There are many platform businesses that have achieved significant size and success around the world. By plugging into ex-executives or senior leaders within these businesses, it is possible that other, less tech-focused companies can do the same!
Here are a few examples of some of the biggest platform businesses:
- Amazon – Amazon is a leading e-commerce platform that also offers a range of other services, including cloud computing, digital content, and advertising. It is one of the largest and most successful companies in the world.
- Google – Google is a dominant player in the search and advertising markets, and it also operates a range of other platforms, including its Android mobile operating system, YouTube, and Google Maps.
- Facebook – Facebook is a social media platform with more than 2.7 billion monthly active users. It also owns other platforms, including Instagram, WhatsApp, and Oculus VR.
- Apple – Apple is a technology company that operates a range of platforms, including its iOS mobile operating system, the App Store, and Apple Music. It is one of the most valuable companies in the world.
- Alibaba – Alibaba is a Chinese e-commerce company that operates a range of platforms, including the Taobao and Tmall marketplaces. It is one of the largest e-commerce companies in the world.
- Airbnb – Airbnb is a platform that enables people to rent out their homes or apartments to travelers. It has become one of the most successful sharing economy platforms and is valued at billions of dollars.
- Uber – Uber is a ride-sharing platform that connects drivers with riders through its mobile app. It is one of the most successful sharing economy platforms and is valued at billions of dollars.
These are just a few examples of some of the biggest platform businesses in the world. There are many other platforms that have achieved significant size and success in various industries.
Without doubt, platforms can generate significant revenue and profits, far in excess of the standardised business models that carry overheads such as physical stock or retail premises. Here are a few ways that platforms can make money:
- Advertising – Many platforms, such as Google, Facebook, and Amazon, generate a significant portion of their revenue through advertising. These platforms have a large user base and can target ads to specific users based on their interests and demographics, which makes the ads more effective and valuable to advertisers.
- E-commerce – Platforms that facilitate online transactions, such as Amazon and Alibaba, generate revenue through the sale of goods and services. These platforms can also earn revenue from transaction fees and commissions.
- Subscriptions – Some platforms, such as Netflix and Spotify, generate revenue through subscriptions. These platforms offer premium content or services that users can access by paying a monthly or annual fee.
- Licensing – Some platforms, such as Apple’s App Store and Google’s Play Store, generate revenue by licensing their platform to developers who want to distribute their apps to users. The platform typically takes a cut of the revenue generated by the app.
- Data monetization – Some platforms collect data from their users and use it to create targeted advertising or to improve their products and services. This data can be very valuable, and platforms can generate significant revenue by monetizing it.
Overall, there are many ways that platforms can generate revenue and profits, and the specific business model will depend on the platform and its target market. But understanding how platform businesses operate and generate revenue can be useful for a variety of companies, including those that are looking to become platform businesses themselves (or those that want to develop strategies to compete with existing platforms).
Here are a few ways that this knowledge can be applied:
- Developing a platform strategy – Companies that want to become platform businesses can use this knowledge to develop a strategy for building and monetizing their platform. This might involve identifying a target market, developing a unique value proposition, and identifying monetization opportunities.
- Competing with existing platforms – Companies that compete with existing platforms can use this knowledge to develop strategies for differentiating their products and services and for attracting and retaining users. This might involve offering unique features or benefits, or finding ways to monetize their users that are different from the existing platforms.
- Partnering with platforms – Companies that are not platform businesses themselves can still benefit from partnering with platforms. For example, a company that sells physical products might use Amazon or Alibaba as a platform to reach a wider audience and generate more sales.
Overall, understanding the business model and revenue streams of platform businesses can be useful for a variety of companies looking to develop strategies for success in the digital economy but hiring from these tech behemoths is often out of the reach of the standard, privately-owned SME. That is, unless the business considers hiring a non-executive director from one of the multitude of platform businesses.
Having knowledge about platform businesses can certainly be helpful for individuals who are interested in serving as a non-executive director (NED) for a company. NEDs will typically bring a strong background and expertise in a relevant area, such as business strategy, finance, or technology.
Having knowledge about platform businesses and how they operate and generate revenue can be useful for smaller businesses because many companies may operate in industries where platforms (could) play a significant role. Think about the JustEat business and how it disrupted a traditional takeaway “bricks and mortar” industry. Perhaps the idea behind this came from an executive with prior platform credentials. This knowledge can provide valuable insights and recommendations to the executive team.
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