What the $%#! is a Platform Company
Platform’s serve multiple purposes that enable the companies that build them to drive growth exponentially
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I have competed against platform companies almost my whole career. I started my career in 1997, 3-years after Amazon launched. 10-years into my career, Apple iPhone launched with the App Store. 2 years into my career, Salesforce launched in 1999. I had just started a sales role and remember signing up for a free account to use as my customer relationship management system. As these companies grew, and the term “Platform” was coined, I had been using and competing with them for 15 years.
For the most part, I didn’t think about these companies as competitors. Until Amazon launched its price checker feature in their mobile app in and around the end of 2008, for the first time, consumers could walk into any retail store, check the price of the item on Amazon, and order with one click. A period of price match guarantees launched at retail stores. I was working at Target, and we had been using Amazon to host our e-commerce business. This was also at what I would call the beginning of Amazon’s sonic boom growth. They had just launched AWS two years before, monetizing the same infrastructure that powered their e-commerce sites.
Let’s pause right here. Think about that for a minute. What would happen at your company if the investments you made in everything that made you run could be monetized? The additional cash that was produced was immediately reinvested to make what made you run even better. Then with each improvement, you not only got to use it yourself but earn the investment back immediately by selling to everyone else. This is the power of the platform.
While many people focus on Amazon’s AWS cloud computing platform, their more powerful platform is the 3rd Party Seller marketplace that uses all the same tools that Amazon uses to merchandise and sell their products on Amazon.com. This marketplace allows Amazon to charge 3rd Party sellers of goods fees for listing products, warehousing and shipping products, and advertising fees. Amazon then gets a massive lift in product assortment availability without having to source and hold inventory. They get to charge others to house their inventory.
