Platform Revolution: How Networked Markets Are Transforming the Economy--And How to Make Them Work for You

Platform Revolution: How Networked Markets Are Transforming the Economy--And How to Make Them Work for You

Sangeet Paul Choudary, Marshall W. Van Alstyne

Language: English

Pages: 352

ISBN: 0393249131

Format: PDF / Kindle (mobi) / ePub

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.














processing are already being transformed by the superior ability of platforms to coordinate the movement of vehicles and resources using highly efficient algorithms to match demand and supply. For example, San Francisco-based Munchery is one of several rapidly growing new food delivery platforms. By aggregating citywide demand according to specific time slots, Munchery’s algorithms determine the best truck routes to maximize density of delivery points, thereby minimizing the marginal costs of

quitting. The strangely addictive site grew from twenty people at launch in late 2009 to more than 1.5 million users six months later. Initially, Chatroulette had no registration requirement and no controls of any kind, leading to what became known as the Naked Hairy Men problem. As the network grew without policing, a growing number of naked hairy men showed up to chat, leading many of the non-naked, non-hairy others to abandon the network. As legitimate users fled, the noise level on the 17. Simeon Djankov, Edward Glaeser, Rafael La Porta, Florencio Lopez-de-Silanes, and Andrei Shleifer, “The New Comparative Economics,” Journal of Comparative Economics 31, no. 4 (2003): 595–619. 18. Shleifer, “Understanding Regulation.” 19. KPMG, “China 360: E-Commerce in China, Driving a New Consumer Culture,”

of them value units that are being added to the platform. Your news feed algorithm, based on signals you’ve given in the past through your interactions with previous content, acts as the filter that determines which units are delivered to you and which are not. When designing a platform, your first and most important job is to decide what your core interaction will be, and then to define the participants, the value units, and the filters to make such core interactions possible. As we see in

basic strategic concept to the smallest tactical movements were affected by, and often determined by, the need to provide these supplies to the army.1 Given a certain number of soldiers and animals, Caesar’s quartermaster could quickly determine how far the army could march and how long it could campaign before reprovisioning, simply by tabulating the quantity of food for the men, fodder for the animals, and firewood for warmth and cooking. These three key metrics shaped many of Caesar’s most

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