Business Platform Master Class 2020

BUSINESS PLATFORMS
2020
EDC & EFREI PARIS / MASTER

WHO I AM
ZISHAN ASHRAF MOHAMMAD
@zimo80fr
linkedin.com/in/zimohammad
zishanmohammad.wordpress.com
Product lead and Educator
Consulting Entrepreneur Product Management in Big, Start ups and Unicorn

PLATFORM
AGENDA
▸ Business shift
▸ WTF is a Platform 😱
▸ How to design a platform 👨🎨
▸ Creating and capturing value in Platforms 🤑
▸ Competition in a platform led economy ⚔
▸ Case study

PLATFORM - BUSINESS SHIFT
👴 👨 👦

2009
8/100
platform firms
5/20
platform firms
🙈

2019
25/100
platform firms
12/20
platform firms
🙉

2019
PLATFORM DRIVEN FIRMS OVERTAKING TRADITIONAL FIRMS

2019

INDUSTRIES RESHAPING BY PLATFORM FIRMS 🤔

INDUSTRIES RESHAPING BY PLATFORM FIRMS
INDUSTRY EXAMPLES
Agriculture John Deere, Intuit Fasal
Communication and Networking LinkedIn, Facebook, Twitter, Tinder, Instagram, Snapchat,
WeChat
Consumer Goods Nike, Philips, McCormick Foods FlavorPrint
Education Udemy, Skillshare, Coursera, edX, Duolingo
Energy and Heavy Industry Nest, Tesla PowerWall, General Electric, Enernoc
Finance Bitcoin, Lending Club, Kickstarter
Healthcare Cohealo, SimplyInsured, Kaiser Permanante
Gaming Xbox, Nintendo, PlayStation
Labor and Professional Services Upwork, Fiverr, 99designs, Sittercity, LegalZoom
Local Services Yelp, Foursquare, Groupon, Angie’s List
Logistics and Delivery Munchery, Foodpanda, Haier Group
Media Medium, Viki, YouTube, Wikipedia, Huffington Post, Kindle
Publishing
Operating Systems iOS, Android, MacOS, Microsoft Windows
Retail Amazon, Alibaba, Walgreens, Burberry, Shopkick
Transportation Uber, Waze, BlaBlaCar, GrabTaxi, OlaCabs
Travel Airbnb, TripAdvisor
Source: Geoffrey G. Parker, Marshall W. Van Alstyne, Sangeet Paul Choudary, Platform Revolution: How Networked Markets Are Transforming the Economy and How to Make Them Work for You (Anglais) Broché, 2017
GAFAM AND PLATFORM
TRADITIONAL

MOST OF UNICORNS ARE PLATFORM FIRMS

PLATFORM FIRMS CREATE MORE VALUE

THE MOST VALUED FINANCIAL SERVICES FIRM?

ANT FINANCIAL (EX ALIPAY) PART OF ALIBABA, CHINA
150 $Bn valuation

ANT FINANCIAL

MOORE’S LAW : CPU X2 EVERY 18 MONTHS

NIELSEN LAW: INTERNET SPEED X2 EVERY 21 MONTHS

METCLAFF LAW = NETWORK EFFECT = N^2
1
connection
2 phones
10
connections
5 phones
66
connections
12 phones

SOFTWARE IS EATING THE WORLD

2 PRODUCTS LAUNCH ~2007 WILL REVOLUTIONISE
TECH INDUSTRY, LOWER BARRIER TO ENTRY AND
CREATE NEW BUSINESS MODEL

A COMPUTER IN EVERY POCKET

> 3H AVERAGE ON MOBILE + 12 HOURS SPENT ON TECH

LEARN FROM THE EAST

WTF PLATFORM
DEFINITION
Source: Platform Scale, Sangeet Paul Chaudhary, 2015
Def: Platform scale (n): Business scale powered by the ability to leverage and orchestrate a global connected
ecosystem of producers and consumers toward efficient value creation and exchange. The management of
platform scale involves the design and optimisation of value- exchange interactions between producers and
consumers.
Value accumulates from stage to stage
Minimal Network Effects
Value created through
iterations with others
Source: Choudary, Sangeet Paul. Platform Scale: How an emerging business model helps startups build large empires with minimum investment. Platform Thinking Labs, 2016

WTF PLATFORM
3 TYPES OF PLATFORMS
Source: Cusumano, Michael A.. The Business of Platforms. Harper Business, 2019

WTF PLATFORM
PLATFORMS BY GEO

WTF PLATFORM
PLATFORM ≠ PIPE
Elements of value exchange
Source Content Edit/ Curate Create Bundles Multiple channels
RAW MAT’LS PRODUCTION ASSEMBLY DISTRIBUTION
CONSUMERS
PRODUCERS
PLATFORM
2016 Parker & Van Alstyne, with Choudary – licensed under Creative
Commons Attribution-ShareAlike 4.0 International (CC BY-SA 4.0).

WTF PLATFORM
PLATFORM ≠ PIPE
‣ Is a nexus of rules and architecture
‣ Is open, allowing regulated participation
‣ Actively promotes (positive) interactions among different
partners in a multi-sided market
‣ Scales much faster than a pipeline business because it
does not necessarily bear the costs of external production

WTF PLATFORM
PLATFORM ≠ PIPE

WTF PLATFORM
PLATFORM > PRODUCTS
▸ Example with Go-Jek: Leading app in Asia

WTF PLATFORM
PLATFORM > PRODUCTS

WTF PLATFORM
PLATFORM > PRODUCTS
▸ Network Effect (i.e. metclaff law)
▸ Scale at marginal zero cost (inventories, resources etc.)
▸ Massive existing eco-system (developers, users, partners…)
▸ Massive Data (Google and Facebook have the biggest first
party data globally and Amazon the biggest shopping
customer data)
▸ User stickyness (high rate of DAU and MAU on firms’
services)

WTF PLATFORM
PLATFORMS STACKS: AIRBNB

WTF PLATFORM
PLATFORMS STACKS: INSTAGRAM

WTF PLATFORM
PLATFORMS STACKS: YOUTUBE VS VIMEO

WTF PLATFORM
GAFA/INTERNET
PLAYERS
INVADING
DELIVERYOffline
Native
Online
Native

WTF PLATFORM
GAFA/INTERNET
PLAYERS
INVADING
DELIVERYOffline
Native
Online
Native
Due to their high latency, capabilities,
Offline native growth options are limited
Vs
Digital native expanding fast leveraging
their agility and network effect and multi-
sided business platform driven
approach. Often started as low cost,
they move upstream fast.

WTF PLATFORM
WHY GAFA ARE GOING IN DELIVERY…
Ridesharing is merely the prelude to autonomous ride
services, just as Netflix DVD subscriptions was the
prelude to Netflix video streaming.
The strategy of ridesharing companies is to develop the
market, get customer loyalty, then replace drivers with
autonomous ride services.
With the current ridesharing business model, they are losing
a lot of money, yet they keep raising more capital at very
high valuations to fund these loses.
McGrath, Michael E.. Autonomous Vehicles: Opportunities, Strategies, and Disruptions (p. 62).

WTF PLATFORM
WHY GAFA ARE GOING IN DELIVERY…

WTF PLATFORM
EXAMPLE
Uber and alike are redefining entire sectors with superior Data/AI
providing real time request/match (data flow) delivery (physical flow)
mechanisms with innovative multi-sided platform business model

WTF PLATFORM
DELIVERY FUTURE: NURO

WTF PLATFORM
DELIVERY FUTURE: NURO PIVOTING FOR MEDICAL SUPPLY DELIVERY DURING COVID19

WTF PLATFORM
MOBILITY FUTURE: WAYMO

WTF PLATFORM
TV IS TRANSFORMING

WTF PLATFORM
GAFA/INTERNET PLAYERS INVADING TRADITIONAL TV

WTF PLATFORM
APPLE TV PLATFORM…

WTF PLATFORM
BUILD ON TOP ON THEIR PLATFORM STACK…

WTF PLATFORM
GOOGLE TV PLATFORM…

WTF PLATFORM
AMAZON PRIME TV PLATFORM…

WTF PLATFORM
DATA IS THE NEW DOLLAR$, EXAMPLE IN THE TV/MEDIA

DESIGN A PLATFORM
THE PLATFORM DESIGN PROCESS

DESIGN A PLATFORM
THE PLATFORM DESIGN PROCESS (ROCKET MODEL)
Source: Platform Strategy. How to Unlock the Power of Communities and Networks to Grow Your Business. Routledge, 2017

DESIGN A PLATFORM
MINDSET: WHAT PEOPLE THINK USUALLY

DESIGN A PLATFORM
MINDSET: WHAT YOU SHOULD THINK

DESIGN A PLATFORM
DEFINE THE INTERACTIONS
‣ Producer(s)
‣ Consumer(s)
‣ Value
‣ Currency(ies)

DESIGN A PLATFORM
DEFINE THE INTERACTIONS
‣ Pull
‣ Facilitate
‣ Match

DESIGN A PLATFORM
INTERACTIONS ≠ TRANSACTION
Source: Botsman, Rachel. Who Can You Trust?, 2017

DESIGN A PLATFORM
TRUST: INTRO
Source: TED, June, 2016

DESIGN A PLATFORM
TRUST: CONCEPT

DESIGN A PLATFORM
TRUST: DEFINITION
Trust 🤝 is a confident relationship with the unknown.

DESIGN A PLATFORM
TRUST: THE TRUST STACK

DESIGN A PLATFORM
TRUST: BUILD TRUSTWORTHINESS
Competence comes down to how
capable a person is to do
something. Does he or she have the
skills, knowledge and experience to
do a particular role or task,
Reliability comes down to a person’s
consistency in doing what they said they
would do for you. Ultimately, it’s about you
knowing, ‘Can I depend on this person?’
Will he or she follow through?
Integrity is about honesty and fairness.
‘What are their interests and motives
towards me? What do they gain by
lying or by telling the truth?
Benevolence comes down to
empathy and goodwill. How much
does this person care about the goal
or commitment?

DESIGN A PLATFORM
TRUST: THE TRUST EQUATION
Source: HBR, 2008, https://hbr.org/2008/05/how-trustworthy-are-you, and Trusted Advisor https://trustedadvisor.com/why-trust-matters/understanding-trust/understanding-the-trust-equation

DESIGN A PLATFORM
TRUST: THE 7CS

DESIGN A PLATFORM
EXAMPLE: BLABLACAR

DESIGN A PLATFORM
EXAMPLE: BLABLACAR (PARIS-NICE)
Source: Blablacar, 2020

DESIGN A PLATFORM
DEFINE THE INTERACTIONS/PRODUCERS AND CONSUMERS

DESIGN A PLATFORM
TRACTION/FRICTION

DESIGN A PLATFORM
SOLVE THE CHICKEN AND EGG PROBLEM
Hacking the platform demand side growth
• Communities
• Network effect
• Chicken and Egg problem
• 8 hacks observed
1. Follow the rabbit ( i.e. amazon marketplace)
2. Piggyback strategy (i.e. square with CC, Airbnb with craigslist…)
3. Seeding strategy (i.e. bots or fake profiles I.e. dating)
4. Marquee strategy (i.e. MSFT/PS4/Nintendo and Game publishers)
5. Single side strategy (i.e. open table)
6. Producers evangelism strategy (i.e. skillshare or udemy)
7. Big bang strategy (i.e. twitter at SXSW)
8. Micromarket strategy (i.e. FB exclusive to Harvard)

DESIGN A PLATFORM
DEFINE PLATFORM BUSINESS MODEL

VALUE CAPTURE
VALUE (REMINDER)
Retained Value = Value Created - Value Capture
Source: https://futureblind.com/2019/08/03/advantage-flywheels/

VALUE CAPTURE
VALUE - 6 WAYS PLATFORMS CREATE VALUE

VALUE CAPTURE
VALUE: EXAMPLES

VALUE CAPTURE
NETWORK EFFECT = 2 TYPES
Source: a16z, 2016, https://www.slideshare.net/a16z/network-effects-59206938

VALUE CAPTURE
NETWORK EFFECT ≠ VIRALITY

VALUE CAPTURE
NETWORK EFFECT : 4 SIDES
Side
2
Side
1
PLATFORM
▸ A same-side effect for each
side, i.e., preference
regarding number of other
users on own side
▸ A cross-side effect in each
direction, i.e., preference
regarding number of users
on other side

VALUE CAPTURE
NETWORK EFFECT : 4 SIDES
▸ Exemple: A same-side effect for each side: OLX, (le bon coin alike) global classified site,
where buyers are sellers as well

VALUE CAPTURE
NETWORK EFFECT
Source: a16z, 2016, https://www.slideshare.net/a16z/network-effects-59206938

PLATFORM COMPETITION
PLATFORM VS INSIDERS
1. Belong to a platform (co-opetiton)
2. Buy a platform
3. Build A new platform
Disruption Model, The Innovator’s Dilemma, C. Christensen

! "

1. Belong to a platform
2. Buy a platform

1. Belong to a platform (co-opetiton)
1. 👍 good
1. Zynga on Facebook
2. Square on Visa/Mastercard
3. Airbnb on Craiglist
2. 👎 not so good
1. Toys R Us on Amazon
2. HTC on Google Android

2. Buy a platform
1. 👍 good
1. Microsoft acquired Linked-in, Github
2. Walmart acquired jet.com and Flipkart
2. 👎 not so good
1. Accor acquired Onefinestay
2. Microsoft acquired Nokia

2. Buy a platform
1. 👍 good
1. Netflix pivoting from DVD to Streaming in 2007/8
2. GE pivoting to Industrialized IoT with Predix
2. 👎 not so good:
1. Microsoft Lumia app stores

Why platform fails? all 4 main reasons
1. Mispricing on one side of the market,
2. Failure to develop trust with users and partners,
3. Prematurely dismissing the competition, and
4. Entering too late/early.

EXAMPLE: PIVOT TO A PLATFORM: MICROSOFT
Use Case: Microsoft

MICROSOFT SHIFT
Source: Nandela Satya, Hit Refresh,2017

PLATFORM VS PLATFORM
3 configurations
1. Platform vs Platform
2. Platform vs Partner
3. Partner vs Partner

1. Preventing Multi-Homing
2. Innovate and capture value
3. leverage Data
4. Redefining Mergers and Acquisitions
5. Platform Envelopment
6. Enhanced platform design

1. Preventing Multi-Homing
1. “Multihoming occurs when users engage in similar
types of interactions on more than one platform”
1. Android phone vs Apple iPhone (Apps)
2. Apple apps vs Adobe Flash
Mono-homing
Switching
Multi-homing
Mobile
Handsets
Xbox
Xbox-
PS4
Credit Card
Netflix/Hulu
1 SETUP + 1ONGOING
2 SETUPS + 1 TERMINATION + 1 ONGOING
2 SETUPS + 2 ONGOING

2. Innovate and capture value
1. “A platform business need not own all the inimitable
resources in its ecosystem, but it should seek to own
the resources whose value is greatest.”
1. Alibaba vs baidu search
2. Facebook/Instagram and Snapshat (stories)
3. Google Pixel vs Samsung and HTC

3. Leverage data
1. "use data in tactical (A/B testing) and strategic
(partnership, feature…)”
1. Amazon Basic from Amazon Marketplaces
2. Facebook (bought Instagram for teen)
3. Monster vs Linkedin
4. Netflix/Spotify Recommendation engine

4. Redefining Mergers and Acquisition (M&A)
1. "The key question is whether the target company creates
value for a user base that significantly overlaps with the
one they are currently serving.”
1. Amazon buys whole food
2. Spotify buys leading podcast firms (Gimlet, Anchor..)
3. Uber buys Careem
4. AT&T buys Time Warner (HBO, NBC…)

5. Platform Envelopment
1. “This occurs when one platform effectively absorbs the
functions—and the user base—of an adjacent platform”
1. Google search and shopping
2. Apple iPhone (iPod, Phone, Gaming Handheld
devices…)
3. Amazon Prime (video, kindle…)

6. Enhanced Platform Design
1. platforms compete by trying to improve the quality of the
tools they provide to pull in users, facilitate interactions,
and match producers with consumers
1. Vimeo vs Youtube
2. Airbnb vs Craiglist
3. Spotify vs Apple Music
4. Netflix vs Canal+

MEASURE PLATFORM
PLATFORM PERFORMANCE
Measuring platform performance split by 3 stages
1. Ignition stage
2. Growth/Scale stage
3. Maturity stage

MEASURE PLATFORM
1. IGNITION STAGE

MEASURE PLATFORM
2. SCALE STAGE

MEASURE PLATFORM
3. MATURITY STAGE

USE CASE - TOOLS
PLATFORM DESIGN TOOLKIT
‣ Analysing/designing platform based business model requires a new
thinking, hence new tools. While the business and lean cavas helps,
they have limitations when comes to platforms.
‣ To analyse/design platform based businesses, we will use the
platform design kit. You can download and find extensive
information there:
‣ https://platformdesigntoolkit.com/toolkit/#download
‣ Based on the tradition of Service Design, Lean Startup and
Strategic Thinking. Helps teams craft ecosystem-based platform
strategies that are highly scalable.
Source:https://platformdesigntoolkit.com/toolkit/, 2020

USE CASE - FRAMEWORK

DESIGN YOUR MVBP WITH KEY ASSUMPTION

BUILT/TEST/LEARN UNTIL YOU FIND THE PRODUCT/MARKET FIT
Source: Cagan, M. (2017), INSPIRED: How to Create Tech Products Customers Love
Source: Ash Murray, (2012) Running Lean, 2nd edition, o-Reilly,

USE CASE - PRACTICE
EXAMPLE WITH AIRBNB

DESIGN A PLATFORM
Airbnb
Airbnb
Superhost
Host
Guest
Insurance
Travel sites
Cities…

DESIGN A PLATFORM
‣ Airbnb example:

‣ Airbnb example

DESIGN A PLATFORM
DESIGN YOUR MVBP WITH KEY ASSUMPTION

BIBLIOGRAPHY
• Cusumano, Michael A.. The Business of Platforms. Harper Business, 2019
• Choudary, Sangeet Paul. Platform Scale: How an emerging business model helps startups
build large empires with minimum investment. Platform Thinking Labs, 2016
• Geoffrey G. Parker, Marshall W. Van Alstyne, Sangeet Paul Choudary, Platform Revolution:
How Networked Markets Are Transforming the Economy and How to Make Them Work for
You (Anglais) Broché, 2017
• David S. Evans, Richard Schmalensee, Matchmakers: The New Economics of Multisided
Platforms, HBR, 2016
• Reillier, Laure Claire. Platform Strategy. How to Unlock the Power of Communities and
Networks to Grow Your Business. Routledge, 2017
• Platform design toolkit: https://platformdesigntoolkit.com/toolkit/

CONTACT:
Zishan Ashraf Mohammad
mail: zishan@mozconsulting.tech
Linkedin: https://www.linkedin.com/in/zimohammad/
twitter: @zimo80fr

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