Platform Revolution Quotes

“In today’s hypercompetitive environment enabled by technology, ownership of infrastructure no longer provides a defensible advantage. Instead, flexibility provides the crucial competitive edge, competition is perpetual motion, and advantage is evanescent.”
― Geoffrey G. Parker, Platform Revolution: How Networked Markets Are Transforming the Economy and How to Make Them Work for You

“However, simplicity is a virtue when developing metrics for your platform business. Overcomplex metrics make management less effective by introducing noise, discouraging frequent analysis, and distracting from the handful of data points that are most significant.”
― Geoffrey G. Parker, Platform Revolution: How Networked Markets Are Transforming the Economy and How to Make Them Work for You

“The derisive term bloatware has been coined to describe software systems that have become complicated, slow, and inefficient through thoughtless accretion of features.”
― Geoffrey G. Parker, Platform Revolution: How Networked Markets Are Transforming the Economy and How to Make Them Work for You

“We are hopping into strangers’ cars (Lyft, Sidecar, Uber), welcoming them into our spare rooms (Airbnb), dropping our dogs off at their houses (DogVacay, Rover), and eating food in their dining rooms (Feastly). We are letting them rent our cars (RelayRides, Getaround), our boats (Boatbound), our houses (HomeAway), and our power tools (Zilok). We are entrusting complete strangers with our most valuable possessions, our personal experiences—and our very lives. In the process, we are entering a new era of Internet-enabled intimacy.
~ Jason Tanz

Not so long ago, activities like these would have been viewed as weird, if not downright dangerous. Today, they are familiar to millions, thanks to the trust-building mechanisms established by platform businesses.”
― Geoffrey G. Parker, Platform Revolution: How Networked Markets Are Transforming the Economy―and How to Make Them Work for You

“ShopThis!,”
― Geoffrey G. Parker, Platform Revolution: How Networked Markets Are Transforming the Economy and How to Make Them Work for You

“However, reality teaches us that democracy—like free markets—can be messy, especially when intense passions and partisanship are involved. Hence the episode we recounted at the start of this chapter, in which the Wikipedia article about the death of Meredith Kercher was hijacked by “haters” of Amanda Knox who were determined to make sure the page should assert her guilt and were prepared to eradicate any signs of dissension. The Kercher killing is not the only instance in which Wikipedia is embroiled in controversy—far from it. An article on the platform headed “Wikipedia: List of controversial issues” lists over 800 topics that “are constantly being re-edited in a circular manner, or are otherwise the focus of edit warring or article sanctions.” Organized under headings that include “Politics and economics,” “History,” “Science, biology, and health,” “Philosophy,” and “Media and culture,” they include everything from “Anarchism,” “Genocide denial,” “Occupy Wall Street,” and “Apollo moon landing hoax accusations” to “Hare Krishna,” “Chiropractic,” “SeaWorld,” and “Disco music.”
― Geoffrey G. Parker, Platform Revolution: How Networked Markets Are Transforming the Economy and How to Make Them Work for You

“In 2012, Google Maps had become the premier provider of mapping services and location data for mobile phone users. It was a popular feature on Apple’s iPhone. However, with more consumer activity moving to mobile devices and becoming increasingly integrated with location data, Apple realized that Google Maps was becoming a significant threat to the long-term profitability of its mobile platform. There was a real possibility that Google could make its mapping technology into a separate platform, offering valuable customer connections and geographic data to merchants, and siphoning this potential revenue source away from Apple. Apple’s decision to create its own mapping app to compete with Google Maps made sound strategic sense—despite the fact that the initial service was so poorly designed that it caused Apple significant public embarrassment. The new app misclassified nurseries as airports and cities as hospitals, suggested driving routes that passed over open water (your car had better float!), and even stranded unwary travelers in an Australian desert a full seventy kilometers from the town they expected to find there. iPhone users erupted in howls of protest, the media had a field day lampooning Apple’s misstep, and CEO Tim Cook had to issue a public apology.19 Apple accepted the bad publicity, likely reasoning that it could quickly improve its mapping service to an acceptable quality level—and this is essentially what has happened. The iPhone platform is no longer dependent on Google for mapping technology, and Apple has control over the mapping application as a source of significant value.”
― Geoffrey G. Parker, Platform Revolution: How Networked Markets Are Transforming the Economy and How to Make Them Work for You

“Unfortunately for Sony, this victory proved short-lived. Today, a few years after the triumph of Blu-ray, the migration of consumers away from DVD to streaming video is well under way, making Bluray’s dominance increasingly irrelevant. The lesson? If, like Sony, you choose to fight a standards battle in quest of proprietary control of a market, you’d better win it—and win it fast, before the next big thing supersedes the very technology you seek to dominate.”
― Geoffrey G. Parker, Platform Revolution: How Networked Markets Are Transforming the Economy and How to Make Them Work for You

“Creating value for users while asking nothing in return is often a great way to attract members and encourage participation. “Users first, monetization later,” as the slogan goes. Or, in a variant that we heard from the executive in charge of platform strategy for Haier Group, a Chinese manufacturing company, “You never take first money.” In other words, only after a value unit has been created and exchanged with results that are satisfactory to both the producer and the consumer should the platform business itself seek to capture a share of that value.”
― Geoffrey G. Parker, Platform Revolution: How Networked Markets Are Transforming the Economy and How to Make Them Work for You

“WAYS TO MONETIZE (3):
CHARGING FOR ENHANCED ACCESS Sometimes a platform that facilitates a monetary transaction may be unable to own, and hence to monetize, the transaction. Such platforms may instead charge producers for enhanced access to consumers. This refers to the provision of tools that enable a producer to stand out above the crowd and be noticed on a two-sided platform, despite an abundance of rival producers and the resulting intense competition to attract consumer attention. Platforms that charge producers fees for better targeted messages, more attractive presentations, or interactions with particularly valuable users are using enhanced access as a monetization technique. The system of monetizing enhanced access generally doesn’t harm network effects, since all producers and consumers are permitted to participate in the platform on an open, non-enhanced basis. But those for whom the additional value of enhanced access is particularly great can pay for that extra value—allowing a portion of that value to be captured by the platform business.”
― Geoffrey G. Parker, Platform Revolution: How Networked Markets Are Transforming the Economy and How to Make Them Work for You

“For both consumers and producers: Access to curation mechanisms that enhance the quality of interactions. Consumers value access to high-quality goods and services that address their specific needs and interests, while producers value access to consumers who want their offerings and are willing to pay a fair price for them. Well-run platforms build and maintain curation systems that connect the right consumers with the right producers quickly and easily.”
― Geoffrey G. Parker, Platform Revolution: How Networked Markets Are Transforming the Economy and How to Make Them Work for You

“Not every budding platform has an opportunity to achieve viral growth. But if it does, it can help turn slow but steady expansion into the kind of skyrocket growth that makes a platform into a national or global phenomenon with the potential to dominate its market for years to come.”
― Geoffrey G. Parker, Platform Revolution: How Networked Markets Are Transforming the Economy and How to Make Them Work for You

“To avoid this result, the managers of startup platforms need to be strategic about identifying the external networks they can use to build their growth and finding creative, value-adding ways to connect with their users.”
― Geoffrey G. Parker, Platform Revolution: How Networked Markets Are Transforming the Economy and How to Make Them Work for You

“A platform may also choose to innovate when features provided by third parties become a large part of the overall value enjoyed by users. As we saw in chapter 7, this helps to explain Apple’s 2012 introduction of Apple Maps in response to the enormous popularity of Google Maps.”
― Geoffrey G. Parker, Platform Revolution: How Networked Markets Are Transforming the Economy and How to Make Them Work for You

“To enable this strategy, Cisco employs metrics that seek out instances in which the same capability is provided across multiple industry verticals—health care or the automotive business, for example. That is a sign that the platform is missing important features that should be part of the next round of continuous platform innovation.”
― Geoffrey G. Parker, Platform Revolution: How Networked Markets Are Transforming the Economy and How to Make Them Work for You

“The issue is to embed into the platform multiple independent solutions to the same problem. Then this becomes common for everyone else. It’s a question of timing. If you do it right away, your ecosystem is scared that you’ll cannibalize their cash cows. If one provider builds a particular functionality, you don’t want to co-opt it. But if a whole slew of them have [developed the same capability], then competition reduces benefits anyway, and you can fold it in.”
― Geoffrey G. Parker, Platform Revolution: How Networked Markets Are Transforming the Economy and How to Make Them Work for You

“signal-to-noise ratio,”
― Geoffrey G. Parker, Platform Revolution: How Networked Markets Are Transforming the Economy and How to Make Them Work for You

“lifetime value (LTV) models”
― Geoffrey G. Parker, Platform Revolution: How Networked Markets Are Transforming the Economy and How to Make Them Work for You

“However, as growth continues, the platform must monitor the change in size of the user base over time. In particular, platform managers will want to work to ensure balance on the two sides of its market.”
― Geoffrey G. Parker, Platform Revolution: How Networked Markets Are Transforming the Economy and How to Make Them Work for You

“The three key factors of liquidity, matching quality, and trust remain crucial to measuring the health of virtually any kind of newly launched platform.”
― Geoffrey G. Parker, Platform Revolution: How Networked Markets Are Transforming the Economy and How to Make Them Work for You

“the rate at which producers join the platform and the growth of this rate over time. Dating”
― Geoffrey G. Parker, Platform Revolution: How Networked Markets Are Transforming the Economy and How to Make Them Work for You

“matching quality, and trust”
― Geoffrey G. Parker, Platform Revolution: How Networked Markets Are Transforming the Economy and How to Make Them Work for You

“sales conversion rate, which can be expressed as the percentage of searches that lead to interactions.”
― Geoffrey G. Parker, Platform Revolution: How Networked Markets Are Transforming the Economy and How to Make Them Work for You

“What fraction of the value creation unleashed by the platform is occurring on the platform rather than outside it?”
― Geoffrey G. Parker, Platform Revolution: How Networked Markets Are Transforming the Economy and How to Make Them Work for You

“3.  The seeding strategy. Create value units that will be relevant to at least one set of potential users. When these users are attracted to the platform, other sets of users who want to engage in interactions with them will follow. In many cases, the platform company takes the task of value creation upon itself by acting as the first producer. In addition to kickstarting the platform, this strategy allows the platform owner to define the kind and quality of value units they want to see on the platform, thereby encouraging a culture of high-quality contributions among subsequent producers.7”
― Geoffrey G. Parker, Platform Revolution: How Networked Markets Are Transforming the Economy and How to Make Them Work for You

“Staging value creation. The platform managers arrange for the creation of value units that will attract one or more sets of users and demonstrate the potential benefits of participating in the platform.5 Those initial users create more value units, attract still other users, and set up a positive feedback loop that leads to continuing growth.6 The Huffington Post followed this strategy by hiring writers to create an initial array of high-quality blog posts for the site, thereby attracting readers. Some of these readers began contributing blog posts of their own, leading to the gradual development of a wider network of content creators and attracting even more readers.”
― Geoffrey G. Parker, Platform Revolution: How Networked Markets Are Transforming the Economy and How to Make Them Work for You

“Furthermore, for a platform business, user commitment and active usage, not sign-ups or acquisitions, are the true indicators of customer adoption. That’s why platforms must attract users by structuring incentives for participation—preferably incentives that are organically connected to the interactions made possible by the platform. Traditionally, the marketing function was divorced from the product. In network businesses, marketing needs to be baked into the platform.”
― Geoffrey G. Parker, Platform Revolution: How Networked Markets Are Transforming the Economy and How to Make Them Work for You

“Most important, the PayPal team realized that getting users to sign up wasn’t enough; they needed them to try the payment service, recognize its value to them, and become regular users. In other words, user commitment was more important than user acquisition. So PayPal designed the incentives to tip new customers into the ranks of active users. Not only did the incentive payments make joining PayPal feel riskless and attractive, they also virtually guaranteed that new users would start participating in transactions—if only to spend the $10 they’d been gifted in their accounts.”
― Geoffrey G. Parker, Platform Revolution: How Networked Markets Are Transforming the Economy and How to Make Them Work for You

“PayPal’s big challenge was to get new customers. They tried advertising. It was too expensive. They tried BD [business development] deals with big banks. Bureaucratic hilarity ensued. … the PayPal team reached an important conclusion: BD didn’t work. They needed organic, viral growth. They needed to give people money. So that’s what they did. New customers got $10 for signing up, and existing ones got $10 for referrals. Growth went exponential, and PayPal wound up paying $20 for each new customer. It felt like things were working and not working at the same time; 7 to 10 percent daily growth and 100 million users was good. No revenues and an exponentially growing cost structure were not. Things felt a little unstable. PayPal needed buzz so it could raise more capital and continue on. (Ultimately, this worked out. That does not mean it’s the best way to run a company. Indeed, it probably isn’t.)2”
― Geoffrey G. Parker, Platform Revolution: How Networked Markets Are Transforming the Economy and How to Make Them Work for You

“Consider McCormick Foods, a 126-year-old company that sells herbs, spices, and condiments. By 2010, the company’s traditional growth strategies had run their course. McCormick had already expanded into a full range of food seasonings and established a foothold up and down its supply chain, including operations in farming and food preparation. The company was running out of growth options. CIO Jerry Wolfe heard about Nike’s move into platform-building. Could McCormick do the same? Wolfe reached out to Barry Wacksman, a partner at R/GA, a leading New York design firm that had helped Nike design its platform. Together, they hit on the idea of using recipes and taste profiles to build a food-based platform. Wolfe and Wacksman used McCormick’s taste laboratories to distill three dozen flavor archetypes—such as minty, citrus, floral, garlicky, meaty—that can be used to describe almost any recipe. Based on personal preferences, the system can predict new recipes an individual is likely to savor. Members of the McCormick platform community can modify recipes and upload the new versions, creating ever-expanding flavor options and helping to identify new food trends, generating information that’s useful not only to the platform’s users but also to managers of grocery stores, food manufacturers, and restaurateurs.18”
― Geoffrey G. Parker, Platform Revolution: How Networked Markets Are Transforming the Economy and How to Make Them Work for You