Strategists in the “21st century economy” have a difficult task predicting disruptive new models that will challenge established business. In “Modern Monopolies” Alex Moazed and Nicholas Johnson provide truly valuable insight into platform businesses and how several of them have come to have such an impact across all industries. Examples of platform businesses are Uber, AirB&B, Facebook, Twitter and so on.
Modern platform businesses are very different from traditional linear businesses. A linear business can be described as a sequence of activities that convert inputs (or raw materials) to more valuable outputs (products). Platform businesses on the other hand are structured in a way akin to an ecosystem, where producers are matched with consumers so that they can transact value in a very simple way. The platform is more a facilitator of value exchange and less of a producer.
This book is very useful in understanding how a platform business is structured at its core. Four activities namely: developing useful tools, matchmaking, audience building and setting rules and standards are necessary to build a successful platform. Understanding what makes some platforms succeed and others fail is very important whether you are looking to enhance your existing business models, or invest in a new start-up that promises to become the next big thing in a specific market.
I would highly recommend this book to business strategists, technology professionals, software professionals and investors looking to get a good understanding of this new and evolving business model. The book is very readable with many many examples that illustrate the principles in a clear and entertaining way.