CHAPTER 5Platforms

Commerce changes the fate and genius of nations.

Thomas Gray

 

The tectonic plates of big business have shifted. Now, the most successful companies in the world have a digital platform at their core. Facebook, Alibaba, Google, Amazon — they all have one, and so should you.

Platforms provide value for all users as they are able to share resources. The economic value, however, comes to those who own the platform and facilitate exchanges that would not otherwise occur. The more transactions you expedite, the more money you generate. Being the platform provider also minimises your exposure to risk, which is dispersed among all the platform’s contributors and users. And the beauty of enabling all these interactions and innovations is data. Platforms naturally attract data. Data drives informed decision making, providing the platform owner with insights into future trends, opportunities and of course new cash streams. If you think that sounds like a flywheel, you’d be right.

Breaking these concepts down into first principles, we can see how a platform generates value through facilitating transactions. A shopping centre is a pre-digital platform (see figure 5.1); it has suppliers (the shops) and it has buyers. The platform owner provides infrastructure such as cleaning, power, toilets, parking and so on, which not only complements the transactions, but actually facilitates said transactions by improving the shopping experience. Thanks to the infrastructure and amenities ...

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