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Entrepreneurs try to build platform businesses

  • By Alan Knott-Craig
  • September 15, 2015

1 connect dots

 

Being a dot is cool, but it’s far better to be the guy who connects the dots, i.e.: the platform.

 

Think about Uber. Would you rather be the driver/car-owner (dot), or the platform (connector of dots)?

 

Drivers make decent cash in the short term but are at the mercy of the platform to manage supply of cars (ie: ensure supply of cars doesn’t outstrip demand) and not arbitrarily reduce retail rates.

 

Uber on the other hand holds all the cards. It’s a network business, and whilst difficult to build, once built it will be a natural monopoly, impervious to competition and printing cash like Google.

 

If you like the idea of being a monopoly, never worrying about competition and printing cash, then take the time to think about how you can be a dot-connector rather than a dot.

 

If you do become a dot-connector, remember this:

 

Focus on connecting the dots, don’t make new dots! There will be many temptations to get into the game of “dots”, i.e.: Uber can hire its own drivers and buy its own cars.

 

DONT DO IT. Platforms don’t build dots. Platforms connect dots.

 

Be a platform.