prodmgmt/platforms
NEXT POST: Part II of my thoughts on TikTok, on how the app design is informed by its algorithm and vice versa in a virtuous circle.
Thoughts on business models that don't seem to make perfect sense
On the risks of over-emphasizing platform thinking
Last updated: Jan 30, 2021 Are you looking for ideas to unlock your long-term business value? If you shook your head in yes, remember that business model is one of the ways to streamline your business process. Precisely, a business model is a holistic framework to define, understand, and design your entire business in the…
Business models based on the compiled list at http://news.ycombinator.com/item?id=4924647. I find the link very hard to browse, so I made a simple version in Markdown instead. · GitHub
Why Systems of Intelligence™ are the Next Defensible Business Model
The unbundling of Excel is just as important as the unbundling of Craigslist. Here's what you need to know about the Excel Economy and how SaaS companies can take advantage of different verticals and use cases that Excel has dominated.
Like other meta-platforms **the web thrives or declines to the extent it can accomplish the lion's share of the things we expect most computers to do**. Platform Adjacency Theory explains how to expand in a principled way and what we risk when natural expansion is prevented mechanisms that prevent effective competition.
Patterns and Practices in the Creation, Rise, and Fall of Platforms
Methodologies for understanding and measuring marketplace liquidity
There is a fallacy in believing your current performance is indicative of future success: Performance is a trailing indicator. Power is a leading one.
This is a book summary of The Art of Profitability by Adrian Slywotzky. Read The Art of Profitability summary to review key ideas and lessons from the book.
The most significant bottleneck in the adoption of healthcare technology to date has been distribution. Over the last decade, generations of digital health companies have struggled to reach escape velocity—not because their products and services weren’t transformative, but because they failed to find an executable path for sustainable distribution and value capture. Some of that...
Building a two-sided market is probably the hardest thing you can build as an entrepreneur. It's so hard that a few weeks ago, I organized a Marketplace
01 Intro One of the best books I have read in the last few years is The Elephant in the Brain by Robin Hanson and Kevin Simler. The book makes two main arguments: a) Most of our everyday actions can be traced back to some form of signaling or status seeking b) Our brains deliberately hi
Insights and Resources for Tech Entrepreneurs
New products change what we buy, but new platforms have much broader effects.
Each day on Tech Twitter, we get up in the morning, open up the website, and then go see what it is we’re mad about. A few days ago, it was this: The concept of “pay to get a better place in l…
Raise a glass of bubbly to the count of Champagne.
Probably not the ones you think.
Building a better mousetrap isn’t enough.
In the furiously competitive world of tech startups, where good entrepreneurs tend to think of comparable ideas around the same time and "hot spaces" get crowded quickly with well-funded hopefuls, competitive moats matter more than ever. Ideally, as your startup scales, you want to not only be able
Goods versus Services: The next trillion dollar opportunity Marketplace startups have done incredibly well over the first few decades of the internet, reinventing the way we shop for goods, but less so for services. In this essay, we argue that a breakthrough is on its way: The first phase of the internet has been...
Perhaps the most egregious is a failure of imagination.
Companies are a sequencing of loops. While it’s possible to stumble into an initial core loop that works, the companies that are successful in the long term are the ones that can repeatedly find the next loop. However, this evolution is poorly understood relative to its existential impact on a company’s trajectory. Figma is a … Continue reading Why Figma Wins →
Since Benchmark’s investment in Ebay 15 years ago, we have been fascinated by online marketplaces. Entrepreneurs accurately recognize that the connective tissue of the Internet provides an opportunity to link the players in a particular market, reducing friction in both the buying and selling experience. For example, my car tax check is an online platfrom that allows you to book a slot for a complete history and guidance of your car taxes and other details. The arrival of the smartphone amplifies these opportunities, as the Internet’s connective tissue now extends deeper and deeper into an industry with the participants connected…
The same-day cancellation rate likely includes subscribers who only wanted access to one article, or who felt the full paid experience was lacking after a quick look around. New data suggests some just really hate the idea of auto-renewal.
You can't build a weatherproof company if you don’t constantly gather challenges to your thinking, learn to listen to them, and then test those learnings out.
This week, we published the a16z Marketplace 100, a ranking of the largest and fastest-growing consumer-facing marketplace startups and private companies. See the full index and analysis here, and visit a16z.com/marketplace-100 for more marketplace-related content. From a business standpoint, we know marketplaces are challenging to scale; from a conversational perspective, we’ve come to realize they’re...
Innovation is not a binary choice between the old and the new. The answer is often to contribute to evolution — by making parts that work…
Centralized planning is no longer required.
In many ways, online marketplaces are the perfect business model. Since they facilitate transactions between independent suppliers and customers rather than take possession of and responsibility for the products or services in question, they have inherently low cost structures and fat gross margins. They are highly defensible once established, owing to network effects. Yet online marketplaces remain extremely difficult to build, say Andrei Hagiu of Harvard Business School and venture capitalist Simon Rothman of Greylock Partners. Most entrepreneurs and investors attribute this to the challenge of quickly attracting a critical mass of buyers and suppliers. But it is wrong to assume that once a marketplace has overcome this hurdle, the sailing will be smooth. Several other important pitfalls can threaten marketplaces: growing too fast too early; failing to foster sufficient trust and safety; resorting to sticks, rather than carrots, to deter user disintermediation; and ignoring the risks of regulation. This article draws on company examples such as eBay, Lending Club, and Airbnb to offer practical advice for avoiding those hazards.
“A startup is a company designed to grow fast. Being newly founded does not in itself make a company a startup. Nor is it necessary for a startup to work on technology, or take venture fundin…
Last night, Twitter curtailed Meerkat's access to its graph . I saw lots of discussion on Twitter (I'd say this was ironic but it's just expected) about why and whether Twitter should just compete on its own merits with its recent acquisition Periscope . Some have termed what happened to Meerkat
Just don’t pretend you’re all on the same side.
Knowledge moats (secret sauces) are one of the most fundamental type of moat in business. They consist of the information, data and…
Five of the 10 most valuable companies in the world today—Apple, Alphabet, Amazon, Facebook, and Microsoft—derive much of their worth from their multisided platforms, which facilitate interactions or transactions between parties. Many MSPs are more valuable than companies in the same industries that provide only products or services: For instance, Airbnb is now worth more than Marriott, the world’s largest hotel chain. However, companies that weren’t born as platform businesses rarely realize that they can—at least partially—turn their offerings into one, say the authors. And even if they do realize it, they often wander in the dark searching for a strategy to achieve this transformation. In this article, Hagiu and Altman provide a framework for doing so. They lay out four specific ways in which products and services can be turned into platforms and examine the strategic advantages and pitfalls of each: (1) opening the door to third parties; (2) connecting customers; (3) connecting products to connect customers; and (4) becoming a supplier to a multisided platform. These ideas can be used by physical as well as online businesses.
Done right, companies competing as a multi-sided platform often win with higher percentage profit margins than those enjoyed by traditional resellers. The problem is that a winning strategy is far from self-evident. Professor Andrei Hagiu explains the potential and the pitfalls for life as an MSP.
Startups fail because they run out of money before achieving product-market fit. NFX Managing Partner Gigi Levy-Weiss identifies 10 places to look for product-market fit in startup ideas.
When I was in college I took two intro economics courses: macroeconomics and microeconomics. Macro was full of theories like “low unemployment causes inflation” that never quite stood u…
Data has long been lauded as a competitive moat for companies, and that narrative’s been further hyped with the recent wave of AI startups. Network effects have been similarly promoted as a defensible force in building software businesses. So of course, we constantly hear about the combination of the two: “data network effects” (heck, we’ve...
By Stephanie Tilenius, an entrepreneur in residence at Kleiner Perkins Caufield & Byers The Wild West of online marketplaces is over. From 1999 until 2006, eBay and Amazon Marketplaces dominated the field, offering platforms that brought buyers and sellers together. But over the last seven years, more than 20 new marketplace [...]
Few realize that Uber's core network effects aren't as strong as they seem. At this point, we count no less than 9 additional defensibilities Uber is pursuing to reinforce their core network effect.
Value is created through innovation, but how much of that value accrues to the innovator depends partly on how quickly their competitors imitate the innovation. Innovators must deter competition to…
Zapier has 3M+ users and generates $125M in ARR. At a $5B valuation, its fast-growing horizontal platform is unable to meet the demands of all of its customers. The increase of underserved Zapier customers presents an opportunity.
Today, we’re sharing the newest social nfx we've identified—the 15th type of network effect: Tribal Network Effects.
A Guide to Reddit, Its Key Competitive Advantages, and How to Unbundle It
Hatching a Design Marketplace from Scratch at Visually
The world’s most successful companies all exhibit some form of structural competitive advantage: A defensibility mechanism that protects their margins and profits from competitors over long periods of time. Business strategy books like to refer to these competitive advantages as “economic moats”.
Business-to-business marketplaces are among ecommerce's leading growth trends, yet many industries remain under-served, especially for raw materials.
20 years ago Apple seized music, and turned it into a lever for its broader business. It failed to do the same to TV, and lost control of music, but won massively in games, where it now makes more money than the entire global digital music industry. Now, perhaps, it’s looking at advertising.
Summary Helmer sets out to create a simple, but not simplistic, strategy compass. His 7 powers include: scale economics, switching costs, cornered resource, counter positioning, branding, network effects, and process. Key Takeaways Strategy: the study of the fundamental determinants of potential business value The objective here is both positive—to reveal the foundations of business value—and […]
After more than 12.000 Github stars, two successful open-source projects, a failed open-core company, and a successful prop-tech one*, I feel more than ever that giving your product away for free is just as bad a business strategy as it sounds.
The marketplace revolution is still just beginning and the enterprise gateway is the newest type of marketplace.
How Figma and Canva are taking on Adobe—and winning In 2010, Photoshop was ubiquitous. Whether you were editing a photo, making a poster, or designing a website, it happened in Photoshop. Today, Adobe looks incredibly strong. They’ve had spectacular stock performance, thanks to clear-eyed management who’ve made bold bets that have paid off. Their transition … Continue reading How to Eat an Elephant, One Atomic Concept at a Time →
A classic pattern in technology economics, identified by Joel Spolsky, is layers of the stack attempting to become monopolies while turning other layers into perfectly-competitive markets which are commoditized, in order to harvest most of the consumer surplus; discussion and examples.
This article originally appeared on Fortune.com.
A few factors I’ve seen pull winners off the podium…
Our top ecommerce builders are based on objective performance data, feature set & value. Check out ecommerce platforms now.
In 2019, long before the outbreak of COVID-19, many lower gross margin tech companies were not being well-received by the public markets, and an excessive spotlight was cast by many on company gross margins. In the present moment, that attention has only grown for both public and private companies. We’ve observed a bifurcation in the...
Inside the surreal and lucrative two-sided marketplace of mediocre famous people
If you polled a cross-section of companies about their most important software, accounts payable and accounts receivable software would likely not rank high on their lists. It’s the kind of unglamorous, workhorse software that’s necessary, but often taken for granted. Then, late last year, the cloud-based b2b payments company Bill.com went public—and became the second...
One man's desire to create the perfect gun profoundly changed manufacturing.
There might be no more beloved image of the American entrepreneurial spirit than that of neighborhood kids who open a sidewalk lemonade stand on a hot summer day. With a little bit of “capital” from their parents — lemons, water, sugar, a card table, some markers and paper — hard work, and good sidewalk placement,...
Apple TV+ is cheap and barren. HBO Max is expensive and cheapening their brand. Everyone is confused.
Tokyo Ohka Kogyo Co., JSR Corp. and Shin-Etsu Chemical Co.: Three seemingly inconspicuous companies suddenly came into the spotlight in early July when Japan announced it would slap tightened export controls to South Korea on three key chemicals — photoresists, fluorinated polyimide and hydrogen fluoride...
How does Netflix get away with releasing its movies in theaters on the same day it makes them available for “free” on its streaming platform? The answer is that Netflix is pursuing a fundamentally different business model from everyone else in the industry. Netflix is not in the business of selling individual movies to many different customers. Instead, it’s in the business of selling many different movies to individual customers—in bundles. Bundled subscriptions allow Netflix to practice a different kind of price discrimination from the movie studios. The company doesn’t have to figure out how much a consumer values any individual movie on the service. The bundle does that for them—very profitably.
A new battle is brewing to be the default of every choice we make. As modern interfaces like voice remove options, augmented reality…
Bird recently announced a new form factor for micromobility, the Bird Cruiser. It’s a cross between an electric scooter, a bicycle and a…
Amazon is so new, and so dramatic in its speed and scale and aggression, that we can easily forget how many of the things it’s doing are actually very old.
Many of the most consequential projects of the internet era — from Wikipedia to Facebook and bitcoin — have all been predicated on network effects, where the network becomes more valuable to users as more people use it. As a result, we’ve become really good at analyzing and measuring network effects. Whether it’s decreasing customer...
An inquiry into how young people are hanging out on the internet.
Art has always had a strange relationship with copying.
There is a story arc of the electric scooter market that took the world by storm in 2018, was second-guessed late in the year and has…
The most successful companies and products of the internet era have all been predicated on the concept of network effects, where the network becomes more valuable to users as more people use it. This is as true of companies like Amazon and Google as it is for open source projects like Wikipedia and some cryptocurrencies....
Shopify App Store: customize your online store and grow your business with Shopify-approved apps for marketing, store design, fulfillment, and more.
Shopify is partnering with a network of more than 20,000 app developers and agency partners to build profitable businesses.