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Video Summaries of Platform Revolution

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1-Page Summary of Platform Revolution

Overview

Platform Revolution is a book about how platforms have become the dominant market force in today’s world, and how they are changing the way we do business. It also includes tips on founding and managing platforms.

A platform connects two parties for the exchange of a product. Uber is an example of this. A platform leverages economies of scale by having fewer steps in the production process, thereby reducing costs and ensuring higher quality. Businesses who target both businesses and consumers can have incredible growth using platforms because their structure optimizes profitability instead of profit per transaction.

For a platform to work, it needs both sides of the network. In other words, if you’re trying to build a platform business model, you need both users and providers. The more users there are on one side of your platform (e.g., Uber), the more providers will want to join in order for them to make money from their assets (e.g., cars). This is called the “network effect,” which refers to how changes in one part of a network can affect other parts of the same network.

The platform’s goal is to have a large network of users. However, the true success metric isn’t only about having a lot of people on it, but rather if they are interacting with each other and sharing valuable information. This means that entry into the platform must be easy and free for everyone. The more connections there are between different types of people, the better experience it will be for those using it. Therefore, charging money or giving away access to an existing network can help make this happen because then you’re guaranteed that there will be interactions happening on your site/platform.

Platforms may choose to allow other companies to manage the platform, or they can do it themselves. However, in either case, there are guidelines for good governance of a platform. The most important ones state that platforms should always create value for users and not change the rules in their favor to make more money. Platform competition depends on how easy it is for users to switch from one platform to another (multihoming), and whether a competitor can get them back if they defect.

Governments are trying to regulate the potential harm of social media platforms. Meanwhile, these platforms have already changed many industries such as education and health care.

Key Takeaways

Platform networks can grow quickly because growth on one side of the network attracts more users to the other side as a result of network effects. The architecture of a platform relies on five elements: users, the item that users will be exchanging, currency, filters used to find producers and information to help with that decision. Platforms have low distribution costs and high speed for growth compared with traditional businesses. They use predictive analytics to better serve customer needs.

A new platform needs to recruit users in order for it to be successful. The more people who are using the platform, the more valuable it is. In addition, platforms need to find a way to make money while still maintaining user trust and satisfaction. A good business model will not deter users from joining or participating on the platform because they will want something out of their participation (usually money). There are different ways for businesses to make money depending on what they’re willing and able to expose about their business practices.

The metrics for a platform’s health differ depending on the stage it is in. If you’re trying to grow your social media network, then you need to measure its value to users.