Todayâs top tech startups are almost all platform businesses. Rather than creating products or services, like the linear tech companies of old, these platforms focus on connecting users. These dominant tech companies include large public companies like Apple, Google and Facebook, as well as those soon to join their ranks like Uber, Airbnb and Snap Inc. For decades, almost all of these platform companies have hailed from Silicon Valley and the tech sector, and theyâve been built by startups challenging and disrupting existing incumbents.
The next wave of billion-dollar platforms wonât just be built by tech startups. Now, large, incumbent enterprises are starting to get into the game.However, over the next decade, this trend will start to shift. The next wave of billion-dollar platforms wonât just be built by tech startups. Now, large, incumbent enterprises are starting to get into the game. Whatâs changed? For one thing, the blueprint for building a platform business is no longer a Silicon Valley secret. As we detailed in our book Modern Monopolies, platforms have a clear recipe for success. Building a platform isnât easy â and as with any new business venture, it involves some risk â but the fundamentals of the underlying business model are remarkably consistent across different platform types and different industries. Additionally, over the last decade and a half, tech has spread from a niche industry separate from most of the economy, to a key part of almost every industry. Connected technology is now table stakes in every industry â if you arenât already established on mobile and thinking about your IoT strategy, youâre behind the competition. Meanwhile, attracted by large addressable markets, platforms have migrated from just consumer-facing business into the business-to-business sector. Many incumbents, in industries that range from automotive and telecom to industrial supply and freight logistics, are feeling the threat from both startups and large tech companies like Amazon, Apple, Google and Facebook. These incumbents now not only see the opportunity represented by platform business models, but theyâre also feeling the threat from potential Silicon Valley competitors if they donât act now.
Creating modern monopolies isnât just a Silicon Valley game anymore.For one, the mental model for building a platform is very different than the one for building a linear business. But now that the blueprint is out there in books like Modern Monopolies, these enterprises have the ability to change their business model quickly. Second, agility and speed are paramount when building platforms, and existing enterprises often lack in these areas. However, putting in place the right organizational structure and culture for a platform business, particularly by giving the new business the necessary independence from the existing core business, can help an existing enterprise overcome this challenge. Given the size of the opportunity around platform businesses, you can expect that more and more established businesses will start to dominate their industries by building platforms over the next five to ten years. Creating modern monopolies isnât just a Silicon Valley game anymore.
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