Being a platform is the “end-all, be-all” business model. Namely, because other companies or individuals do most the work while you reap a significant chunk of the benefits.
- Apple and Google take 30% of all app sales on through their App Stores
- Airbnb takes 5-15% from guests
- Uber takes 25% from drivers
- Spotify pays $0.006 to $0.0084 to artists/labels
But, platforms are extremely hard to build. Kickstarting the network effects can take years, and there are many methods of getting them going.
Some try bounty programs, funding for early participants, crypto tokens, and grass-roots efforts.
If I were starting a platform, I’d follow the Apple method: build the platform and seed it with in-house built content and big players.
When Apple launched the iPhone, they didn’t merely ship hardware, they built many of the apps that came standard: Calendar, Notes, Weather, Photos, Camera, Clock, Safari, iPod
They also included YouTube and Maps built by Google.
Imagine how lame the iPhone launch would have been if they tasked 3rd-party developers with building all these “essential” apps. Growth would have been slow, and developers wouldn’t be interested.
This donned on me while reading “The Everything Store” about Amazon. Amazon started by building a focused consumer brand—creating a single end-point for everything you’d find in Barne’s & Noble and Walmart.
Once a consumer relationship had been built and their warehouse infrastructure working, they launched a 3rd-party sellers program, allowing anyone with relevant products to list alongside top manufacturers.
The program now contributes 25% of Amazon’s revenue.
If you’re building a platform, start by seeding the platform with your own products or content, then leveraging your success to bring on others.
—Uber (founders were the drivers)
—DoorDash (founders delivered)
—Airbnb (listed their own apartment)
—Justin.tv→Twitch (created content, pivoted to platform)
—Instacart (hired craigslist drivers)
— Decentraland (building infrastructure only)