Hi, I’m Sangeet Paul Choudary, author of the books Platform Scale and Platform Revolution and the co-chair of the MIT Platform Strategy Summit. I write the popular Platform Thinking blog and have advised a ton of startup founders and incumbent CXOs around the world on how to build and execute on platform, marketplace and network business models. I’m delighted to be here - ask me anything.
Hi Sangeet, are there any examples of where 'pipes' have transformed into platforms?
@grahamshannon Yes, pipes are moving in this direction from different angles and I've myself spent a lot of time helping pipes move in this direction. Let's take a few examples: 1. Data footprint as a starting point: If you create a data footprint for a user, you have a starting point to move towards platforms as you can use that data to attract third parties. Look at what McCormick is doing with Flavorprint. 2. Again, on the point of data footprint, a lot of healthcare players are trying to digitize patient needs to create a platform ecosystem around the patient. 3. Traditional giants like GE, John Deere and Monsanto are trying to create an end-to-end data platform to guarantee outcomes around the usage of their products. Here again, they start with the data and attract other players around that data. 4. Some like Patagonia (see their partnership with ebay for second hand sweater exchange) are creating secondary marketplaces around the usage of their products. 5. Banks are trying out platform models thoguh there isn't any single bank that has fully shifted its model in this direction. These are just a few but this shift is happening in some way across industries.
Hi Sangeet happy to have you here for today's discussion. The platform model has caused big disruption especially in ecommerce. When do you see this affecting core engineering sectors like mechanical, manufacturing and how do you think it will affect them?
@mugunthan_scribe Great question! I believe that any industry where an object or its interaction with other objects can be digitized has the potential to be reorganized as a platform. A classic example is what's happening in the upstream functions of mining and oil and gas where the prospecting functions are becoming increasingly digitized because of sensor. As a result, where and how you mine is increasingly moving away from a human decision and action to becoming a machine decision and action coordinated by a platform managing all these machines. Another proof of the platform model comes through when you think of enabling technologies that make it easier to democratize production. 3D printing does that to some parts of manufacturing, especially manufacturing of specialized goods. In a similar way, the availability of prospecting data over open platforms allows much smaller companies to enter oil and gas exploration than ever before. Finally, industrial companies like GE and JOhn Deere are great examples of how you move in the direction of platforms by first changing your business model from products sales to data-driven outcome guarantees. Once you see data as the core value and start capturing data, you have the starting point for creating an ecosystem.
I have another question Sangeet. What is your view on India's current startup environment? What are the things they are doing right and where are they falling short?
@mugunthan_scribe The good thing: There are some really big problems, especially in education, that are waiting to be cracked, which will not only create large value but will also help capture large value. The bad thing: Most of the potential right now is taken up by using VC money to fund discounts for things people do not necessarily want to buy. There are a lot of great opportunities for startups in India but the ones that get all the attention are not necessarily the ones that are solving the biggest problems. In the immediate term, I am most keenly looking at test-prep startups and some healthcare startups that are uniquely solving things for the Indian market.
@sanguit So what are the other alternatives Indian startups should look for instead of VC money?
@mugunthan_scribe There is nothing wrong with looking for VC money but if your whole business model requires discounts to drive usage, then something is fundamentally not going right. Look for VC money but use it to build a sustainable business model, not one where the money itself is the key input.
Ali R. Tariq
@alirtariq · Product Designer, Manulife RED Lab
Hey Sangeet - thanks for spending your time with us today! Since you started diving into platform strategy, what do you think are the biggest things to have changed as of today and what things do you believe still hold true?
@alirtariq At a fundamental level, platform dynamics haven't changed. A platform, at its most basic level, is still a plug-and-play infrastructure tat allows others to plug in and create value and then governs the interactions that ensue. That fundamental model is so core to the economics of platforms that that will remain stable. What has changed are the following things: 1. AI has become much more powerful allowing platforms to learn and scale their ability to allocate resources much better and faster. 2. New governance models have gained much ground in the last 3-4 years, especially decentralized governance models like the blockchain 3. Platform play has moved away from the original information industries like media and telecom to much more physical industries like mining and utilities as well as much more regulated industries like banking and healthcare. However, these changes do not impact the fundamental model. Fundamentally, platforms will continue to behave in the same manner. Today, I believe the biggest tensions for platforms lies in their ownership models. Even though they allow decentralized participation, they are still centrally owned. Platform cooperatives are being suggested as an alterrnate ownership model for the future but are still theoretical at this point. I expect ownership and governance to face more pressure to get decentralized just as production itself got decentralised.
Hi @sanguit, Thanks for the resources & materials you share, you put words on the way we thought for a long time. 1. Do you think the Platform is the ultimate model? What would be the next Big model? 2. Do you still take part in Ventures and what s the best way to get in touch.
@jackdiver Platforms may be variously defined. What I look for in any venture is the idea of a feedback loop that self-reinforces the business. The more such loops you can create into the usage of your offering, the more scalable a business model you have. That is a principle that is timeless and that is the reason why I find platforms exciting because network effects are the most effective form of self-reinforcement.
@janet_alexandersson · Founder of Everlearners
Hello Sangeet, Thank you for taking the time to answer questions. What do you envision for the future of platform type businesses? How will the model evolve?
@janet_alexandersson A few things about the future: 1. Platforms will increasingly move from match-making to enabling end-to-end interaction tracking. Airbnb does only matchmaking, Uber tracks your end to end journey. Point is not to compare the two companies but to explain what I mean by end-to-end. 2. Platforms will become more intelligent faster as machine learning improves. This may lead to faster dominance of platforms in some industries, especially related to IOT where platform intelligence is more important than ecosystem participation. 3. Governance will move from centralized models to decentralized models. Think blockchain. 4. Ownership may move from centralized to decentralised models.
@sanguit @janet_alexandersson In an IoT market space isn't the Blockchain concept more of a horizontal approach to the IoT market; Whereby, the IoT market is more of a Vertical and Horizontal combination type of market? What creates that feed back loop within this type of approach? I know the security aspects creates this feed back loop for ecommerce. I don't see security being the driving force for IoT. I see the feed back loop for IoT being more about the networking innovations.
@roger_pena Network effects are really important at (at least) two levels: 1. Network effect of things: More connections among things leads to faster learning and better performance. 2. Network effect of people and things: More interactions among people and things leads to greater value in owning a suite of connected things. But the real value of network effects comes in the platform's ability to learn faster and use this learning to increase the value of every connected object. I see this work out already not so much in home automation and connected cars but more so in heavy industry, in fleet management and in functions like mining and prospecting.
Hey Sangeet..If you were just getting out of school for the summer soon and had some extra time..what niche areas of platforms would you recommend to study to develop an expertise? Maybe a niche that is interesting and being missed, misunderstood, or not maybe not covered?
@jamessidh In terms of industries, I think the least that has been done and the greatest potential that remains is in healthcare. I would spend time studying that to identify new opportunities for patient-centered platforms. In terms of broader topics, I would try and understand the blockchain. Even if the blockchain itself doesn't stay, the idea of decentralized governance is here to stay.
Whats one piece of advice that you often find yourself repeating to startup founders?
@ems_hodge A few that come top of mind: 1. Platforms and marketplaces are engines that are driven by usage. Stop thinking features and start thinking how one person's usage will drive the other person's usage. Features are a way to make that happen. 2. There is no non-linear growth without self-reinforcement in your business model. Unless you can show how usage orgnaically leads to more usage, you can't have non-linear growth. Self-reinforcement can come through data-driven personalization, through virality and through network effects. 3. Activation is not acquisition. Virality is not word of mouth. The former can be engineered, the latter cannot. 4. You have to ensure that users get accelerating value over time. The 100th time someone uses a product, they should feel much more powerful than when they used it the first time. Think of the reaction you get to your 100th tweet compared to yoru first tweet ebcause of the number of folowers you gained in the meantime.