Do you want to understand what global players are using to build their own platform ecosystems? Are you looking for tips on how to understand and develop platform opportunities?
Futurice has been building platforms, as well as services and products on platforms for years, but 2016 was definitely the year platform business started to garner some serious media attention. We also started to notice a shift in our discussions with customers – many want to understand the transformation from a traditional pipeline business into a platform business model: what does it mean in their context and how can they start moving towards a new business logic?
You’ve probably read a book or two, maybe some articles, too, on the platform business model, so you already know the key is to enable interaction between different user roles. The value in a multi-sided platform is generated by the ability to activate external stakeholders, allowing them access and the opportunity to provide each other with value – the platform owner works as network orchestrator, giving control to other participants and curating the interactions. It’s important to remember that whether it’s a marketplace or an API platform enabling other parties to connect, the point of the platform is always to remove friction from the ecosystem and help users achieve more – it’s never an end in and of itself.
There’s no tech silver bullet - 15 global platforms use tech stacks of over 200 solutions
The interesting change is that platforms are moving strongly into the B2B sector – and hopefully increasingly into the public sector, too. Our most interesting projects have been in the B2B realm. We’ve realized that there’s never been a study looking into what components companies use as a part of their tech stacks. Or at least we haven’t come across one. So, to deepen our customers’ and our own understanding of the technology decisions behind successful platform business models, we compiled a study of 15 large global platforms.
We analyzed the tech stacks - from languages and frameworks to infrastructure, databases, devops and even project team technologies. The data was collected from the techstacks.io and stackshare.io developer communities. Once again, we found that there is no silver bullet or one-size-fits-all solution to boost the platform scale with ready-made tech systems. Based on our analysis, the world’s 15 top platforms use over 245 different technologies, either as a part of their tech components or to enable project team collaboration. The most common overlaps become apparent in the word cloud below.
This shows just how largely the tech stacks can differ. And this confirms our point of view again: in platform business, technology is not the thing, it’s an enabler to superboost the interaction ecosystem.
Fear not - validation is possible
Luckily, there are ways how startups and enterprises can test and validate rapidly their platform business ideas. As we now know, it’s not about tech. So where do you start then?
To simplify (a lot): platform business model creation happen iteratively in three phases that minimize waste.
- When an idea comes up, start with a quick-and-dirty market validation
- Move on to a quick-and-dirty concept validation - i.e. proof-of-concept
- Start choosing the right technologies for scale
Start with how to decrease market friction, remove information asymmetries and consolidate a highly fragmented market. Keep in mind that the key is the value (core interaction) you are going to provide to both sides of the game (producers and customers). Check out our Quick and Dirty Market Validation checklist for ideas.
After you’ve confirmed your market hypothesis, it’s time to validate and iterate your concept with potential users. We hope you haven’t fallen in love with your idea at this point, because the first brush with users will change it.
Paper prototyping, animations, cartoons, UI mockups, etc. will usually do the trick, but if you want to test your idea with a larger audience at this early stage and promote the platform externally, starting with an MVP (minimum viable product) tech solution is often a good idea - especially if you don’t want to throw money at a non-validated idea quite yet. Services like Sharetribe (a startup for launching an online marketplace) or Wordpress can help you learn how to build things yourself, without hiring a team of developers. Even using templates from Weebly, Squarespace or Shopify is sometimes sufficient to create a rapid marketplace or launchsite that conveys the idea behind your platform business and pulls in traffic. Boost it with social media marketing and analyze the resulting engagement and feedback.
Have you ever considered crowdfunding platforms like Kickstarter or Indiegogo as a potential channel for validating your business idea or product concept? They’re not just for innovators and individuals with dreams - Kickstarter can be used by enterprises as well.
Finally, you’ve figured all this out and hopefully the market you’re going for isn’t 100% saturated... or maybe you have deep enough pockets to outpace everyone else. Now it’s time to start looking at how to superboost the platform with the right tech. If you’d like to get your hands on the tech stack raw data of the 15 platforms we investigated fill out the form below and we'll get in touch.
And one more importantly: do not start your journey by first choosing the “right” technologies to solve a stated problem. This choice may become a major limitation later on. If you feel the urge to do things the wrong way, please drop us a line or give us a call. We’d like to take a shot at talking you out of it.
For a look at the hands-on approach we employ in building platform businesses and single services for different mobile platforms, here are some posts to read:
Creating a crowdfunding platform for Nordea, the biggest bank in the Nordics
Ville Saarinen shares the story of building building mobile apps for four different platforms, on a super tight deadline, as a volunteer for Ravintola Day a few years back
Back in the day, Juha Ristolainen talked about Xamarin as a great cross-platform for creating mobile apps.
And then last year, came project Pepperoni – a team of Futuriceans used React Native to build a free and open-source blueprint for others to kickstart projects for Android and iOS.
THE QUICK AND DIRTY MARKET VALIDATION CHECKLIST
Here are our tips to help you make sure you cover most important business considerations, before pursuing your platform concept validation further. This way you minimize the waste and have information to back your idea. The questions you should be asking yourself as you validate the market for your platform business idea include the following:
- Information asymmetry - Do customers lack visibility on information like prices, quality, etc? (e.g. used cars back in the days without comparable information)
- Level of data usage - Does the industry have a potential to utilize (big) data to boost performance? (e.g. open data bases, user data points)
- Level of regulation – Is the industry heavily regulated? Could it be disrupted via platforms? (e.g. Uber and taxi industry, fintech and finance regulations)
- Digital maturity / timing – Is the industry’s digital transformation lagging behind other industries? Is the market ready? (e.g. construction industry)
- Level of free capacity / surplus – Is there lot of surplus in the market? (e.g. car sharing, boat sharing, summer cottages)
- Level of trust / personal connections – Is the industry based on personal connections instead of transparency and curation by customers? (e.g. Upwork and freelance services, Urakkamaailma and the renovation business)
- Value chain / supply chain structure – Are there ”unnecessary participants” in the value chain and is there a possibility to cut out some middlemen via a collaborative platform model?
- Industry vertical growth / profitability – Is the industry growing and profitable and what are the volumes required to make a break even?
Customer / producer point of views
- Friction / transaction costs / real problem – Is the problem / need real? Do customers & producers have matchmaking problems?
- Variety of pricing models – Has the industry’s pricing models been the same for the last decades / could there be room for different models like subscription, value-added pricing, etc?
- Transaction / purchase size (€) – Is the typical transaction value small or big? (e.g. Uber vs. Used cars)
- Frequency of purchase (#) – How often customers are using the service / product? (e.g. Ordering food vs. Buying home)
- Variance of transactions / customer needs - Is the core value unit always the same (standard) or does it vary case by case? (e.g. AirBnB vs. UpWork)?
- Delivery time criticality – How critical is the delivery time for the customers? (e.g. Healthcare / doctors vs. Room or hotel purchased now but to be consumed in the future)
- Possibility to create a community at some level – Is there a possibility to lock and increase network effects for the customers / producers by providing a community?
- Fragmentation level – Is there a possibility to connect small players with customers through consolidation or is it oligopolistic structure? (e.g. renovator providers and Urakkamaailma, car owners and Uber, homeowners and AirBnb, etc)
- Existing (platform) companies – Is the industry vertical already full of platform players? (e.g. Wolt, Foodora, Uber eats, etc)
- Switching costs – Are customers preferably using / locked into the same provider after one transaction? (e.g. restaurants vs. home cleaning)
- Strategic fit – Is the industry suitable for your strategic choices?
- Current industry footprint – Do you already have a stronghold in the industry?
- Implementation effort – Is it financially sustainable to implement the model into the selected industry?