Platform Revolution Quotes

In some cases, they are already doing so. Influenced by a coalition of community groups, the New York City Council passed a historic budget in the summer of 2014 that created a $1.2 million fund for the growth of worker-owned cooperatives. Richmond, California has hired a cooperative developer and is launching a loan fund; Cleveland, Ohio has been actively involved in starting a network of cooperatives, as we’ll see in the next chapter; and Jackson, Mississippi elected a mayor (Chokwe Lumumba) in 2013 on a platform that included the use of public spending to promote co-ops. On the federal level, progressive politicians like Bernie Sanders are working to get the government more involved in supporting employee ownership.130

The next phase of the Digital Revolution will bring even more new methods of marrying technology with the creative industries, such as media, fashion, music, entertainment, education, literature, and the arts. Much of the first round of innovation involved pouring old wine—books, newspapers, opinion pieces, journals, songs, television shows, movies—into new digital bottles. But new platforms, services, and social networks are increasingly enabling fresh opportunities for individual imagination and collaborative creativity. Role-playing games and interactive plays are merging with collaborative forms of storytelling and augmented realities. This interplay between technology and the arts will eventually result in completely new forms of expression and formats of media. This innovation will come from people who are able to link beauty to engineering, humanity to technology, and poetry to processors. In other words, it will come from the spiritual heirs of Ada Lovelace, creators who can flourish where the arts intersect with the sciences and who have a rebellious sense of wonder that opens them to the beauty of both.

In today’s hypercompetitive environment enabled by technology, ownership of infrastructure no longer provides a defensible advantage. Instead, flexibility provides the crucial competitive edge, competition is perpetual motion, and advantage is evanescent.

party….” In New York, several thousand gathered at Tompkins Square. The tone of the meeting was moderate, speaking of “a political revolution through the ballot box.” And: “If you will unite, we may have here within five years a socialistic republic…. Then will a lovely morning break over this darkened land.” It was a peaceful meeting. It adjourned. The last words heard from the platform were: “Whatever we poor men may not have, we have free speech, and no one can take it from us.” Then the police charged, using their clubs.

The derisive term bloatware has been coined to describe software systems that have become complicated, slow, and inefficient through thoughtless accretion of features.

Silicon Valley dreams of destructive revolution, and platforms designed in ways that supercharge identity into a matter of totalizing and existential conflict.

The Constitution, the National Assembly, the dynastic parties, the blue and the red republicans, the heroes of Africa, the thunder from the platform, the sheet lightning of the daily press, the entire literature, the political names and the intellectual reputations, the civil law and penal code, the liberté, égalité, fraternité and the second of May 1852—all have vanished like a phantasmagoria before the spell of a man whom even his enemies do not make out to be a magician. Universal suffrage seems to have survived only for a moment, in order that with its own hand it may make its last will and testament before the eyes of all the world and declare in the name of the people itself: Everything that exists has this much worth, that it will perish.

I have been taunted on various platforms recently for becoming a neo-conservative, and have been the object of some fascinating web-site and blog stuff, from the isolationist Right as well as from the peaceniks, who both argue in a semi-literate way that neo-conservativism is Trotskyism and 'permanent revolution' reborn. Sometimes, you have to comb an overt anti-Semitism out of this propaganda before you can even read it straight. And I can guarantee you that none of these characters has any idea at all of what the theory of 'permanent revolution' originally meant.

The combination of GNU and Linux created an operating system that has been ported to more hardware platforms, ranging from the world’s ten biggest supercomputers to embedded systems in mobile phones, than any other operating system.

However, simplicity is a virtue when developing metrics for your platform business. Overcomplex metrics make management less effective by introducing noise, discouraging frequent analysis, and distracting from the handful of data points that are most significant.

most memorable moment came when someone asked if Mr. Trump supported the Reform Party platform.”9 “Well. Nobody knows what the Reform Party platform is,” Trump loudly responded. A man offered Trump a copy of the platform as boos rang out from the crowd. The fact is that no one really cares about a party platform except those people who write it. Unfortunately, those were the exact people Trump was addressing.

The combination of GNU and Linux created an operating system that has been ported to more hardware platforms, ranging from the world’s ten biggest supercomputers to embedded systems in mobile phones, than any other operating system. “Linux is subversive,” wrote Eric Raymond. “Who would have thought that a world-class operating system could coalesce as if by magic out of part-time hacking by several thousand developers scattered all over the planet,

Labourism was to be the bete noire of the Party, hated as much as the capitalist system itself. Its growth was to lead to the hardening of Party attitudes almost to the point where even the wish to improve everyday conditions was considered iniquitous. The resentment was heated by the fact that many of the rising Labour leaders had been fellow members of the Social Democratic Federation and once professed the revolution.No words were strong enough for the Party's contempt. In the the Socialist Standard they were 'fakirs', a strong allusion to self-seeking piety, and on the platforms 'Labour bleeders',...

The great majority of those who, like Frankl, were liberated from Nazi concentration camps chose to leave for other countries rather than return to their former homes, where far too many neighbors had turned murderous. But Viktor Frankl chose to stay in his native Vienna after being freed and became head of neurology at a main hospital in Vienna. The Austrians he lived among often perplexed Frankl by saying they did not know a thing about the horrors of the camps he had barely survived. For Frankl, though, this alibi seemed flimsy. These people, he felt, had chosen not to know. Another survivor of the Nazis, the social psychologist Ervin Staub, was saved from a certain death by Raoul Wallenberg, the diplomat who made Swedish passports for thousands of desperate Hungarians, keeping them safe from the Nazis. Staub studied cruelty and hatred, and he found one of the roots of such evil to be the turning away, choosing not to see or know, of bystanders. That not-knowing was read by perpetrators as a tacit approval. But if instead witnesses spoke up in protest of evil, Staub saw, it made such acts more difficult for the evildoers. For Frankl, the “not-knowing” he encountered in postwar Vienna was regarding the Nazi death camps scattered throughout that short-lived empire, and the obliviousness of Viennese citizens to the fate of their own neighbors who were imprisoned and died in those camps. The underlying motive for not-knowing, he points out, is to escape any sense of responsibility or guilt for those crimes. People in general, he saw, had been encouraged by their authoritarian rulers not to know—a fact of life today as well. That same plea of innocence, I had no idea, has contemporary resonance in the emergence of an intergenerational tension. Young people around the world are angry at older generations for leaving as a legacy to them a ruined planet, one where the momentum of environmental destruction will go on for decades, if not centuries. This environmental not-knowing has gone on for centuries, since the Industrial Revolution. Since then we have seen the invention of countless manufacturing platforms and processes, most all of which came to be in an era when we had no idea of their ecological impacts. Advances in science and technology are making ecological impacts more transparent, and so creating options that address the climate crisis and, hopefully, will be pursued across the globe and over generations. Such disruptive, truly “green” alternatives are one way to lessen the bleakness of Earth 2.0—the planet in future decades—a compelling fact of life for today’s young. Were Frankl with us today (he died in 1997), he would no doubt be pleased that so many of today’s younger people are choosing to know and are finding purpose and meaning in surfacing environmental facts and acting on them.

By tracing the early history of USCYBERCOM it is possible to understand some of the reasons why the military has focused almost completely on network defense and cyber attack while being unaware of the need to address the vulnerabilities in systems that could be exploited in future conflicts against technologically capable adversaries. It is a problem mirrored in most organizations. The network security staff are separate from the endpoint security staff who manage desktops through patch and vulnerability management tools and ensure that software and anti-virus signatures are up to date. Meanwhile, the development teams that create new applications, web services, and digital business ventures, work completely on their own with little concern for security. The analogous behavior observed in the military is the creation of new weapons systems, ISR platforms, precision targeting, and C2 capabilities without ensuring that they are resistant to the types of attacks that USCYBERCOM and the NSA have been researching and deploying. USCYBERCOM had its genesis in NCW thinking. First the military worked to participate in the information revolution by joining their networks together. Then it recognized the need for protecting those networks, now deemed cyberspace. The concept that a strong defense requires a strong offense, carried over from missile defense and Cold War strategies, led to a focus on network attack and less emphasis on improving resiliency of computing platforms and weapons systems.

If you want a shortcut to the Eastern European experience, you must have yourself woken from the sarcophagus of a sleeper's ceiling berth by border guards in the night. You must have every light lit. You must be spoken to in a language you understand slightly, or not at all, depending on the kind of estrangement you want. Trains: To a European person, an Eastern European person, a Jewish Eastern European person, they call up cattle cars and extinction as readily as a megaphone in a pickup summons revolution to a Latin American. Emigration, evacuation, extermination, exile - in Russia, a train has carried the quarry. The platform, the engine's weary exhalation, a whistle's hoot and blare, 'the grey wet quay, over a wilderness of rails and points, round the corners of abandoned trucks,' as Graham Greene put it - if we are to speak of the things that divide the Russian mind from the American, we could begin here.

On the train I had a lot of time to think. I thought how in the thirty years of my life I had seldom gotten on a train in America without being conscious of my color. In the South, there are Jim Crow cars and Negroes must ride separate from the whites, usually in a filthy antiquated coach next to the engine, getting all the smoke and bumps and dirt. In the South, we cannot buy sleeping car tickets. Such comforts are only for white folks. And in the North where segregated travel is not the law, colored people have, nevertheless, many difficulties. In auto buses they must take the seats in the rear, over the wheels. On the boats they must occupy the worst cabins. The ticket agents always say that all other accommodations are sold. On trains, if one sits down by a white person, the white person will sometimes get up, flinging back an insult at the Negro who has dared to take a seat beside him. Thus it is that in America, if you are yellow, brown, or black, you can never travel anywhere without being reminded of your color, and oft-times suffering great inconveniences. I sat in the comfortable sleeping car on my first day out of Moscow and remembered many things about trips I had taken in America. I remembered how, once as a youngster going alone to see my father who was working in Mexico, I went into the dining car of the train to eat. I sat down at a table with a white man. The man looked at me and said, "You're a nigger, ain't you?" and left the table. It was beneath his dignity to eat with a Negro child. At St. Louis I went onto the station platform to buy a glass of milk. The clerk behind the counter said, “We don't serve niggers," and refused to sell me anything. As I grew older I learned to expect this often when traveling. So when I went South to lecture on my poetry at Negro universities, I carried my own food because I knew I could not go into the dining cars. Once from Washington to New Orleans, I lived all the way on the train on cold food. I remembered this miserable trip as I sat eating a hot dinner on the diner of the Moscow-Tashkent express. Traveling South from New York, at Washington, the capital of our country, the official Jim Crow begins. There the conductor comes through the train and, if you are a Negro, touches you on the shoulder and says, "The last coach forward is the car for colored people." Then you must move your baggage and yourself up near the engine, because when the train crosses the Potomac River into Virginia, and the dome of the Capitol disappears, it is illegal any longer for white people and colored people to ride together. (Or to eat together, or sleep together, or in some places even to work together.) Now I am riding South from Moscow and am not Jim-Crowed, and none of the darker people on the train with me are Jim-Crowed, so I make a happy mental note in the back of my mind to write home to the Negro papers: "There is no Jim Crow on the trains of the Soviet Union.

[Description of the behind-the-scenes situation of the Beer Hall Putsch] The crowd began to grow so sullen that Goering felt it necessary to step to the rostrum and quiet them. “There is nothing to fear,” he cried. “We have the friendliest intentions. For that matter, you’ve no cause to grumble, you’ve got your beer!” And he informed them that in the next room a new government was being formed. It was, at the point of Adolf Hitler’s revolver. Once he had herded his prisoners into the adjoining room, Hitler told them, “No one leaves this room alive without my permission.” He then informed them they would all have key jobs either in the Bavarian government or in the Reich government which he was forming with Ludendorff. With Ludendorff? Earlier in the evening Hitler had dispatched “Scheubner-Richter to Lud-wigshoehe to fetch the renowned General, who knew nothing of the Nazi conspiracy, to the beerhouse at once. The three prisoners at first refused even to speak to Hitler. He continued to harangue them. Each of them must join him in proclaiming the revolution and the new governments; each must take the post he, Hitler, assigned them, or “he has no right to exist.” Kahr was to be the Regent of Bavaria; Lossow, Minister of the National Army; Seisser, Minister of the Reich Police. None of the three was impressed at the prospect of such high office. They did not answer. Their continued silence unnerved Hitler. Finally he waved his gun at them. “I have four shots in my pistol! Three for my collaborators, if they abandon me. The last bullet for myself!” Pointing the weapon to his forehead, he cried, “If I am not victorious by tomorrow afternoon, I shall be a dead man!” (...) Not one of the three men who held the power of the Bavarian state in their hands agreed to join him, even at pistol point. The putsch wasn’t going according to plan. Then Hitler acted on a sudden impulse. Without a further word, he dashed back into the hall, mounted the tribune, faced the sullen crowd and announced that the members of the triumvirate in the next room had joined him in forming a new national government. “The Bavarian Ministry,” he shouted, “is removed…. The government of the November criminals and the Reich President are declared to be removed. A new national government will be named this very day here in Munich. Not for the first time and certainly not for the last, Hitler had told a masterful lie, and it worked. When the gathering heard that Kahr, General von Lossow and Police Chief von Seisser had joined Hitler its mood abruptly changed. There were loud cheers, and the sound of them impressed the three men still locked up in the little side room. (...) He led the others back to the platform, where each made a brief speech and swore loyalty to each other and to the new regime. The crowd leaped on chairs and tables in a delirium of enthusiasm. Hitler beamed with joy.

The history of irregular media operations is complex and fractured; generalizations are difficult. Yet it is possible to isolate three large and overlapping historical phases: First, throughout the nineteenth century, irregular forces saw the state's telecommunications facilities as a target that could be physically attacked to weaken the armies and the authority of states and empires. Second, for most of the twentieth century after the world wars, irregulars slowly but successfully began using the mass media as a weapon. Telecommunications, and more specifically the press, were used to attack the moral support and cohesion of opposing political entities. Then, in the early part of the twenty-first century, a third phases began: irregular movements started using commoditized information technologies as an extended operating platform. The form and trajectory of the overarching information revolution, from the Industrial Revolution until today, historically benefited the nation-state and increased the power of regular armies. But this trend was reversed in the year 2000 when the New Economy's Dot-com bubble burst, an event that changed the face of the Web. What came thereafter, a second generation Internet, or "Web 2.0," does not favor the state, large firms, and big armies any more; instead the new Web, in an abstract but highly relevant way, resembles - and inadvertently mimics - the principles of subversion and irregular war. The unintended consequence for armed conflicts is that non-state insurgents benefit far more from the new media than do governments and counterinsurgents, a trend that is set to continue in the future.

If the technology platforms of the First and Second Industrial Revolutions aided in the severing and enclosing of the Earth’s myriad ecological interdependencies for market exchange and personal gain, the IoT platform of the Third Industrial Revolution reverses the process. What makes the IoT a disruptive technology in the way we organize economic life is that it helps humanity reintegrate itself into the complex choreography of the biosphere, and by doing so, dramatically increases productivity without compromising the ecological relationships that govern the planet. Using less of the Earth’s resources more efficiently and productively in a circular economy and making the transition from carbon-based fuels to renewable energies are defining features of the emerging economic paradigm. In the new era, we each become a node in the nervous system of the biosphere.

A revolution for the poor. To save us all … for a cold death on a train platform.

It was too embarrassing to admit that a young woman was the most popular politician in the Islamic Republic. In the official tally she came in second, with slightly fewer votes than the older cleric—an injustice that must have riled Hashemi, given the nature of her platform. Hashemi had made her debut in politics by challenging conservative clerics who opposed women’s right to exercise in public. Using her standing as Rafsanjani’s daughter, she argued that there was nothing wrong with fully covered women exercising. An increasing number of old and young women already crowded parks to jog or play volleyball or badminton. But the Basij often harassed and intimidated them to discourage women from exercising. As part of her campaign to defend and expand women’s right to exercise, Hashemi built a bike path for women, increased women’s access to sports facilities such as golf courses and tennis courts, and set up the first women’s soccer and, eventually, rugby teams since the revolution. She also founded the Islamic Women’s Sport Foundation, through which she held games in Tehran involving Iranian athletes and Muslim women invited from other countries.

Strategy has moved from controlling unique internal resources and erecting competitive barriers to orchestrating external resources and engaging vibrant communities. And

And innovation is no longer the province of in-house experts and research and development labs, but is produced through crowdsourcing and the contribution of ideas by independent participants in the platform.

As a result of the rise of the platform, almost all the traditional business management practices—including strategy, operations, marketing, production, research and development, and human resources—are in a state of upheaval. We are in a disequilibrium time that affects every company and individual business leader. The coming of the world of platforms is a major reason why. 

Uber, the world’s largest taxi company, owns no vehicles. Facebook, the world’s most popular media owner, creates no content. Alibaba, the most valuable retailer, has no inventory. And Airbnb, the world’s largest accommodation provider, owns no real estate.

Yet all are operating businesses that share the fundamental platform DNA—they all exist to create matches and facilitate interactions among producers and consumers, whatever the goods being exchanged may be.

Because the bulk of a platform's value is created by its community of users, the platform business must shift its focus from internal activities to external activities. In the process the firm inverts-it turns inside out, with functions from marketing to information technology to operations to strategy all increasingly centering on people, resources, and functions that exist outside the business, complementing or replacing those that exists inside a traditional business.

Frictionless entry is the ability of users to quickly and easily join a platform and begin participating in the value creation that the platform facilitates. Frictionless entry is a key factor in enabling a platform to grow rapidly.

Threadless is a T-shirt company founded by people with expertise in information technology services, web design, and consulting. Their business model involves holding weekly design contests open to outside participants, printing only T-shirts with the most popular designs, and selling them to their large and growing customer base. Threadless doesn’t need to hire artistic talent, since skilled designers compete for prizes and prestige. It doesn’t need to do marketing, since eager designers contact their friends to solicit votes and sales. It doesn’t need to forecast sales, since voting customers have already announced what numbers they will buy. By outsourcing production, Threadless can also minimize its handling and inventory costs. Thanks to this almost frictionless model, Threadless can scale rapidly and easily, with minimal structural restrictions.

Nothing comes from highly planned and organized efforts but start-up energy and passion and newness cause chaos, confusion and ambiguity and that results into great product, platform, innovation and even socail revolution

The industrial world of pipelines relies heavily on push. Consumers are accessed through specific marketing and communication channels that the business owns or pays for. In a world of scarcity, options were limited, and getting heard often sufficed to get marketers and their messages in front of consumers. In this environment, the traditional advertising and public relations industries focused almost solely on awareness creation—the classic technique for “pushing” a product or service into the consciousness of a potential customer. This model of marketing breaks down in the networked world, where access to marketing and communication channels is democratized—as illustrated, for example, by the viral global popularity of YouTube videos such as PSY’s “Gangnam Style” and Rebecca Black’s “Friday.” In this world of abundance—where both products and the messages about them are virtually unlimited—people are more distracted, as an endless array of competing options is only a click or a swipe away. Thus, creating awareness alone doesn’t drive adoption and usage, and pushing goods and services toward customers is no longer the key to success. Instead, those goods and services must be designed to be so attractive that they naturally pull customers into their orbit. Furthermore, for a platform business, user commitment and active usage, not sign-ups or acquisitions, are the true indicators of customer adoption. That’s why platforms must attract users by structuring incentives for participation—preferably incentives that are organically connected to the interactions made possible by the platform. Traditionally, the marketing function was divorced from the product. In network businesses, marketing needs to be baked into the platform.

a platform is fundamentally an infrastructure designed to facilitate interactions among producers and consumers of value. These two basic types of participants use the platform to connect with each other and to engage in exchanges—first, an exchange of information; then, if desired, an exchange of goods or services in return for some form of currency.

Platforms beat pipelines because platforms scale more efficiently by eliminating gatekeepers. Until recently, most businesses were built around products, which were designed and made at one end of the pipeline and delivered to consumers at the other end.* Today, plenty of pipeline-based businesses still exist—but when platform-based businesses enter the same marketplace, the platforms virtually always win.

All three must be clearly identified and carefully designed to make the core interaction as easy, attractive, and valuable to users as possible. The fundamental purpose of the platform is to facilitate that core interaction.

Labour markets, meanwhile, are becoming biased towards a limited range of technical skill sets, and globally connected digital platforms and marketplaces are granting outsized rewards to a small number of “stars”.

Its official platform, the so-called Erfurt Program, adopted in 1891, contended that the interests of the “bourgeois” state and the working class were irreconcilable and that, accordingly, workers had no stake in their nation: they owed loyalty only to their class. It reaffirmed the international unity of labor and the imminence of a revolution that would crush capitalism and the bourgeoisie around the globe.

Today, thanks to the social media revolution, clients actually own media and consequently a platform to express themselves.

For a modern-day PR expert, it is absolutely essential to know social media platforms in detail.

We predict market adoption of block-chain-based decentralized alternative trading platforms that enable peer-to-peer exchanges of security tokens with transactions recorded to a distributed ledger.

These methods emphasize how a community can use the economics of tokens to incentivize its members to push for the betterment of the underlying platform, the commons of the blockchain itself.

Equity is a classical instrument used to fund private enterprises, with the value of shares based on the expectation of revenues and profit in the private enterprise. As such, equity is an appropriate tool to fund private profit centers, such as the centralized online platforms from the Web 2.0 world, or even the various Dapps emerging in the Web 3.0 landscape.

A platform is a business based on enabling value-creating interactions between external producers and consumers. The platform provides an open, participative infrastructure for these interactions and sets governance conditions for them.

Its platform, subsequently published abroad, was suppressed inside Russia. Its efforts to arouse worker support by clandestinely distributing such materials as the text of Lenin’s testament and by organizing street demonstrations in Moscow and Leningrad on November 7, 1927, the tenth anniversary of the Revolution, were foiled by the authorities.

Companies like Pets.com made the mistake of choosing a linear business model in the age of the platform. What is a linear business model? It’s the model that has dominated in various forms since the Industrial Revolution, when new technologies like steam power and railways gave rise to the large, vertically integrated organization.

Bitcoin isn’t the only cryptocurrency in town. There are well over 2000 competing cryptocurrencies, known as altcoins,[410] each with its own features, mining algorithms, and (in some cases) blockchains. Some are specialized for particular kinds of payments, others aim to build a platform for apps, and others just seek to improve on Bitcoin’s flaws. Altcoins have gotten bigger and bigger over time — Bitcoin controlled 90% of the cryptocurrency market back in 2015 but just over 60% at the time of writing.

Yet, in most cases, platforms don’t create value units; instead, they are created by the producers who participate in the platform. Thus, platforms are “information factories” that have no control over inventory.

Later still, LinkedIn created another interaction when it allowed thought leaders, and subsequently all users, to publish posts on LinkedIn for others to read, effectively turning the site into a publishing platform.

Remember that one of the key characteristics that distinguishes a platform from a traditional business is that most of the activity is controlled by users, not by the owners or managers of the platform. It’s inevitable that participants will use the platform in ways you never anticipated or planned.

Facebook’s news feed is a classic multiuser feedback loop. Status updates from producers are served to consumers, whose likes and comments serve as feedback to the producers. The constant flow of value units stimulates still more activity, making the platform increasingly valuable to all participants.

And while platform businesses themselves are often extraordinarily profitable, the chief locus of wealth creation is now outside rather than inside the organization.

Thus, every platform business must be designed to facilitate the exchange of information.

H. Srikrishnan, then head of transactional banking and operations, gave me an example, ‘We looked at funds transfer—which was manual—such as MTs (mail transfers) and TTs (telegraphic transfers). When we implemented a centralized banking solution, the key things we could do were to sweep across multiple locations and get the balances of customers or transfer funds from one location to another using core banking. Those were big problems we solved.’ HDFC Bank was thus the first among Indian banks to have a centralized system. Whilst foreign banks like Citibank had centralized systems, they lacked the branch strength to fully leverage them. It is worth remembering that in the mid-1990s, banking didn’t really exist in the form that we know of today. Customers could open bank accounts, but the whole gamut of products (home loan, car loan, etc.) and services (Internet banking) was just not available. Salaries would still be paid by cheque and employees would have to take time off from their jobs to go to the bank, write a deposit slip, hand it over to the teller and then wait for the cheque to get cleared. Also, the employer would have to take time off to sit and sign numerous salary cheques to be given to all the employees. Compare this to the instant, online credit of salary today and a notification by SMS and email at the end of every month! HDFC Bank’s centralized technology platform allowed it to kick-off a revolution in how employees were paid their salaries.

The supernova is enabling a deeper revolution that is just beginning, spurred by learning platforms such as Udacity, edX, and Coursera, that will change the very metabolism and shape of higher education and, one hopes, lift the adaptability line in the way that

Most consumers appear to be willing to trade access to detailed data about their spending behavior for easy access to credit. But many may not fully appreciate the fact that the same dynamics that power the credit agencies underlie the services provided by “free” information service businesses—the data aggregators we described in chapter 7. If

Until financial incentives are aligned to encourage universal sharing of patient services and data, the growth of platforms within health care may be slow. Helping to bring about this alignment should be a key focus of regulators and industry leaders.

The division of labor into smaller and smaller units of work, which Adam Smith recognized as a key to the productive capability of organizations almost three centuries ago, is likely to continue, powered by increasingly smart algorithms that are capable of breaking down a complex job into tiny, simple tasks to be handled by hundreds of workers, then reassembling the results into a unified whole. Amazon

1.  Staging value creation. The platform managers arrange for the creation of value units that will attract one or more sets of users and demonstrate the potential benefits of participating in the platform.5 Those initial users create more value units, attract still other users, and set up a positive feedback loop that leads to continuing growth.6 The Huffington Post followed this strategy by hiring writers to create an initial array of high-quality blog posts for the site, thereby attracting readers. Some of these readers began contributing blog posts of their own, leading to the gradual development of a wider network of content creators and attracting even more readers.

The internet today is not merely a mode of communication but the defining platform by which businesses innovate and transact around the world. How can governments restrict this platform when its very success is based on transparency, openness, and access? “More

a monetization model is sustainable only when it strengthens network effects (rather than weakening them).

If possible, avoid charging for value that users previously received for free. People naturally resent being told that they have to pay for a good or service they’ve previously received for free—as we saw in the case of Meetup.

Consider potential monetization strategies when making your initial platform design choices. From the time of launch, a platform should be architected in a manner that affords it control over possible sources of monetization. This directly impacts how open or closed the platform is. For example, if platform managers hope to monetize through a transaction fee, they need to ensure that the platform design makes it possible for them to capture control of transactions. If platform managers hope to monetize by charging for access to their user base, the platform should be designed to control the avenues through which content reaches the users as well as the flow of data about users.

A platform is “open” to the extent that (1) no restrictions are placed on participation in its development, commercialization, or use; or (2) any restrictions—for example, requirements to conform with technical standards or pay licensing fees—are reasonable and non-discriminatory, that is, they are applied uniformly to all potential platform participants.2

When Facebook launched Facebook Platform to help developers create apps in May 2007, the big shift began. An ecosystem of partners willing to extend the capabilities of Facebook quickly took root.7 By November 2007, there were 7,000 outside applications on the site.8 Recognizing how this flood of new apps was enhancing its rival’s appeal, Myspace responded by opening to developers in February 2008. But the tide had already turned,

Having studied both the possible risks and the likely rewards, the Guardian’s managers decided both to “open in” the website, by bringing in more data and applications from the outside, and to “open out” the site, by enabling partners to create products using Guardian content and services on other digital platforms. To work toward the “open out” goal, the Guardian created a set of APIs that made its content easily available to external parties. These interfaces include three different levels of access. The lowest access tier, which the paper calls Keyless, allows anyone to use Guardian headlines, metadata, and information architecture (that is, the software and design elements that structure Guardian data and make it easier to access, analyze, and use) without requesting permission and without any requirement to share revenues that might be generated. The second access tier, Approved, allows registered developers to reprint entire Guardian articles, with certain time and usage restrictions. Advertising revenues are shared between the newspaper and the developers. The third and highest access tier, Bespoke, is a customized support package that provides unlimited use of Guardian content—for a fee.

Cloud computing and computer services platform Salesforce generates 50 percent of its revenues through APIs, while for travel platform Expedia, the figure is 90 percent.

By attempting to grab an even bigger share of the profits from its coffee-making platform, Green Mountain had angered its community and forfeited profits. The king of coffee had violated three fundamental rules of good governance: • Always create value for the consumers you serve; •    Don’t use your power to change the rules in your favor; and • Don’t take more than a fair share of the wealth.

Platform businesses at this scale control economic systems that are bigger than all but the biggest national economies. No wonder Brad Burnham, one of the lead investors at Union Square Ventures, responded to the introduction of Facebook Credits—a short-lived system of virtual currency for use in playing online games—by wondering what the move said about Facebook’s monetary policy.

In general, there are four main causes of market failures: information asymmetry, externalities, monopoly power, and risk.

A broader view of platform governance uses insights borrowed from the practices of nation-states as modeled by constitutional law scholar Lawrence Lessig. In Lessig’s formulation, systems of control involve four main sets of tools: laws, norms, architecture, and markets.20 A familiar example can be used to clarify these four kinds of tools. Suppose leaders of a particular ecosystem want to reduce the harmful effects of smoking. Laws could be passed to ban cigarette sales to minors or forbid smoking in public spaces. Norms—informal codes of behavior shaped by culture—could be applied by using social pressure or advertising to stigmatize smoking and make it appear “uncool.” Architecture could be used to develop physical designs that reduce the impact of smoking—for example, air filters that clean the air, or smokeless devices that substitute for cigarettes. And market mechanisms could be used by taxing tobacco products or subsidizing “quit smoking” programs. Historically, those who want to control social behavior—including platform managers—have employed all four of these tools.

The underlying principle: Give fast, open feedback when applying laws that define good behavior, but give slow, opaque feedback when applying laws that punish bad behavior.

Norms. One of the greatest assets any platform—indeed, any business—can have is a dedicated community. This doesn’t happen by accident. Vibrant communities are nurtured by skilled platform managers in order to develop norms, cultures, and expectations that generate lasting sources of value.

Nakamoto’s invention has given birth to a new kind of platform—one with open architecture and a governance model but no central authority. Having no need for gatekeepers, it will put serious pressure on existing platforms that rely on costly gatekeepers. Financial services that claim 2–4 percent of transactions simply for passing them may in the future be hard pressed to justify their rake.

Markets can govern behavior through the use of mechanism design and various incentives—not money alone, but the trifecta of human motivations that may be summarized as fun, fame, and fortune. In fact, on many platforms, money is far less important than the more intangible, subjective form of value known as social currency. The idea behind social currency is to give something in order to get something. If you give fun in a photo, you can get people to share it. Social currency, measured as the economic value of a relationship, includes favorites and shares.39 It also includes the reputation a person builds up for good interactions on eBay, good news posts on Reddit, or good answers on Stack Overflow. It includes the number of followers a user attracts on Twitter and the number of skill endorsements she garners on LinkedIn.

The enterprise management platform company SAP uses a social currency like that of iStockphoto or Stack Overflow to motivate developers to answer one another’s questions. Points earned when the employee of a development company answers a question are credited to a company account; when the account reaches a specified level, SAP makes a generous contribution to a charity of the company’s choice. The system has saved SAP $6–8 million in tech support costs, generated numerous new product and service ideas, and reduced average response time

Even more interesting, SAP has used the social currency supply to stimulate its developer economy in the same way as the Federal Reserve uses the money supply to stimulate the U.S. economy. When SAP introduced a new customer relationship management (CRM) product, it offered double points on any answer, code, or white paper relating to CRM. During the two-month duration of this “monetary expansion” policy, developers found gaps in the software and devised new features at a vastly higher rate.43 Used as a money supply, the increased flow of social currency caused overall economic output to rise. In effect, SAP employed an expansionary monetary policy to stimulate growth—and it worked.

For example, in the 1960s, credit card companies, which host the two-sided merchant and cardholder platform, resisted insuring cardholders against fraud on their cards. They argued that insurance would promote fraud as consumers would become careless with their cards, and that banks forced to absorb more risk would become more reluctant to extend credit, hurting low-income consumers. Over the vigorous objections of major banks, the Fair Credit Reporting Act (1970) and a subsequent amendment required fraud insurance, imposing a limit of $50 on consumer liability for fraudulent use of a credit card. The disaster predicted by the credit card companies did not occur. Freed from the fear of fraud, consumers used their cards so much more often that the increase in interaction volume more than offset the increase in fraud. The business benefit from fraud insurance is so powerful that, in order to encourage adoption and use, many banks now waive the $50 charge if consumers report a lost or stolen card within twenty-four hours.45

Thiel and Levchin (along with a third partner, John Bernard Powers, who soon departed) launched Confinity, a startup aimed at enabling money transfers on Palm Pilots and other personal digital assistants (PDAs) equipped with infrared ports.

By contrast with supply economies of scale, demand economies of scale take advantage of technological improvements on the demand side—the other half of the profit equation from the production side. Demand economies of scale are driven by efficiencies in social networks, demand aggregation, app development, and other phenomena that make bigger networks more valuable to their users. They can give the largest company in a platform market a network effect advantage that is extremely difficult for competitors to overcome.

Growth via network effects leads to market expansion. New buyers enter the market, attracted by the growing number of friends who are part of the network. If prices also fall—as they often do when technology matures and production quantities increase—then network effects work together with more attractive pricing to drive massive market adoption.

It’s important to distinguish network effects from other familiar market-building tools, such as price effects and brand effects. Misunderstanding of these distinctions is a source of the current confusion over how to value platform business models, and contributed to the dot-com boom and bust of 1997–2000. During the dot-com boom, investors in startups like eToys, Webvan, and FreePC regarded market share as practically the only significant metric of business success. Captivated by slogans like “Get big fast” and “Get large or get lost,” they urged companies to spend lavishly to lure customers in hopes of achieving an insurmountable market share advantage. The companies responded: for example, via discounting and couponing, they created price effects.

Brand effects are stickier. They arise when people come to associate a particular brand with quality. But brand effects, like price effects, are often difficult to sustain. They can also be extremely expensive. EToys spent millions to establish a brand in hopes of competing with Amazon and Toys“R”Us.

Price effects and brand effects have their place in a startup’s growth strategy. But only network effects create the virtuous cycle we described above, which leads to the building of a longlasting network of users—a phenomenon we called lock-in.

Virality is about attracting people who are off the platform and enticing them to join it, while network effects are about increasing value among people on-platform.

Curious about what separated the successful companies from those that failed, we examined dozens of cases and found that the failures mostly relied on price or brand effects. By contrast, the successes hit on an idea that really worked—driving traffic from one user group in order to drive profits from another user group. We described our findings in a paper that analyzed the mathematics of two-sided network effects.10 Today, such successful platform businesses as eBay, Uber, Airbnb, Upwork, PayPal, and Google exhibit this model extensively.11

match. To avoid this dilemma, frictionless entry must be balanced through effective curation. This is the process by which a platform filters, controls, and limits the access of users to the platform, the activities they participate in, and the connections they form with other users. When the quality of a platform is effectively curated, users find it easy to make matches that produce significant value for them; when curation is nonexistent or poorly handled, users find it difficult to identify potentially valuable matches amid a flood of worthless matches.

Thus, the larger your network grows, the better your curation can become—a phenomenon we refer to as data-driven network effects. Of course, this is dependent on having well-designed curation tools that are continually tested, updated, and improved.

STRUCTURAL CHANGE: NETWORK EFFECTS TURN FIRMS INSIDE OUT As we’ve seen, in the industrial era, giant companies relied on supply-side economies of scale. By contrast, most Internet era giants rely on demand-side economies of scale. Firms such as Airbnb, Uber, Dropbox, Threadless, Upwork, Google, and Facebook are not valuable because of their cost structures: the capital they employ, the machinery they run, or the human resources they command. They are valuable because of the communities that participate in their platforms. The reason Instagram sold for $1 billion is not its thirteen employees; the reason WhatsApp sold for $19 billion wasn’t its fifty employees. The reasons were the same: the network effects both organizations had created. Standard accounting practices might not factor the value of communities into the value of a firm, but stock markets do.

where network effects are present, industries operate by different rules.17 One reason is that it is far easier to scale network effects outside a firm than inside it—since there are always many more people outside a firm than inside it. Thus, where network effects are present, the focus of organizational attention must shift from inside to outside. The firm inverts; it turns inside out. The management of human resources shifts from employees to crowds.18 Innovation shifts from in-house R & D to open innovation.

management of externalities becomes a key leadership skill. Growth comes not from horizontal integration and vertical integration but from functional integration and network orchestration. The focus on processes such as finance and accounting shifts from cash flows and assets you can own to communities and assets you can influence. And while platform businesses themselves are often extraordinarily profitable, the chief locus of wealth creation is now outside rather than inside the organization. Network effects are creating the giants of the twenty-first century. Google and Facebook each touch more than one-seventh of the world’s population. In the world of network effects, ecosystems of users are the new source of competitive advantage and market dominance.

    A two-sided market (with both producers and consumers) gives rise to four kinds of network effects: same-side effects (positive and negative) and cross-side effects (positive and negative). A growing platform business must manage all four.

As we’ll discuss in more detail in chapter 6, a platform’s ability to monetize the value of the exchanges it facilitates is directly related to the types of currency exchange it can capture and internalize. A platform that can internalize the flow of money may be well placed to charge a transaction cut—for example, the fee of 10 percent of the sale price typically charged by eBay after a successful auction. A platform that can capture only attention may monetize its business by collecting payments from a third party that considers the attention valuable—for example, an advertiser willing to pay Facebook for “eyeballs” attracted by posts related to a particular topic. The platform’s goal, then, is to bring together producers and consumers and enable them to engage in these three forms of exchange: of information, of goods or services, and of currency. The platform provides an infrastructure that participants plug in to, which provides tools and rules to make exchanges easy and mutually rewarding.

the design of every platform should start with the design of the core interaction that it enables between producers and consumers. The core interaction is the single most important form of activity that takes place on a platform—the exchange of value that attracts most users to the platform in the first place. The core interaction involves three key components: the participants, the value unit, and the filter. All three must be clearly identified and carefully designed to make the core interaction as easy, attractive, and valuable to users as possible. The fundamental purpose of the platform is to facilitate that core interaction.

The participants. There are fundamentally two participants in any core interaction: the producer, who creates value, and the consumer, who consumes value. When defining the core interaction, both roles need to be explicitly described and understood.

The value unit. As we’ve noted, every interaction starts with an exchange of information that has value to the participants. Thus, in virtually every case, the core interaction starts with the creation of a value unit by the producer.

The filter. The value unit is delivered to selected consumers based on filters. A filter is an algorithmic, software-based tool used by the platform to enable the exchange of appropriate value units between users. A well-designed filter ensures that platform users receive only value units that are relevant and valuable to them; a poorly-designed filter (or no filter at all) means users may be flooded with units they find irrelevant and valueless, which may drive them to abandon the platform.

When designing a platform, your first and most important job is to decide what your core interaction will be, and then to define the participants, the value units, and the filters to make such core interactions possible.

The crucial role of the value unit. As this description of the core interaction shows, value units play a crucial role in the workings of any platform. Yet, in most cases, platforms don’t create value units; instead, they are created by the producers who participate in the platform. Thus, platforms are “information factories” that have no control over inventory. They create the “factory floor” (that is, they build the platform infrastructure within which value units are produced). They can foster a culture of quality control (by taking steps to encourage producers to create value units that are accurate, useful, relevant, and interesting to consumers). They develop filters that are designed to deliver valuable units while blocking others. But they have no direct control over the production process itself—a striking difference from the traditional pipeline business.

Platforms must perform three key functions in order to encourage a high volume of valuable core interactions, which we summarize as pull, facilitate, and match. The platform must pull the producers and consumers to the platform, which enables interactions among them. It must facilitate their interactions by providing them with tools and rules that make it easy for them to connect and that encourage valuable exchanges (while discouraging others). And it must match producers and consumers effectively by using information about each to connect them in ways they will find mutually rewarding.

One kind of feedback loop is the single-user feedback loop. This involves an algorithm built into the platform infrastructure that analyzes user activity, draws conclusions about the user’s interests, preferences, and needs, and recommends new value units and connections that the user is likely to find valuable.