how do platforms succeed? (part 1)

For a platform to succeed, it has to do 3 things: Pull, Facilitate, and Match 
 

• On the Supply/Producers side, The Pull: The challenge is to encourage producers to regularly produce core value units, each of which must have the right data so that the system can match that with the relevant customer] 

 

• On the Demand/Consumers side, The Match: The challenge is to scale quantity and quality – and to really succeed the platform should facilitate as many aspects of the interaction as possible 

 
Note: Units that cannot be matched do not contribute to activity on the platform, and the platform only has value when it creates value, which is when there is activity.
 
Consider how Uber facilitates value exchange, creates persistent value and then creates a feedback loop: 
 

• Transfer of information (a form of value) from producer to consumer 
• Transfer of transport-as-a-service (a form of value) from producer to consumer 
• Transfer of money (a form of value) from consumer to producer 
• Transfer of rating (a form of value) from consumer to producer, and from producer to consumer 

 
Conclusions

• Monetization is dictated by which transfers are captured and tracked by the platform 
• If your platform owns the end-to-end interaction, you’re more likely to capture the user’s input on quality — and hence scale quality as well as quantity 
• Interaction ownership is critical to create a sustainable platform business
  

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Rules, Tools, and Trust
To facilitate effectively, at scale, the platform’s curator needs to create a culture where the adequate behaviors happen. This is achieved with Rules, Tools, and Trust.

Rules

1. Nudge users to compliance and the desired behavior
2. Create simple pathways for producers/consumers to follow
3. Use cues, notification, feedback
4. Core questions:
   1. Who do we want to create core value units?
   2. Who can create core value units?
   3. How can they create core value units?
   4. Can we make that simpler, reduce steps?
   5. Can they do it passively?
   6. What differentiates a high-quality unit from a low-quality unit?

 
Tools

1. “Kill the skill barrier” with tools that make anyone look good. (Think Instagram’s filters: making crap photographers look like they have talent since 2010)
2. Allow for “emergence” — when users develop behaviors you weren’t expecting

 
Trust

1. This is quality control.
2. Have mechanisms that identify, differentiate and encourage good behavior
3. There are 7 ways to confirm trust online
   

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The 7 Cs of Trust

1. Confirmed identity
2. Centralized moderation — in the early days. This will give way to…
3. Community feedback
4. Codified behavior — i.e. via implicit rules
5. Culture — create a good one
6. Completeness — think of LinkedIn’s progress bar (could you do that for producers/consumers?)
7. Cover — think of Airbnb’s insurance

 
The Types of Payments
There are a few ways a consumer can “pay” a producer — that is, offer value:
 

• money
• attention
• reputation
• influence
• data

​And here are the best ways to capture value on the platform – while noting that the platform should capture value for every interaction:
 

• % — take a discount/commission
• Charge one to access the other, for example a listing fee
• Charge 3rd party advertising
• Charge producer/consumer for premium tools and services, for example a concierge-style service
• Charge consumer for access to high quality, curated producers
• Charge producer for change to signal high quality

(To be continued)

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​My name's phil mora and I blog about the things I love: fitness, hacking work, tech and anything holistic. 
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Head of Digital Product
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