What Advantages Do Existing Businesses Have in Building Platforms?

While most of the companies that have built platforms have been startups and tech companies, this doesn’t have to be the case. In fact, we see a few serious but largley unrealized advantages that existing businesses have in building platforms.

For one, existing businesses already have an established audience. This gives them a serious leg up in solving the chicken-and-egg problem and reaching the point of critical mass. You can use your existing customer base as a magnet to attract the user group on the other side of your platform.

Another big advantage existing businesses have is access to capital to invest in building their ecosystem. You can see this in action with companies like Nike, which invested in creating an accelerator program around Nike+ to jumpstart its producer ecosystem. This kind of investment from a large and successful existing business can also serve as an important signal that your platform isn’t going anywhere, reducing uncertainty for potential producers for your platform and signaling that they can safely build a business around it.

These advantages, along with others, like the ability to leverage existing customer data, give existing businesses a serious advantage in building a successful platform. So why haven’t many companies done it? We’ll address that question in another video.

Filed under: Platform Innovation | Topics: chicken and egg, Nike, platform economics, Platform Startup Advisory, platform thinking, platforms