Business
A platform is built around a single central exchange between a producer and a consumer. Everything else is the open infrastructure that makes that exchange easy to repeat and keeps it in check. Growth comes from making that one exchange happen more often and more smoothly.
Neither clever technology nor a big sign-up count makes a platform valuable. The value lies only in the activity that connected users actually carry out on it.
More production on a platform draws more consumption, which in turn draws more production. This self-reinforcing loop between the two sides is the main engine of platform growth.
A platform succeeds only if both the number and the quality of its interactions rise at the same time. Its job is therefore to govern the market, deciding which interactions to encourage and which to block, not merely to connect people.
Traditional businesses compete by owning resources and scaling the processes that run through them. Platforms compete by owning the community of participants that gathers around them. Because they hold no inventory, they can add supply, such as a new room to rent, at almost no extra cost.
The fastest-growing businesses don't make the thing being exchanged; they build a place where outsiders create and trade value with each other. The business's real product is the interaction between those parties, not the software or the goods.
A new marketplace has no buyers because it has no sellers, and no sellers because it has no buyers. Escaping this cycle of no activity requires a deliberate lure that gives one side a reason to show up before the other side exists.
Word-of-mouth growth happens when users spread a product by sharing content made with it. That has to be built into how the business works from the start; it cannot be bolted on later by marketing or engineering.
The internet lets production be gathered from many outside contributors instead of inside one company. Partners can plug in through open software connections, and a 'customer' may be a producer as well as a consumer, so the line between the firm and its market blurs.
A new kind of dominant company holds power not by controlling physical resources but by using data to coordinate resources it doesn't own. Moving toward this model depends on collecting data and letting it flow in and out of the business.