Review of “Platform Revolution”
This article is a review of “Platform Revolution: How Networked Markets Are Transforming the Economy — And How to Make Them Work for You” by Geoffrey Parker, Marshall Van Alstyne, and Sangeet Paul Choudary.
The beginning lays out a bold goal: that no other book had offered a comprehensive coverage of the “platforms” that have grown to dominate several industries, and that this book would do so. It succeeds. Drawing on a wide range of examples, both expected and unexpected — Uber, Airbnb, Keurig (!), SAP, Apple, Android, Intel with the USB standard, and dating apps — it eschews petty descriptions of company histories and instead lays out a framework for how to understand and design such platforms.
Platforms are places where 2+ sides — riders and drivers, hosts and guests, app developers and users — come together. The book’s thesis — novel at the time of publication (early 2016) but now a standard view — is that such platforms need to be understood through their “core interaction,” the central workflow that the two sides repeatedly follow to create value. The role of the platform is to facilitate this interaction: helping the two sides find each other, (potentially) recommending or setting a price, and providing trust and safety. In exchange, the platform takes a cut of the value generated. Every design decision must be made with the core interaction in focus, including price structure (subscriptions vs up-front vs commission), open-ness to external developers, whether to subsidize a given side, and which metrics to obsess over.
I consider myself fairly knowledgeable about platforms; it’s a PhD research area, I recently TA’d a Stanford MBA class on data science for platforms, and I am working on pricing at Uber. This book is probably the most comprehensive and methodological treatment of the subject I’ve seen. Despite my prior knowledge and the book being a bit old in a ever-changing area, I learned a bunch. I especially appreciated how the book connects design decisions between companies one would never think to relate — such as how Keurig’s “closed” cup system relates to Apple’s closed app environment vs Android’s more open one.