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Platform Revolution, G4 (Thet Thet, Terry, Vivian), Get one side to join…
Platform Revolution
Ch1 Today: Welcome to the Platform Revolution
Traditional Business
Pipeline Business
Single-track shape
Linear value chain
Many Business are shifting from the pipeline structure to platform structure.
Platform
2.Attracts different kinds of users
Basic elements are the same
Eg. Apple's IOs and Google sponsored Android
3.Creates different forms of value
1.Operates diffe :rently
(Lose)Pipeline
1.Rely on inefficient gatekeepers
Eg. Traditional Publishing Industry
2.Rely on mechanisms of control
Platform(Win)
1.Scale more efficient by eliminating gatekeepers
3.Use data-based tools to create community feedback loops
2.Unlock new sources of value creation and supply
Eg. Amazon's Kindle Platform
How will you respond?
An essential attribute for business leadership
Struggling to come to grips with the rise of the platform
Ch2 Network Effects: The power of the platform
Negative Network Effects
When it occurs?
How to solve?
An effective curation
To filter and sort and try to decrease the disadvantages of fictionless.
Producer
Customer
The participant
e.g Chatroulette
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A paltform
More demands(Consumers)
More producers
Geographic coverage saturation
The customers get some benefit from the number of demands. (+)
The producers get some benefit from the number of demands (+)
More demends
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Positive Network Effects
Value Creation
Two-Sided Network Effects
PayPal: sellers & buyers
Airbnb: hosts & guests
Google’s Android: consumers & app developers
Uber: riders & drivers
Differences between network effects and other growth-building tools
Brand Effects
Difficult to sustain and can also be extremely expensive
Super Bowl Ads
A high-profile television commercials featured in the U.S. television broadcast of the Super Bowl, the championship game of the National Football League (NFL)
Startup’s growth strategy :check: Virtuous cycle :red_cross:
Virality
Tendency of an idea or brand to be circulated rapidly and widely from one Internet user to another
Virality: Attracting people out of the platform to join
Network Effects: Keep original users that are in the platform to increase value
Price Effects
Companies attract customers through extraordinarily low pricing by discounting and couponing
Disappear at the moment the discounts end or another firm offers a better price
As few as only 1 to 2 percent of customers convert from free to paying
Even create freeusers than can be hard to profit from
Scaling Network Effects
Frictionless Entry
The ability of users join a platform quickly and easily and begin participating in the value creation that the platform facilitates
Thus, enables platform to grow rapidly
Threadless: information technology services + web design + consulting = a T-shirt company
Print only most popular designed T-shirts
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Sell to large and growing customer base
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Weekly design contests
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Side Switching
Both sides of the market is required to grow proportionally
Users of one side of the platform join the opposite side
Uber recruits new drivers from among its rider pool
Airbnb recruits new hosts from among its guest pool
Scaling Network Effects
Google’s algorithm :check:
Considers the extent to which web pages link to one another
Focus have been shifted from inside the firm to outside the firm
Choices of the crowd control the action
Page producers already consider what viewers want
Yahoo :green_cross:
Employee-edited databases do not scale well
Competitive Advantage
Supply economies of scale
Production efficiencies
Reduce the unit cost of creating a product or
service as the quantities produced increase
Demand economies of scale
Efficiencies in social networks, demand aggregation, app development
Make bigger networks more valuable to their users
Metcalfe’s Law
Number of telephone(s) / Possible connection(s)
1 / 0
2 / 1
4 / 6
12 / 66
100 / 4950
People who are part of the network invite their friends, which are new buyers, to enter the market
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Uber
More drivers
Faster pickups
Less driver downtime
Lower prices
More demand
More drivers
G4
Thet Thet
Terry
Vivian
Get one side to join the platform then the other side will follow
In a two-sided market, it can sometimes make
economic sense to accept financial losses —not just temporarily, but permanently!
Cost Advantage
Convex growth
Nonlinear growth
Price for a 30-second-ad is 180 million NTD :!!:
Same Market
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