A practical guide to the new economy that is transforming the way we live, work, and play.
Uber. Airbnb. Amazon. Apple. PayPal. All of these companies disrupted their markets when they launched. Today they are industry leaders. What’s the secret to their success?
These cutting-edge businesses are built on platforms: two-sided markets that are revolutionizing the way we do business. Written by three of the most sought-after experts on platform businesses, Platform Revolution is the first authoritative, fact-based book on platform models. Whether platforms are connecting sellers and buyers, hosts and visitors, or drivers with people who need a ride, Geoffrey G. Parker, Marshall W. Van Alstyne, and Sangeet Paul Choudary reveal the what, how, and why of this revolution and provide the first “owner’s manual” for creating a successful platform business. Platform Revolution teaches newcomers how to start and run a successful platform business, explaining ways to identify prime markets and monetize networks. Addressing current business leaders, the authors reveal strategies behind some of today’s up-and-coming platforms, such as Tinder and SkillShare, and explain how traditional companies can adapt in a changing marketplace. The authors also cover essential issues concerning security, regulation, and consumer trust, while examining markets that may be ripe for a platform revolution, including healthcare, education, and energy.
As digital networks increase in ubiquity, businesses that do a better job of harnessing the power of the platform will win. An indispensable guide, Platform Revolution charts out the brilliant future of platforms and reveals how they will irrevocably alter the lives and careers of millions.
Every so often I lead workshops on pricing strategy. For the past several years I have been telling people that if you are in a conventional business (what Parker, Van Alstyne and Choudary call a ‘pipeline business’) and you are competing against a platform business you have already lost. Pipeline businesses do not have winning strategies against multisided markets, or as this book calls them ‘platform businesses.’ This book is the single best introduction I have read to Platform Businesses. If you use (and if you are reading this you do use a Platform Business, Amazon), are working on or may compete against a Platform Business you need to read this book. I have been recommending it to my own team at TeamFit.co to my investees and to companies that come to me for pricing advice.
Platform Revolution has many strong points.It explains the feedback loops and network effects (positive and negative) that drive platform business dynamics, the chapter on monetization is excellent and the chapter on governance is a must read (I think I will send a copy to Vancouver’s mayor). The book even has a short section on data ownership, which is likely to emerge as a major social issue over the next decade (ask yourself, why does the company I work for own my employee records, why don’t I own them too!).
Platform Revolution is not perfect of course. My main complaint is the lack of useful diagrams. The book is sketch poor and I found that I had to keep a notebook and pencil beside me as I read to make sure I was following all of the interactions of forces and to give me some mnemonics to remember what I was reading. This is good in that it helped me to build up my own mental models, but I would prefer to have shared sketches that I could use in business planning with other people. I also found the characterization of the two sides of a market as ‘producers’ and ‘consumers’ limiting. This is not a useful model to describe many two-sided market interactions, as the authors themselves noticed when they talked about dating sites (dating sites are a good thing to study to learn a lot about very dynamic two-sided markets). I also found the discussion of Porter’s Five Forces to be simplistic and dismissive. This seems to be an MIT thing as other people associated with MIT have the same blinkers. A more useful approach would be to look at how each aspect of the five forces gets drawn into platform markets.
There are some other good books to read on this theme. I would also recommend Platform Ecosystems by Amrit Tiwana, Matchmakers by David Evans and Modern Monopolies by Moazed and Johnson. But Platform Revolution is an excellent place to start.
As a software engineer working in California for several years I found the book to be disappointingly lacking in useful content. Since the book was written by academics, and since others had mentioned this book as a high-content alternative to other platform books out there I had high expectations. The book lacks a clear theory, and reads more as a list of activities that large platform companies have performed to succeed. If you’ve worked close to platform companies you’ve probably already heard it all before. I understand that this book may be useful to those that have not had any exposure to a platform company, but I just came off of reading the Innovator’s Solution—a business book that is insight after insight even after you’ve worked in a business. Unfortunately, I cannot say the same about this book.
The pros are that the book is well organized, well written, and the authors have given clear definitions and names to various elements of platform businesses. I was on the edge between giving it 3 stars or 2. Amazon’s description of 2 stars is “I don’t like it”, which sums up my opinion.