Platform businesses have reached a major milestone. The top 15 mobile apps that make up the lion share of consumption and user engagement are mostly all platform businesses.
We define platforms as a business model that enables the exchange of value between a third party network of producers and consumers. These businesses are infinitely different compared to companies like Home Depot or Coca Cola. While these linear businesses may have mobile apps, their business cannot solely be conducted on mobile.
Platforms, like Uber and Airbnb, can conduct their business primarily through mobile apps. Of course, they must also secure a network of producers and consumers to create a value ecosystem that is attractive to both sides of the platform. For instance, Snapchat needed users to produce content and consumers to view and interact with that content.
What exactly about the business model enables these platforms to be so attractive to users? Here are three reasons (there are many more)…
- Aggregating supply (e.g., Uber)
- Provide new modes of socialization (Facebook Messenger)
- Convenience (think Amazon)