The
ubiquity of internet access has caused a sharp rise in the number of businesses
offering platforms that connect users for communication or commerce.
Entrepreneurs are particularly drawn to these platforms because they create
significant value and have modest operating costs, and network effects protect
their position once established—users rarely leave a vibrant platform. But
these businesses also raise significant start-up challenges. Every platform
starts out empty. Platforms need to immediately attract not only many users but
multiple types of users. For example, it’s not enough that many customers want
to book taxis by smartphone. Drivers must also be willing to accept smartphone
bookings. Harvard Business School professor Ben Edelman has been studying the
dynamics of platform businesses and strategies for launching them for 10 years.
In this article he draws on research on dozens of platform sites and products
to offer a framework for building a successful platform business. It involves
asking five basic questions:
• Can I attract a large group of users at once?
•
Can I offer stand-alone value to users?
• How can I build credibility with
customers?
• How should I charge users?
• Should my platform be compatible with
legacy systems?
[ABSTRACT FROM AUTHOR]