Winner Takes All: The Rise of the Platform
Posted at 15:51h, 05 Jan 2016 in List Archive by Bonnie Halper No Comments 135 Likes Share

Imagine almost anything, and chances are, there’s an app for that. Apple announced not all that long ago that for Apple TV, the future was in apps. Considering that apps have been a major focus in tech for the past few years, not surprising and not exactly a groundbreaking announcement, but then, Apple hasn’t exactly had its most stellar year (This has been the worst year for Apple shares since 2008), but apps were built for platforms, so it was only a matter of time and a good move on Apple’s part.

A must read and great general (thumbnail) overview of the history of the tech industry is GIgaOm and True Ventures founder Om Malik’s In Silicon Valley Now, It’s Almost Always Winner Takes All, from the point of view of the demise of Sidecar and Richard Branson’s declaring, upon investing in the company back in 2014, that ‘it was early days and, like a lot of other commodity businesses, there is room for innovators on great customer experiences.” He added that he was not putting his money into a “winner-takes-all market.”’

Not even visionaries get it right every time.

Forest through the trees: it’s not about the app; it’s about the platform, and that’s why Uber is the uber player in the field, so far. What started as a ride-sharing app is a platform that has expanded to offer food delivery and to offer a courier service, too. So far. Think maximum utility. The network effect is all well and good – and a distinguishing feature between the winners and the losers – but tech is also at a point of consolidation and multi-functionality. Look at that camera/internet onramp/digital wallet/text communicator/smartphone in your pocket – it’s a device that has more processing power than did the rockets that went into orbit in the first manned space flights.

Google thrived in the age of the algorithm and the network effect, which Malik defines as occurring “when the value of a product or service goes up with the number of people using it.” As for the latter, think Facebook.

But while the network effect is about users – and data collection –  the platform is about revenue/revenue expansion. Again, think Facebook and Instant Articles. For one.

There’s also the systole and diastole of the industry itself to consider. There is always a first-to-market company/app, followed by a series of wanna-bes/moi-aussis, as investors see traction in a space and look to see what else is out there in the vertical that just might be the winner, but a word of caution to entrepreneurs: Silicon Valley and Wall Street Are Falling out of Love With Each Other – and with so-called unicorns who seem to be flailing upwards. So if you’re looking to be an ‘Uber for X,’ you’ve already missed the point, unless you’ve already factored Y and Z into the equation. Time to create vertically but think horizontally, if you plan on moving onward and forward.