There seem to be two purposes to this book. The first is to explain the rise of the ‘platform’  while the second provides a handbook or overview of how to design a successful platform business.

In the first part, which I personally found the most interesting, the authors tell us that platforms are a form of disruptive technology changing the way businesses and consumers interact.  They suggest that the traditional model of the ‘pipeline’ business, where goods are made at one end of the pipeline and delivered to consumers at the other end, are being often usurped by platforms and their supporting technology.

The authors explain that effectively platforms are organised exchanges where users such as the buyers and sellers of goods and services can interact. They do this by replacing the need for the physical ownership of the assets needed to provide what is required with a virtual presence. The overarching purpose of these platforms such as Amazon, Uber, YouTube, Alibaba and so on is to provide matches among users to facilitate the exchange of goods and services.

The authors claim that where platforms are created they are likely to eclipse other traditional businesses, although they do note that in their concluding chapter that not all industries are ripe for ‘platform transformation’. Instead they suggest that those industries where this transformation is likely to occur is in information-intensive industries, those industries with extreme information symmetries and those with ‘unscaleable gatekeepers’

Platforms, the authors note, have gained traction in various markets quite quickly and indicate that the pace of market penetration in other suitable markets is likely to be quite rapid too. They see four factors for such rapid growth. These revolve around network effects, the lack of the need for physical assets and capital in the same way as traditional firms, the way platforms provide more accurate targeting of products and services through data analytics, and finally the contribution of content by users (think YouTube and Wikipedia) which facilitates inexpensive scalability.

Of all these arguments, the most interesting is the discussion of network effects. This is exemplified by the authors in its most simplistic form with the illustration of the ‘Uber virtuous cycle’. In this model the network effects of initially and subsequently adding more users is exemplified. In its simplest form, more users mean more cars which means more users which means more cars which mean more users, and so on. Although the discussion of network effects moves on from here the idea was quite neatly presented in this simple illustration.

Finally, most of the second part of the book is a handbook for designing a successful platform. The issues revolve around monetization, openness, metrics, strategy, policy and governance. All subjects of interest to developers and innovators, no doubt.