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Platform Scale: How an emerging business model helps startups build large empires with minimum investment

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Over the last decade or so, we're seeing the emergence of a new form of scale. Today's massively scaling startups - which rapidly grow to millions of users and billions in valuation - do not sell a product or service. Instead, they build a platform on which others can create and exchange value.

The many manifestations of the platform business model - social media, the peer economy, cryptocurrencies, APIs and developer ecosystems, the Internet of things, crowdsourcing models, and many others - are becoming increasingly relevant.

Yet, most new platform ideas fail because the business design and growth strategies involved in building platforms are not well understood.

Platform Scale lays out a structured approach to designing and growing a platform business model and addresses the key factors leading to the success and failure of these businesses.

Six core concepts for successful platform business model design

1. Re-imagine your business for platform scale
The mechanism by which these new business models scale so rapidly. Understand the shift in thinking needed to manage businesses with platform scale and the impact of network effects, virality, behavior design and data.

"We are not in the business of building software. We are in the business of enabling interactions."

2. Leverage interaction-first design
How detailed consideration around designing the producer-consumer core interaction is critical for building business models that leverage platform scale.

"The design of the platform business model involves the design of a core interaction followed by the design of an open infrastructure that will enable and govern this interaction."

3. Build cumulative value and minimize interaction failure
Know the key managerial decisions to focus on while managing platform scale businesses, all geared towards maximizing the ability of these businesses to enable interactions by scaling producer participation and minimizing interaction failure.

"Platform scale is achieved by maximizing the repeatability and efficiency of the platform's core interaction."

4. Solve chicken and egg problems
Platform business models face an all too familiar catch-22 chicken and egg problem on the way to scaling. This can be overcome by designing the conditions for sparking interactions.

"The solution to the chicken-and-egg problem requires a bait that can break the vicious cycle of no activity."

5. Design viral engines
Understand the drivers of viral growth in a world of networks and apply the viral canvas design-first approach to viral growth.

"Virality is a business design problem, not a marketing or engineering effort. It requires design before optimization."

6. Account for reverse network effects

Consider the counter view on platform scale and be on the lookout for conditions where scale can be detrimental to platform businesses.

"The goal of platform scale is to ensure the simultaneous scaling of quantity and quality, of interactions."

Platform Scale is a maker's guide for entrepreneurs, innovators and educators looking to understand and implement the inner workings of highly scalable platform business models.

338 pages, Kindle Edition

First published September 15, 2015

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About the author

Sangeet Paul Choudary

6 books65 followers
Sangeet Paul Choudary is a widely published researcher, industry keynote speaker and global CXO advisor on platform business models to high growth startups and Fortune 500 companies.

He is the co-chair of the MIT Platform Strategy Summit and an industry advisor to the Global Platform Data Project at Stanford University. He is an Entrepreneur-in-Residence at INSEAD Business School, an advisor at 500Startups, a Global Fellow at the Centre for Global Enterprise in New York and serves on the advisory board of CoFoundersLab, the world's largest community of startup founders.

Sangeet is also the author of Platform Revolution (W.W. Norton & Company, 2016), as well as a contributing author to Managing Startups (O'Reilly Media, 2013). He has been featured in Fast Company, Forbes, Harvard Business Review, MIT Technology Review, TechCrunch, Wall Street Journal, WIRED Magazine and other leading publications.

For all media-related, research-based advisory and speaker engagement services, contact him on @sanguit or http://platformthinkinglabs.com

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5 stars
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Displaying 1 - 30 of 39 reviews
Profile Image for Steve Willer.
7 reviews
May 9, 2016
This is a tough book to review, as it's about an important business topic, it's very insightful, but it reads like my old Thermodynamics textbook. A *very* tough read.

At the very least, I would recommend you read the first part, which describes what a "Platform" is from his perspective, and what makes them different from past business models. So many of the big money makers nowadays, including unicorns like Facebook, Uber, Google and AirBnB fit this model.

The rest of the book walks through, step by excruciating step, how to build one of these platform companies, with a focus first on the interactions between "producers" and "consumers". Then it dives into some common issues like the chicken-and-egg problem of building a network effect from scratch.

Worth reading. Or possibly worth reading the sequel, which might just be a more readable rewrite. :-)
Profile Image for Jose Papo.
260 reviews151 followers
October 16, 2015
This book is a must read for anyone building and creating a platform business. Platforms appears in many different industries and different manifestations, but they have similar building blocks and this is the quality of this book. It shows the core platform enablers, value units, stacks and drivers. The chapters I liked the most:
- Section 1.4 that explains the Platform Stack, a framework to understand and explain all platforms;
- Section 2.2 about Core Value Units;
- Section 2.8 that offers a tool, Platform Canvas, to help build the Interaction-first Platform Business;
- And section 5 about Virality

So read this book if you are building a Platform business!
Profile Image for Jorge Reyes.
Author 6 books35 followers
August 24, 2017
El título es engañoso, parece ser uno de esos libros con poco fondo intelectual e investigación académica, (ese fondo que le da fortaleza y argumentos a las aseveraciones), sin embargo, dentro de la literatura engañosa que promete "hacer rico" a personas sin formación empresarial con solo copiar unas cuantas ideas y formatos, Sangeet Paul Coundary rompe esquemas y por medio de una estructura académica profundiza en los modelos "plataforma" y desarrolla una tesis interesante.
El autor, es reconocido en USA como una autoridad en el tema, escribiendo para HBR y otras fuente de información y editoriales de prestigio, básicamente cuando Sangeet escribe, conviene leerle.
Me parece que la forma de presentar la información es adecuada, pero el lector requiere un conocimiento al menos básico de la ciencia empresarial.
En momentos me parece redundante y los casos de estudio mostrados como ejemplos de buenas o malas prácticas (un error en el método y el estudio del caso), son los de siempre...información que se podría encontrar en artículos o en otras fuentes. Sin embargo en general me parece que contiene gran valor para aquellos estudiosos de los nuevos modelos de negocios, la innovación y la educación empresarial, sin llegar a ser un material innovador.
Profile Image for Diego Eis.
Author 6 books146 followers
November 25, 2020
O termo Produtos Digitais é um termo que está perdendo muito do seu sentido pra mim, pois remete a uma visão muito estreita sobre algo que é muito maior. Esse termo remete apenas ao pedaço de software que construímos no dia a dia. Tentamos expandir nossa visão dizendo que estamos perto dos usuários, mas essa “desculpa” também não me agrada mais, pois geralmente não temos tempo de falar com os usuários com a frequência, nem com o tempo, nem com a qualidade necessária para conseguirmos extrair informações valiosas. Além disso, o usuário conhece menos do seu produto do que você mesmo. O usuário tem apenas a visão dele, você tem a visão de negócio, do mercado e de todos os outros usuários, incluindo a visão de dados. Contudo, ainda que você expanda sua visão para tentar ter uma aproximação maior com os usuários, você ainda terá uma visão estreita do seu produto.

Para gerir um produto, você precisa entender pra onde a empresa caminha. Precisa conhecer muito do mercado e do negócio que você está inserido. E precisa entender como a cultura, o mercado e a necessidade mudam o comportamento e as ações dos usuários. E para que isso aconteça, você precisa entender como funciona os mecanismos dos sistemas dinâmicos que movimentam o mercado e influenciam a sua empresa, e você só consegue fazer isso tendo uma visão de que seu produto faz parte de uma rede de troca de valor é essa rede é formada porque seu produto constrói uma plataforma, possibilitando interação entre os atores, e essa deveria ser sua única responsabilidade de verdade: criar uma plataforma que facilite a interação entre as pontas da plataforma, orquestrando a geração e o consumo de valor que isso proporciona.

No livro [Platform Scale](https://amzn.to/375EZN8), o Sangeet Paul Choudary explica, de forma muito detalhada, como o modelo de negócio baseado em plataforma funciona, além de como esse modelo impulsiona de maneira exponencial das empresas de tecnologia das últimas décadas. O Sangeet é o porta-voz do termo _economia de plataforma_, que remete a forma com que as empresas de tecnologia se estruturam e se organizam de forma a potencializar a entrega e facilitação de valor e a troca simbiótica de serviços entre empresas e usuários.

O livro poderia ter 100 páginas a menos. Em muitos momentos o autor é redundante nas suas citações e em diversos momentos me deu a impressão de já ter lido alguns trechos. Contudo, o livro é recheado de quotes importantes e estimulantes para quem gosta desse assunto.

Eu sou apaixonado por esse tema. Me ajudou muito a entender como conectar como mirar a entrega de valor parando usuário ao mesmo tempo que impacta o negócio. Product Managers, geralmente, tem uma visão muito micro, pensando apenas no usuário ou pensando apenas no negócio. Em nenhum desses casos se faz uma conexão de indicadores estratégicos com crescimento de negócio e entrega de valor, além de fortalecimento das conexões entre os atores que fazem possível a plataforma existir.

Empresas não entregam mais sozinhas valor para o mercado e para as pessoas. Pouquíssimas empresas conseguem realmente controlar o fluxo todo de entrega e geração de valor. Posso citar a Apple, o Google e talvez a Microsoft, mas todas elas dependem de atores externos para ajudar, em algum momento, a entregar valor: Apple com devs na App Store. Google com os sites e dados dos usuários. Microsoft com as fabricantes e distribuidores de hardware. Embora todas elas conseguem ter um controle grande do pipe, nenhuma consegue (ou quer) controlar tudo.

As empresas menos robustas como Spotify, Airbnb, Facebook, Twitter e etc vivem basicamente dessa troca de valor entre os atores da plataforma. Elas perdem a essência se o caso fosse outro. O Airbnb seria uma rede de hotéis se ela mudasse seu modelo de plataforma para o modelo tradicional. Não faz sentido. Plataforma não é mais uma opção para empresas de produtos e serviços digitais

Recomendo fortemente esse livro para pessoas de estratégia, negócios e para quem faz gestão de produtos digitais. Ele é meio repetitivo, mas pontua os principais pontos desse assunto importantíssimo no dia de hoje. A minha pergunta é: qual será o próximo modelo? Será uma evolução ou um totalmente novo?
Profile Image for Boni Aditya.
325 reviews886 followers
October 30, 2023
If you are building a marketplace and you have to read only one book, then this is the book I would recommend. A close second book would be the COLD START PROBLEM.

Platform Scale is a Text Book - It is a guide to actually help you build a marketplace.

It has clear frameworks and algorithms that tell you about what needs to be built first and then what needs to be built later.

The three layers model of Crowd + Infrastructure +Data is amazing.

The Platform Canvas, just blew my mind. It actually shows how different building a marketplace is from building any other product.

More over, the pipe vs platform analogy was bang on right from the first chapter till the last.

Scaling marketplaces has so many concepts involved in it. Reading about emergence, negative network effects and 100+ other concepts is absolutely mind blowing.

The Viral Canvas, is another great contribution from the book.

The book is extremely dense i.e. it has a lot of knowledge per section, so it took me close to a month to complete this book. I read it thoroughly from end to end.

As a product manager i now clearly have a framework with which i can move ahead with confidence and build marketplaces, which was lacking before reading this book.
Profile Image for Mohamed Ibrahim.
50 reviews9 followers
July 27, 2021
The book walks you starting from the basics and definitions of each term in the platform business context then the architecture of the platform till you learn how to manage the scale phase of the platform business.

It is full of stories for the current platforms around us and how they are mapped to the topic discussed in each chapter, also a lot of examples for the success and failure of these platforms strengthen y0ur understanding of the explained topic.

The final epilogue is excellent I wished it is a bit longer and has more details on the transformation from pipe businesses to platform business.
Profile Image for Rasmus Raspel.
15 reviews
February 1, 2021
Redundant pile of what looks like a first draft of a book that could’ve been a blog post or a youtube video. After the first 30 pages it just feels like the development of ideas has ended and, instead, rephrasing the same ideas for the rest of the book just made it painful to get through. Read in 2020/2021 the book has not aged well at all with all it’s corporate data freedom “best practices” that just scream infringements on the personal privacy of users. 2 stars because the first 30 pages actually contained some valuable information, but that was like 15% of the entire book.
Profile Image for Adrian Goh.
11 reviews
June 5, 2022
Good
- Breaking down platform in a "scientific" manner
- Very complete breakdown of challenges, success and failures of different companies
- Use of relevant examples to demonstrate pointers

Can be improved
- Perhaps examples of non-internet companies would help too e.g. Fax machine, telephone, first credit card
- Front part can be slightly lengthy and seem too technical for someone with sufficient knowledge of platforms
Profile Image for Balki Kodarapu.
8 reviews1 follower
January 11, 2019
Top-rate research to help scale platforms

Sangeet and his team have done a fabulous job of making sense of the big, complex world of platform business. I enjoyed reading each chapter and connecting the dots in my head how mega platform companies like Facebook, Uber, Airbnb etc grow over time.
7 reviews1 follower
February 22, 2019
One of the best read on platform business model. I read the book back in 2015, but the knowledge is still relevant and accurate today. Almost any business can be transformed to platform business to certain extent. I believe we will see more and more businesses shifting to the platform. Definitely recommended for anyone wanting to start a platform, marketplace business.
Profile Image for Vartika.
86 reviews
July 3, 2019
Must read book about platforms

Very structured and thoughtful coverage of all aspects of platform businesses - creating, differentiating, sustaining and scaling.

Must read for business professionals, entrepreneurs, designs who are thinking through their businesses - whether platform or pipes.
8 reviews1 follower
March 22, 2018
Platform phenomenon explained

Explores every aspect of platform model and analysis success and failure of large number of these. Shows common pitfalls that can be avoided and what it takes to succeed in this new world.
Profile Image for Dong Li.
6 reviews1 follower
November 12, 2019
A bit hindsight

The book has deep analysis into the platform business model, but most of it is hindsight. It is also a bit too theoretical.
Profile Image for Mike Burrell.
92 reviews1 follower
March 21, 2020
It's a really good book, but a very "tough read" and it lost me in the last 1/4 of the book.
Profile Image for Pavel Chernyshev.
11 reviews1 follower
March 21, 2020
Good, but at times too overanalysing platforms in the way that is neither backed up by research nor good examples. Majority of classification is hard to apply.
Profile Image for Omar Trejo.
47 reviews1 follower
April 28, 2020
Insightful and with good recommendations around building platforms.
July 5, 2022
Wonderfully intelligent and generous with useful information - essential read for anyone building a platform.
7 reviews
July 13, 2022
Too repetitive at the start with definitions and emphasis towards platform interactions. Provided some good examples and solutions towards the end.
Read
January 15, 2023
Good Book, which helps to understand dynamics of modern or Zen z business. However I felt it similar to Modern Monopolies.
Profile Image for Olaf Kowalik.
6 reviews8 followers
February 23, 2016
Choudary provides theory, examples, real-world strategies, and models for understanding and designing platform businesses. This book describes how "pipe" businesses are being usurped by platforms and how to design a platform business.

Platform Scale contains an up-to-date and insightful look at platform patterns and clear strategies for how growth and scale are achieved. The models Choudary uses are presented in illustrations at the end of each chapter and build on each other to form a complete picture of platform dynamics. He gives two diagnostic and strategic views of platforms: 1) the platform components and participants; and 2) the platform stack including data, infrastructure and services. He uses these throughout the book to illustrate how to achieve scale and create value. Choudary dissects various platform businesses and specific interactions to give detailed advice for interaction design, incentives, and network effects, and virality.

After reading this, you'll have several great models to use for analyzing your own and other platform businesses along with strategies for growth. There's only one other book on platforms which covers more ground: Platform Ecosystems by Amrit Tiwana.
Profile Image for Jaakko.
Author 1 book6 followers
April 23, 2016
Useful handbook to understand platform businesses that are overtaking traditional players industry by industry. Somewhat repetitive which is typical for business books from the US.
However, the book builds a good understanding of what's common across platforms: their structure, mechanics, success factors etc
2 reviews
October 10, 2015
A thorough coverage of platforms and open ecosystems

Sangeet looks at the new business models from various angles and viewpoints while also presenting lean tools to help conceptualise the design of platforms. A recommended read for strategic thinkers of the digital revolution.
Profile Image for David.
Author 1 book5 followers
December 11, 2015
An in-depth and highly informative read!

I really enjoyed the breakdown in delivery of concepts, ideas and strategies. Any business that relies on technology to scale should give this a read.

Definitely looking forward to the next book!
Profile Image for Zakir Jaafar.
13 reviews
July 4, 2016
A Platform is an online system catered for a multisided market place. Uber, Tinder, Yelp and others. A great book introducing the detail components of a platform and points which might lead to platform failure.
Profile Image for Alex Devero.
538 reviews61 followers
June 28, 2017
The traditional model of manufacturing and selling goods is slowly being taken over by a new way of doing business: building platforms that both encourage interactions between producers and consumers, and allow everyone to create value.
Displaying 1 - 30 of 39 reviews

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