Based on 160+ Platform Businesses
Find the full list of 160+ platforms with explanations on the trello board here:
For the purpose of this post, I will focus on how entrepreneurs can model platforms to
How Can you apply this to 10x your business growth?
Allow others to build a business on top of yours.
…this might sound counter intuitive but not after you cosider the evidence.
To be clear, you do not have to be a software company to adopt the platform model. The use of platform models has extended beyond the tech sector. Retailers are shifting from distribution channels selling products, to engagement platforms co-creating value by inviting boutique shops into their department stores.
Allow open contributors to benefit from activity facilitated by your platform that has the positive effect of adding value to your platform.
Do this using the three transformative technologies: cloud, social, and mobile
3 transformative technologies:
Shift from a “fruit stand” to a “flea market”.
Create something that lifts other up, upon which they can stand and you will benefit from the traffic.
Strategize who your most likely partners are that would benefit from your platform but do not directly compete with you, a complimentary service rather than direct competitor. For our company we deal with a lot of home improvement companies so an easy adjascent service that would be interested in accessing our clientele offer services that are helpful to them outside of lead generation such as financial management tools and services that have industry specific programs.
Consider Reseller inclusion.
If you can’t beat ’em, join ’em…
Expand your offerings to have them fulfilled by third party vendors and put your brand on it to increase your reach. This is a quick fix and bridges the chasm on your way to fulfilling the service yourself.
The power of Pull
where traditional businesses push
As they attract more users, they become more valuable to those users
The 9 Types of platforms:
(by Michael Vakuenko & Sameer Singh)
- Technology Platforms
- Computing Platforms
- Utility Platforms
- Interaction Networks
- On-demand Service Platforms
- Content Crowdsourcing Platforms
- Data Harvesting Platforms
- Content Distribution Platforms
I’ll focus on the “Marketplaces” because that is essentially what I’m building, a B2B lead generation platform that essentially is a hybrid Reseller to retain the freedom of flowing between the two. More on Reseller Modeling in another post.
Marketplace Platform Components
Marketplace modeling isn’t a new concept but building online marketplaces is extremely new. I like to think of the era by comparing it to the early 1900’s. In 1904 you might’ve seen 2 cars on the road to every 200 horse buggies in a major city. Similarly, today you might see 2 platforms to every 2000 websites but that ratio is growing exponentially and if you’re not keeping up you’re dead.
Online Marketplace Atributes:
- Enables transaction between supply side & Demand Side
- Eliminates friction in the traditional model of that transaction
- Prices are set by the Supply side
- Engagement depends on variety of supply being high
- Network Effect Viral Component: Sellers attract buyers who attract more sellers
Properly Identifying your Sellers:
Buyers search for a specific product or service, not a specific seller.
It is important that you start them out correctly so that you don’t end up recreating this later. As was the case with the popular real estate platform, Redfin. They did not build for SEO to begin with and had to go through a large technical overhaul later. As a result, within 90 days of doing so, a hocky stick growth curve resulted.
Solve the chicken & egg problem correctly first:
Do you populate the supply side or the demand side first? The worst answer in the world, is actually the correct answer in this case: “it depends”.
(this is not as simple as it seems. Missteps in this crucial phase can cause failure as was the case in Zaarly who pivoted away from marketplace and opted for the more suitable model of a Reseller. More on the Reseller Model in another post coming soon)
If you already have a small number of one side of your marketplace (supply or demand/buyer or seller) then start with that side to attract the other side.
For us, we have about 2000 service providers (sellers/supply side) to start with but it might prove not to be enough as there are already very large players in this space. So we are A/B testing it against the Reseller model. Think of it as the difference between iTunes (reseller) Vs. Appstore (marketplace).
More to come in my post on Reseller Model Vs. Marketplace Model, Which One Is Better?
How To Open Source Your Business Model…(for dummies):
Googles 8 Innovation Principles
- Open will win: In a hyperconnected world with massive amounts of cognitive surplus, it’s critical to be open, allow the crowd to help you innovate, and build on each other’s ideas.
- Keeping it opensourced is important.
- In our case, I did not know this, let alone, how to do it, but sending an article like the following to your developers as you digitize your business is crucial or you will be starting over as I did…Opensource.com’s article on Open source Code and Business Models
- This invites innovations you couldn’t have ever came up with by employing the minds of thousands of smart people who want to capitalize on your efforts which actually grows your model.
- Example: Game developers gamify your platform which raises user engagement which directly effects revenue.
- or thousands of would-be competitors offer your service to their clients and you get all that user feedback.
This can create an inflection point in your growth but you have to be open to the idea of working with your competitors and adjacent markets. In our case, offering one type of lead generation service that forks into other companies lead generation service offerings might prove a 10x inflection point in our growth. I will report on the progress when or if it has any sizable impact.
10x Growth Homework:
So your homework, if you’re following along my in my journey is to determine the following:
- Is there already a significant marketplace providing what you provide?
- If so, pivot to Reseller Model
- If not, start developing the side that you already have (supply or demand/buyer or seller)
- Use that side of the marketplace to get organic traffic from the other side in a microcosm scale. (don’t try to rank for broad terms, tackle a niche).
Example of step 4: If you sell physical products, consider the Etsy marketplace but don’t start with high variety. Do what they did and start a facebook seller group for “High End Purse Traders”, “Designer Jewelry Swap”, etc.
In my case, the homework paid off as I launched in both directions to A/B test my results and discover a clear path…more on this to come.
Practical Exercise: Growth Tactics That Worked For Me
What worked for me so far for Growth and engagement:
- Design for engagement
- Ungated Interactive user tools capability
- Marketing Automation return path after
- SEOing for main keywords