Creating and managing online platforms

Third-party developers are crucial for the success of many platforms. Mention examples of third-party developers in real platforms.

For example, Uber have drivers as third-party developers, who provide their own cars and use the Uber as a platform to connect with riders. In the case of Apple (or Google's Play store) third pary developers create apps that are used on Apple's operating system and devices.

Multihoming means a user or producer participates in several platforms for the same purpose. Mention examples of multihoming in real platforms.

For example, multihoming can happen in E-bay and Amazon or in two second-hand apps, if a same person is selling goods in the in both sites.

Sharing economy platforms enable unlocking value from things that have spare capacity. Mention real examples of this.

A good example of this is Airbnb which allows people to rent out their homes, unlocking value from houses that have spare capacity. Another example is RelayRides which utilizes cars that sit at airports by renting them from departing people for arriving people to use.

What is a two-sided market? Give examples of such markets.

A market, where there are two sides participating, producers (sellers) and consumers (buyers). Examples of such markets are Etsy, eBay and Fiverr, Uber. (Market = where buying and selling takes place)

What is the difference between a platform and an ecosystem?

A platform is a business model that creates value by facilitating exchanges between two or more interdependent groups. An ecosystem is a broader concept that refers to multiple entities linked together in a network and creates value for users. It includes platforms but also other services and players part of the network.

Why is a telecom network a good example of why network effects matter?

A telecom network is a good example of why network effects matter because it's a type of network in which the value increases as more users enter it. In fact more people join the network so there are more connections among them which creates more value.

"Uncomfortably narrow" means that you have defined the platform's initial market well enough. Give examples of uncomfortably narrow targeting.

An example of "uncomfortably narrow" targeting would be a dating app that is meant for wealthy and famous people only. Also a food delivering company that focuses only on vegan foods in a certain area is an example of this.

Explain infrastructure platforms. Give some examples.

An infrastructure platform is an infrastructure where value can be created on top. An example would be Google Cloud services that provides storage for users which increases the value.

A platform can be defined as a business model that facilitates the exchanges between multiple groups. Give specific examples of such groups.

Example would be, that producers of the platform rent their apartments (like at Airbnb) and consumers would be the people that are paying for the stays in those apartments. Airbnb owns the platforms and makes it possible for those consumers and producers to connect.

Matching quality means the platform is able to find a match for a user at a given time. What happens if a match is not found?

If a match is not found for the user, the app doesn't appear as useful and it has failed it's mission which is to connect the producer and the consumer to exchange value. An example of this is when a ride-hailing app like Uber for example, has too many users and not enough riders, a lot of the users cannot be matched with the riders due to the high demand, which causes the users to be unhappy with the platform.

Discuss the tradeoff of making a platform open and participative, but at the same time highly curated and governed.

In order to work, the platform needs to find balance between these two tradeoffs. Open and engaging platform makes its users easier to communicate with each other, but at the same time highly open platform may face the problem of abundance and increase undesirable interaction (like trolling, cyber bullying, inappropriate comments). An open platform therefore requires supervision and management, so that openness does not turn against the operation of the platform. (laws & regulation)

Discuss the role of standardization in platform design. Why does standardization matter?

In platform design, standardization can be useful in programming and in user experience side. In programming, things like standardized API's enable platforms to hire new programmers that can start working immediately. Standardized design in the inner workings of platforms also allow for innovation and differentiation at the surface level. In user experience, standardized services and overall features help new users to understand and use the platform without unnecessary difficulties as well as encourage continuous use of the platform.

Explain apps (complements, third-parties) in platform economics. Give some examples.

In the context of platform economics, apps can refer to complementary products or services offered by third-party developers on the platform --> creates more value for the platform.(For example, the iPhone initially had only key apps such as the text app, mail app, and calculator app)

What does a product template mean in manufacturing business? How does it relate to platforms?

In the manufacturing industry, the concept of a product template may be applied to digital platforms that facilitate collaboration between manufacturers, suppliers, and designers. It´s a set of common components that can be used in product innovation and saving costs.

Service aspects like onboarding, booking, payment, and conflict resolution are important factors in rivalry among platforms. How can platforms differentiate themselves along these aspects?

Making their services user-friendly and clear, such as providing simple sign in and initial tutorials on how to use the platform. As for payment, providing multiple payment methods and secure transactions is appealing to customers. For conflict resolution, providing customer service, good policies and making them transparent attracts users.

Does the platform owner have a complete control over the innovation taking place within the platform? Why/why not?

No because you have to take into account the market trends, variation of users demand and everything else that effects to the development and innovation of the platform. ( Freedom is an important trait of platforms and the owner might even not want to affect to it.

Does a platform typically develop all offerings served to end customers itself? Why/why not?

No it doesn´t develop. The platform provides the infrastructure, tools and ecosystem for others to create and offer products or services. It´s again just about facilitating the groups (for example second-hand apps).

Are platform businesses asset heavy for the platform owner? Why/why not?

No they are not, because they don't have to own or control the assets that they exchange or distribute (for example Uber, drivers have to have own car).

Is Porter's value chain a fitting conceptual model for optimizing a platform business? Why/why not?

No, because it is a very linear model, which is better suited for businesses that manufacture products to be directly sold to customers, and it allows for optimizing this type of linear business, where the highlight is on the end product.

Does the platform need to own the resources it makes use of? Why/why not?

No, platform don't own the resources because usually the producers are owning the resources. The platform is only an intermediary between the producer and the consumer. (for example Uber)

A higher availability of service providers in the platform implies higher liquidity. Why do platforms want to maximize liquidity?

Platforms want to maximize liquidity because higher liquidity allows a platform to better match heterogeneous assets with heterogeneous user needs and with that increase value for both providers and users.

Discuss the pros and cons of a strategy for kicking off a platform by focusing on several niches at a time and dominating in all of them.

Pros: The user community is bigger which means more users and more success to the platform. Also there can be many user groups that are interested in the same thing which can also bring more value for users in several ways. Cons: It needs a lot recourses to keep on managing the platform. This can also effect to the consistent quality of the app and its functions since it can be hard to satisfy individuals needs. Also it can be very straining for the team/company which also effects to the quality.

A platform can provide third-party developers "building bricks" that the developers can use to create new offerings. Mention examples of such building bricks.

The building bricks are the core features of a platform. For example, in smartphones camera, touch screen and microphone which the third party developers can use. An example of this is Shazam that recognizes music trough microphone or games that can be play because of the touch screen feature.

Network effects means that the more a platform has users, the more valuable it becomes for other users to join. What are the different types of network effects?

There are four type of network effects. The positive or negative same-side effects are network effects created by the impact of users from one side of the market on other users from the same side of the market. Then, the positive or negative cross-side effects are network effects which arise when either consumers or producers gain or lose based on the number of users on the opposite side of the platform.

Critical mass implies that there needs to be some minimum number of participants for the platform to provide value. How to quantify this number?

There is no exact minimum critical number of participants, it depends on the nature of the platform. It also depends on the goals of the platform and what profits the owners want to achieve. (For example, only to people who like a certain type of sport thus the limit is much lower than for example communication platforms that target all people in the world)

Assess the truthfulness of this claim: Platforms often face very little competition.

This is not the whole truth since platforms tend to face quite a lot of competition because there are often many similar services and products available. However, they can also benefit from network effects.

Platforms increase information transparency in the market. What does this mean? Give examples.

This means providing market participants with access to more information and enabling them to make more informed decisions. For example, TripAdvisor creates transparency in the hotel industry by allowing customers to see ratings and reviews of different accommodations, helping them make better decisions about where to stay.

The value of a platform originates from its community or network. What does this mean?

This means that when the community on a platform grows positive network effects occure. This Positive network effect refers to a well-managed and large platform community to produce value for the users of the platform. Positive network effect is the main source of value creation in a platform. As more users join the platform the more it's value grows, which attracts more users and creates a cycle.

In Google, advertisers subsidize consumers' free use of the search engine. What does this mean?

Users don't have to pay the money needed for maintenance of the platform (google), since the money comes from advertisers paying google to advertise their products

Give examples of network effects in real platforms.

When a new messaging platform arises, a lot of people don't feel like downloading it. But when more and more of their family and friends start to use the app, they feel the pressure and need to also download it. For example Whatsapp and Snapchat had this effect & second hand apps like Tise.

Is barbie doll an example of a platform? Why/why not?

Yes barbie is a platform, since it possible to create and be sold different types of product, services or pieces of media that are upon this barbie platform. Also if thinking about platforms by the definition of "a business model that creates value by facilitating exchanges between at least 2 interdependent groups", Barbie brings together customers buying Barbie-related products, like clothing for the dolls, made by different manufactures that don't need to be working under the company that owns Barbie, rather selling their products on the Barbie platform.

Do platforms tend to have a high ratio of revenue per employee? Why/why not?

Yes, they tend, because they don´t need their own resources for their business (such as properties, cars, or material), their business core is in facilitating and interactions between third parties, so the core platform has just a few employees whom the company's revenue are divided.