each platform business model that have dominated various tech industries for the last 20 years.