How to Win Over Competitors with Platform Business Model?


Long-term diversity from rivals is much difficult with services and products. But what if you could choose a better and latest business model than your opponents? What if your business could take an advantage of this latest platform business model?

When the messaging service WhatsApp application was acquired by Facebook for $19 billion, everyone had the same question in their mind, “Does the service really merit almost 20 times projected revenues’ valuation?” Without any doubt, we find that there is a huge gap between valuation and revenue.

Similarly, Barcelona-based start-up company, Glovo also raised €2 million in funding from Investors like Felix Ruiz (JobandTalent, Tuenti), Zaryn Dentzel (Tuenti), Bernardo Hernandez (Idealista, Flickr, ex-Google, Fever), Antai Venture Builder, and Cube Investments. Started in January 2015, Glovo gets their users anything from any shop or restaurant in their city within one hour.

Shuttl, founded by IIT Delhi alumni, also raised $20M in funding and now, that fund is used by the startup to inflate Shuttl service to new cities and fortify its technology platform and network.

What all these startup companies are doing? How they get funding within some period of service launched?

The answer to the questions is simple. They are finding targeted audience’s discomfort and provide service accordingly to make them comfort. Also, they represent the new types of business that investors prefer.

Investors prefer to invest in such Startups that have a new concept and trends in the types of business. Is there any logic behind it?

Startups with new concept and trend have higher valuation to their revenue. We have already seen examples at the starting of this post. Moreover, some trend data also indicates that the valuation gap is widening over time that we call “the multiplier effect,” where a business model drives the gap between valuation and income.

Faster growth is another strong point that catching investors’ attention to make an investment towards it. Some of the major categories of startup, where investors interested more are Software, Social Networking, eCommerce, and Education. Startup with these categories is getting more funding as compared to others.

Last but not least, large profit margins have been relished by investors, who are investing in the startups. In the last five years, we have seen 5% of the S&P 500 will be platform businesses that based on the below given trend line. Let’s see in details through this graph.platform_business-graphLooking at the graph, we come to know that Platform representation will continue to increase, as it has distinct benefits over more traditional business models, like higher profit margins, scale to a size, cost structures.

There are many potential public platform companies like LinkedIn, Twitter, Zillow and GrubHub could join the S&P 500 in the next few years while Snapchat, Airbnb, Dropbox, Uber, and Pinterest could be future candidates.

We’ve had discussed many things about platform business model, but do you have Idea about what platform business model exactly is?

A platform is nothing but a business model that simplifies creating value by exchanging between two or more interdependent groups. It generally exchanges between producers and consumers. Platform business is developed on technology that develop the most value.

There are people using the term ‘platform’ to refer the technology solution. But, now the platform is extended far beyond the technology infrastructure, facilitating interactions among interdependent groups, it creates a scalable method of developing and sharing value.

“Digitization has rewritten the rules of business competition, giving rise to a new form of business design and a platform business model.”Sangeet Paul Choudary, CEO, Platform Thinking Labs

Just like that, the app strategy or mobile app for business could be a platform business model or app business model for doing business, where a number of smart device’s users is voluminous.

Uber does, Airbnb does, Glovo also. What about your organization?

Let’s have an example of Uber, a commoditized service, assuring that the job is done well with a certain level of quality and at proper time-frame. Contrary to, non-commoditized services have so far too many characteristics that matter to the consumer.

For example: a consumer on Airbnb requires to consider many different variables, such as the apartment’s place, host and guest presence, amenities, size and so on to automatic matching to work well. Thus, Airbnb concentrates on searching and discovery much easier for its users instead of automatic matching.

Related: Non-scalable and Non-technical Solution Doubled Airbnb Revenue!

Apart from Uber and Airbnb, Glovo is also a commoditized service, catering users with every other small-big work that requires to be done. Developed by Space-O, Glovo’s Courier Delivery App solves everyday issues by making delivery of things in 60 minutes.

Do you know how Instagram’s selfies and Uber’s Drivers power the platform economy?

Whether it is Instagram’s selfie or Dribbble’s designers, and Uber’s Driver, they have created the fuel that required economic and social exchanges to influence society and business. Platform businesses have no meaning without value units.

Those, who have empty search result page, will rapidly demonstrate that. The platform’s value proposition revolves entirely around its core value units.

Platform Business Model Creates Value Through Many Means

When a company is exchanging virtual goods, it is compulsory to create content on the top of the platform. If the exchange includes information and availability about the goods, then it’s supply and demand needs to create on the top of the platform.

There are certain services like Airbnb listing and Uber highly standardized while TaskRabbit Inc., a digital marketplace, enabling users to outsource different jobs and tasks to others. Not only to create value but also platforms have to capture value by ensuring that some currency’s form is nurtured from consumers to producers.

Closing Thoughts

As consumers if you are finding a hard time to search what you are looking for, then the platform-enabled interaction is less competent. But, you do have a question: How do I enable others to create value? The answer to this question is: Choose the right platform.

Want to know how a “platform based business model for startup” helps brand and business to grow, connect with us. We have an idea to let your business be a platform.


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