Modern Monopolies: What It Takes to Dominate the 21st Century Economy by is a fantastic book that explains first and foremost what a monopoly in the 21st century looks like. If you have a massive idea in mind, this book will help validate the core business model that will dominate in the economy of the future. For the most part, just about any physical product in the world can be created with ease, while networks bring together humans as tribes for a common goal. As specialization gets more fierce platform networks will be what consumers use more and more often for convenience.
A great business today is built on a platform with the help of the Internet rather than the linear power of scale. Subsequently, many linear businesses are being disrupted by the network effect that platforms provide, such as restaurants and the ability to find delivery helpers with applications such as Postmates and Uber EATS.
“‘Software alone is a commodity. There is nothing stopping anyone from copying the feature set, making it better, cheaper, and faster.'”
In a typical linear growth business there comes a point when the costs of running the operation far exceeds the advantages of scale that were created in the first place. With a platform network business model, the costs decrease year after year and move towards zero. The advantage isn’t created in the technology used to create the product (which explains many of the dot-com era busts), but rather in the network that is created on the platform to serve a larger purpose.
Facebook does a great job of organizing information of the people on the planet. It got the idea right over Myspace and Friendster by properly allocating the correct ingredients of functions within the platform. The key is as Mark Zuckerberg says, “the trick isn’t adding stuff. It’s taking away.”
On Myspace it was possible to be friends with random people and celebrities. Towards the end of its useful life, Myspace was viewed as a virtual dump of photos and media. Friendster had a complicated network model that required multiple degrees of friendship. With Facebook, each friend relationship was 1 to 1. Also, especially in its beginning stages Facebook’s data from each individual was neatly presented in a Timeline and Wall where starting with elite universities gave them a unique advantage.
Modern Monopolies provides a deep understanding of emerging platform business models that is required to create the next Amazon, Google, or Uber. The book showcases a well thought out presentation of the principles behind the core functions and deliverables of a platform. One of my favorite aspects of the book are the stories that go fairly in-depth into the network and viral strategies used to propel the biggest platforms today, including Facebook, Twitter, Amazon, Etsy, eBay, Paypal, Square, Snapchat, Tinder, YouTube, Skype, Uber, Airbnb, Yelp, Groupon and many, many more.
The Four Core Functions Of A Platform:
- Audience building: Build a liquid marketplace by attracting a critical mass of consumers and producers.
- Matchmaking: Connect the right consumers with the right producers in order to facilitate transactions and interactions.
- Providing core tools and services: Build tools and services that support the core transaction by lowering transaction costs, removing barriers to entry, and making the platform more valuable over time through data.
- Setting rules and standards: Set guidelines that govern which behaviors are allowed and encouraged and which are forbidden or discouraged.
“A small but dense and highly active network is usually much more valuable and useful than a larger but more dispersed network. The smaller network will create more transactions and more value.”
Those looking for potential opportunities to launch their next startup will also find some great ideas within this book. Some industries that are ripe for platform disruption are health care, internet of things and finance. Nevertheless, the best way to spot potential opportunities is to see what is isn’t being done already and capitalize on advantages of time, network and scale in your new audience.
How To Spot Platform Opportunities
- Look for technology that reduces transaction costs and removes gatekeepers.
- Look for implicit or undeserved networks.
- Look for large, fragmented sources of supply.
Check out Applico – The Platform Innovation Company from Founder & CEO, Author Alex Moazed.
Modern Monopolies: What It Takes to Dominate the 21st Century Economy
What do Google, Snapchat, Tinder, Amazon, and Uber have in common, besides soaring market share? They're platforms - a new business model that has quietly become the only game in town, creating vast fortunes for its founders while dominating everyone's daily life. A platform, by definition, creates...
What do Google, Snapchat, Tinder, Amazon, and Uber have in common, besides soaring market share? They’re platforms – a new business model that has quietly become the only game in town, creating vast fortunes for its founders while dominating everyone’s daily life. A platform, by definition, creates value by facilitating an exchange between two or more interdependent groups. So, rather that making things, they simply connect people.
The Internet today is awash in platforms – Facebook is responsible for nearly 25 percent of total Web visits, and the Google platform crash in 2013 took about 40 percent of Internet traffic with it. Representing the ten most trafficked sites in the U.S., platforms are also prominent over the globe; in China, they hold the top eight spots in web traffic rankings.
The advent of mobile computing and its ubiquitous connectivity have forever altered how we interact with each other, melding the digital and physical worlds and blurring distinctions between “offline” and “online.” These platform giants are expanding their influence from the digital world to the whole economy. Yet, few people truly grasp the radical structural shifts of the last ten years. In Modern Monopolies, Alex Moazed and Nicholas L. Johnson tell the definitive story of what has changed, what it means for businesses today, and how managers, entrepreneurs, and business owners can adapt and thrive in this new era.
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Modern Monopolies is an entertaining economic explanation of the platform business model that is pioneering startups of today and of the future. A must read for serious entrepreneurs and those interested in the tech startup world.