Platform Revolution: How Networked Markets Are Transforming the Economy and How to Make Them Work for You: How Networked Markets Are Transforming the Economy―and How to Make Them Work for You

by Geoffrey G. Parker

most Internet era giants rely on demand-side economies of scale. Firms such as Airbnb, Uber, Dropbox, Threadless, Upwork, Google, and Facebook are not valuable because of their cost structures: the capital they employ, the machinery they run, or the human resources they command. They are valuable because of the communities that participate in their platforms. The reason Instagram sold for $1 billion is not its thirteen employees; the reason WhatsApp sold for $19 billion wasn’t its fifty employees. The reasons were the same: the network effects both organizations had created. Standard accounting practices might not factor the value of communities into the value of a firm, but stock markets do. Little by little, the accountants are catching up. A team of experts collaborating with the consulting and accounting firm of Deloitte published research that sorts companies into four broad categories based on their chief economic activity: asset builders, service providers, technology creators, and network orchestrators. Asset builders develop physical assets that they use to deliver physical goods; companies like Ford and Walmart are examples. Service providers employ workers who provide services to customers; companies like UnitedHealthcare and Accenture are examples. Technology creators develop and sell forms of intellectual property, such as software and biotechnology; Microsoft and Amgen are examples. And network orchestrators develop networks in which people and companies crea...