A platform business model creates communities and markets with network effects. It allows users to interact and transact. The radical difference is, these businesses do not own the means of production — instead, they create the means of connection.
We help our clients build apps and technology platforms on top of cloud platforms.
The top five companies by market cap are all platforms
One of them is Uber - the platform with two audiences: riders on one side and drivers on the other. The value riders get from the platform increases with the number of drivers on the Uber network. Availability increases and wait times become shorter. At the same time, more riders means more value for the drivers - increased utilization and incomes.
The key benefit
The network effects platforms create become significant barriers of entry for new competitors. Very few people use more than one competing solution for a given task. The size of the audiences matters.
While Uber does not own the physical means of production, they control something much more valuable: the data - where all the riders and drivers are located, and a mean of communication between those two. Large audiences enable good availability.
But they also define the rules, and run the transactions. Availability is boosted with security and ease-of-use as the producers and consumers know how the transactions work.