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Reid Hoffman

“since transactions on today’s platforms are conducted through application programming interfaces (APIs) rather than person-to-person negotiations, they proceed swiftly, seamlessly, and in incredible volumes, all with barely any human intervention. If a platform achieves scale and becomes the de facto standard for its industry, the network effects of compatibility and standards (combined with the ability to rapidly iterate and optimize the platform) create a significant and lasting competitive advantage that can be nearly unassailable. This dominance lets the market leader “tax” all the participants who want to use the platform, much as levies were imposed in the bygone Republic of Venice. For example, the iTunes store takes a 30 percent share of the proceeds whenever a song, a movie, a book, or an app is sold on that platform. These platform revenues tend to have very high gross margins,”

Reid Hoffman, Blitzscaling: The Lightning-Fast Path to Building Massively Valuable Companies
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Blitzscaling: The Lightning-Fast Path to Building Massively Valuable Companies Blitzscaling: The Lightning-Fast Path to Building Massively Valuable Companies by Reid Hoffman
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