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The Future of Platforms & Markets

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Like every year, end of May is the moment when the fabulous and awaited Internet Trends report from Mary Meeker of KPCB gets published. I’ve tried to give a look at this amazing piece of work with a platform perspective: what do the internet trends we’re seeing mean for the future of platform thinking? That was my original question.

This year issue of Meeker’s peek into the state of the internet is characterized by a strongly quantitative analysis: less trends are spotted — most of them are actually recurring ones, such as the key importance of experiences for brand success or the penetration of voice and AI — and more numbers are provided to testify an evident truth.

We’re (almost) all connected.

Indeed, new smartphones sales don’t grow much anymore YoY, while global internet users are growing steadily at 10% rate: this basically means we’re buying less phones in the west (mostly due to Moore’s law slowing down and making new phone buying less frequent) while a bit of growth is still happening in connecting countries such as India or the African continent.

Giant tech companies are set to dominate the Internet of the present-future

In an internet where everyone is connected with anyone else and where we’re getting to the upper limit of attention time available (with screen time approaching 6 hours a day in the US), efficiency in connecting people with products and services is key.

Thanks to their data-centric nature and to the huge network effects that allow them to train machines and algorithms with an insane amount of data, Google and Facebook now dominate — and are on track to monopolize — global advertising, ensuring all of us can easily get connected with the right (?) product and services.

Amazon is continuously growing its footprint to the extent of, eventually, putting out of business, this year, the largest number of retailers in history. We’re finally noticing that retail as we know it (disconnected from the overall — digitally powered — buying experience) is cursed.

Giant tech companies are therefore dominating the business landscape, and the most interesting aspect perhaps is that they are continuously growing their feature base. Here’s the point: huge tech giants have something that other companies don’t have, they’ve network effects (and enormous user bases), and the agility to test and prototype new ideas rapidly.

While a traditional giant company may have the first, it’s likely failing on the latter; while a nimble tech innovation company may have the latter will always have to bounce back to GAFA to be able to leverage on their network effects to distribute and test new ideas to wider markets.

Facebook now encompasses all the aspects of our socially-connected life, Amazon now sells directly under its brands — or child brands — things such as baby wipes, batteries, or bed linen.

Tech innovations such as AI, machine learning and conversational interfaces (all on the rise) will provide GAFA with even more potential to create seemingly personal relationships with customers, increasing their potential to deal with long tails with highly customized services and self-customization tools to let customers make the tweaks that they couldn’t anticipate.

God only knows what will happen when the penetration of IoT and connected devices will really cross the chasm: everything wants to be connected, and when it’s connected, it will be owned by the GAFA.

Soon machines will be able to fake human relationships

We now have an internet made of enormous platform-infrastructures, connecting entities in their huge ecosystems, providing them with the possibility to find each other precisely, and to trade value to an extent we never experienced before.

What’s left?

A few days ago, my good friend and italian digital icon Fabio Lalli, blurted on Facebook that with giants like Facebook now encompassing everything social and spurring new features continuously (at least test-validating them), it’s really hard for entrepreneurs today to think of something new and valuable, and be able to overcome the bullying of the GAFA bringing it to the market.

Similar reflections could probably be made for e-commerce entrants confronting with and Amazon, or business automation innovators facing the market domination of Salesforce, or similar giants.

So what’s left for us to invent in this internet?

The effect of the penetration of the GAFA, in parallel with the everlasting effort of existing incumbents to componentize and digitalize their business through APIs  is leaving modern entrepreneurs with an interesting set of tools to leverage on:

  • the possibility to connect part of existing industrial business processes, through APIs, in more complex value creation models
  • the possibility to easily reach customers thanks to the efficiency of advertising and GAFA distribution
  • the possibility to leverage on abundant open code base and Everything as a Service

Despite “vertical” transaction-based marketplaces such as Airbnb and the likes have demonstrated that a clearly designed strategy and mission can achieve global growth and impact, I’m skeptical there’s still a lot of room for entrepreneurs to come up with a simple idea that can disrupt these transactional markets.

This may be hard, first because most of those simple markets are now already crowded with exceptional brands, and, furthermore, because it will be easy for GAFA and the likes — including these huge global transactional marketplaces like Airbnb — to jump into an adjacent market by enabling “just another” transaction type among their networks (think of Facebook Marketplace feature or the recent move of Airbnb into travel experiences).

It didn’t take much to Airbnb to move from beds and houses to experiences.

If just 4 percent of Facebook’s 1.7 billion global users turn to Marketplace to buy and sell used cars, Facebook would pass reigning giant Craigslist, as well as Autotrader, Cars.com and eBay Motors.

All these considerations make me think that the upcoming one is really the age of the so-called market-networks. As you may know, the term market-network, was coined by James Currier, efficiently describing something that (in his own words):

  • “Use SaaS workflow software to focus action around longer-term projects, not just a quick transaction”
  • “Promote the service provider as a differentiated individual, helping to build long-term relationships”

Market networks essentially rethink, facilitate and transform all the complex business processes and social workflows that will never be interesting to GAFA (due to the high fragmentation and niche nature of the opportunity) radically improving the overall experience of users and — often — professionals involved.

Early examples of market-networks include the famous houzz.com, Angelist, honeybook as mentioned by James in his seminal blogpost, but also growing brands like lendinvest or opendesk.

GAFA vs Market Networks impact growth model

Differently from GAFA and the likes, that substantially grow their impact by trying to climb the value chain with feature pullulation, still being attached to the idea to be attractive to anyone, market networks start by providing high value to a restricted group of users (more in general to a niche market) and then grow their impact by trying to grow their ecosystem’s size, oftentimes creating multi-national branches.

We can reasonably expect the market networks of the future to be able to leverage more on integrating utilities, telco, retail and other traditional industries through APIs and smart contracts, growing their potential and the value generated for participants.

A bit of foresight — The Infinite Tail

The evolution of the internet infrastructure is pushing the concept of the long tail as we know it even further. We could argue we’re evolving into what could be called an “infinite tail”.

Having everyone connected to anyone else in a shared space of trade, and having enabling technologies at hand to leverage on almost infinite “resources as a service” — increasingly also in the “real” world thanks to API integrations and smart contracts — is going to annihilate the cost of organizing trade among uncoordinated entities.

We can expect then, to evolve into an age where ever-larger global, social and technological infrastructures — soon to be decentralized thanks to technologies like the blockchain — will power small markets in what we could call, indeed, an internet of markets.

In these small markets— be it a small consulting company working with ten key customers, a digitally enabled artisan carefully creating products for her small fanbase or, a music artist living off local shows and special vinyl record sales — reputation will be the key enabler of this infinite tail economy and players will thrive on strong ties and long term relationships, exactly the context that market networks should be set to address, most likely with a decentralized approach (empowering myriads of different small networks) that doesn’t necessarily need network effects to exist and thrive.

reputation will be the key enabler of this “infinite tail” economy made of strong ties and long term relationships, empowering myriads of small networks

Now seemingly alienating technologies like AR or VR will end up helping us bring presence to remoteness, tearing down the last barriers to a world of thriving, relational, infinite small markets. At that moment in time the evolution towards a real global market age will be completed and we’ll be out of the Taylor bathtub forever.

Platforms of the future may be different in shape and strategy but we can be reasonably sure that they will still need to be designed around the idea that relationships play a central role in modern business.

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About the Author

This article was written by Simone Cicero of PlatformDesignToolKit

Entrepreneurship

The Legacy of AIM

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On a cold February morning in 1997, America Online filed a patent for something that was to become the basis of hundreds of social tech startups.

They called it the “Buddy List.” It was the heart of the digital social structure that formed AOL Instant Messenger.

The first words of the patent abstract explained:

The invention implements a real time notification system that tracks, for each user, the logon status of selected co-users of an on-line or network system and displays that information in real time to the tracking user in a unique graphical interface.

If you were a 90’s kid, chances are you remember what a Buddy List was. You likely recall the AIM install CD, your screen name, and how much effort went into your carefully crafted away messages. You can probably reminisce about competing for time on the home computer so you could chat with your friends.

The world had never seen anything like it. And it captivated us all.

AOL Instant Messenger is shutting down for good, 20 years after it launched.

But what it established lives on. AOL didn’t know it back then, and we don’t realize it today, but AIM is the father of our modern social web.

Don’t believe me? Let’s start with the Buddy List.

Buddy List

Think about what’s at the foundation of any social media you use today. It’s that list of other human beings. Followers, friends, whatever they’re called. Social media doesn’t work without these groups of real people and it all originated with the Buddy List.

The Buddy List was everything. Credit

The Buddy List was exactly what you’d think — your list of friends. You controlled who was on it. You could find new people through information they put in their profile, but you had to both agree to the connection — if you were on their buddy list, they were on yours.

The most important feature of the buddy list was the ability to see whether each person was online. This remarkable little feature created a way to “feel” that your friends were around. There was an intimacy and immediacy to it.

Being on someone’s buddy list meant something. Nothing had ever come along like this before AIM, where you had a digital group of connections tied to your real relationships.

Away Messages

If one of your friends wasn’t online, you’d see their “away message.”

AIM away messages.

Have you ever written a tweet or status update? Then you’ve gone through the same process AIM users went through to write away messages. It is the ancestor of those widely-used features.

The away message started as a set of three default options: online, busy, or away. But then AOL set up the ability to write a custom message and it quickly transformed into a way to express yourself to your buddies. From simple plans you had for the day, to quoting lyrics from your favorite songs, the away message let you broadcast anything to the world.

Profiles

The modern digital profile is quite a remarkable thing. In essence, it represents the notion that we can have a web persona that we completely control.

We’ve all agonized over the perfect profile pic or handle. We make conscious decisions about cover images and bios so that we present to the world exactly the image that we want.

That all started on AIM.

Some examples of AIM profiles.

The service let you choose things like an avatar, bio, fonts, and colors, but your biggest decision was your screen name. It could be anything from xXPunkRockPonyXx to InternetDiane. The possibilities of every alphanumeric combination allowed you to choose something meaningful, personal, and easily recognizable, so that’s what everyone did.

This kind of customization helped us realize how what an online persona could be.

Messaging

Online instant messaging hit a sweet spot. It was better than email and less formal than a phone call. It fit right in with what the rising generation wanted as a form of communication.

Chatting on AIM. Credit

It’s still something we can’t get enough of 20 years later. The underlying concepts of Facebook Messenger, WhatsApp, Slack, Discord, and Snapchat all began with AIM.

This is where communication and real human connection actually happened. Things like late night chats with your best friend about the latest music or deliberately worded conversations with that girl or boy you had a crush on.

It was all about the contact with other human beings over the internet in a real, direct, private, and personal way.

The Running Man

AIM could be considered the first social media superpower. It was a digital consumer tool used at an unprecedented scale, a household name.

It defined the social potential of the web for Americans. Perhaps more than any other product, AIM helped establish the internet as a place to hang out rather than a simple utility.

Entrepreneurs realized that, too. AIM was the starting point of an exponential trend in social web startups. Companies like Twitter, YouTube, Facebook, LinkedIn, Pinterest, and Instagram are some of the major players who have ridden that wave.

The running yellow figure of AIM’s logo seems fitting in retrospect. The idea of always on, always transmitting captured the feeling quite well.

Now the runner is passing the baton.

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About the Author

This article was written by Jordan Bowman.

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Entrepreneurship

Making Globalisation Work for Startups

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AI platform Globality is giving small and medium businesses access to broader opportunities.

Ina post-Brexit, “America First” world, protectionism seems to be back in fashion, and globalization has become something of a dirty word. Since the 1990s, global trade has helped lift over a billion people out of poverty, driven sustained economic growth, lowered consumer prices, and delivered unprecedented freedoms to much of the world’s population.

Still, middle-income earners have seen their living standards stagnate, while many of the great leaps forward in automation are destroying the jobs of those least able to cope, with vastly greater levels of disruption feared.

Large multinational companies still seem to be the greatest beneficiaries of a globalized marketplace. Small and medium-sized businesses, which constitute the bulk of the world’s economy and drive most job creation, find it more difficult to make valuable connections that can lead to international trade opportunities and contracts with large organizations.

This is due in large part to the outdated procurement process based on Requests for Proposals (RFPs), which is still the standard across most industries. RFPs are not only extremely time consuming, but such competitions are used as cover for a procurement decision that has already been made, so prospective smaller suppliers never really stand a chance.

Joel Hyatt cofounded Globality to prove that technology could be the missing link to make globalization work for more businesses. By providing a matchmaking platform that connects big clients–Fortune 500 companies spanning financial services, pharmaceuticals, food and beverage, consumer goods, and other sectors–with a diverse pool of providers, he wants to help those small and medium-sized companies land contracts that would otherwise be out of their reach.

He served as the national finance chair for the Democratic Party during Al Gore’s presidential campaign in 2000, and after the election, partnered with Gore to start a media company that they sold in 2013. When Hyatt started Globality in 2015, Gore became an investor. The company has since raised $35 million in their latest funding round and embarked on a major expansion of its platform that uses artificial intelligence to match the small clients with big contracts all over the world. So far, over a dozen fortune 500 companies and over 40 multinational corporations have signed up on the client side, and its SME (Small and Medium Sized Enterprise) Service Provider Network covers every continent and more than 100 countries.

The platform is made up of three main elements, explains Globality CTO Ran Harpaz: The first gathers information from the client, helping them to determine what their real needs are. The second matches them with the best service provider to fulfill those needs, and the third helps build the relationship by fostering collaboration between the two parties.

For the first part, the client answers a detailed Q&A devised by their experts. Their algorithms then extract a variety of data points from those clients using NLP (Natural Language Processing) and continues to build upon that in a constant learning loop. It takes all the information from the questions it asks of both client and providers during the matching process to suggest a shortlist of possible matches, which is then reviewed by an industry expert consultant at the final stages.

This AI-powered consultancy model effectively harnesses the best of both worlds, according to Harpaz, as it scales the nuanced, sector-specific expertise that traditionally comes at a prohibitive premium. By leveraging machine learning to recognize interactions–often spotting patterns in the data that might not have occurred to a person and using that in the matching process–this high-level human know-how becomes accessible to companies without multimillion-dollar consultancy budgets at their disposal.

“At every step, the system is collating feedback from both sides, learning from signals that tell it how the match is actually working in practice by prompting them with questions based on interaction data,” Harpaz says. “This systematic approach to human knowledge representation effectively gives people superpowers, by taking that magic sauce of human interaction and knowledge, and making it possible to apply that consistently and at scale.”

Although this process is building toward ever more efficient automation, Harpaz says that they will always need a human expert to look at those matches with a strategic eye and make the final decision on the most suitable pairings. “What Globality is doing is making high-level knowledge and expertise accessible to a much larger pool of companies and people, rather than only the large corporations who have been traditionally able to afford the services of consultancy firms,” he explains. Globality’s pricing model is usually free for client companies, with suppliers being charged a percentage of the contract’s value, but only once they receive payment themselves for the services they provided.

Waqqas Mir, a partner at Axis Law Chambers, a law firm based in Lahore, Pakistan, is one of the suppliers using Globality to reach international clients. Mir feels that law firms such as his in developing countries often lose out on such business because of their size. Being on the platform, however, gives them the opportunity to open up new channels of communication, which he believes provides great value in the long term. “That allows you to begin a relationship and remain on their radar,” he explains. “The whole thing is motivated by a desire to ensure a more inclusive global economy.”

Globality matched a Fortune 50 company with South African marketing agency Colourworks. The company had to find service providers who were Broad-Based Black Economic Empowerment-certified by the South African government. “So we worked backwards from that, looking at all the providers who matched the certification criteria, and narrowing it down from there,” Harpaz says.

Since winning the Africa account, the agency has continued to use the Globality platform to connect with their new client on a global level, and are now exploring the possibility of working with them in Germany. “In this day and age, it is so easy to do business online or over video conferencing, so distance is really not a barrier,” says Lexy Geyer, account director at Colourworks.

Enabling smaller companies to become “micro-multinationals” means they will in turn fuel job creation and economic growth throughout the developed and developing world. Globalization and AI are often portrayed as inevitable waves of disruption that will leave chaos and inequality in their wake and ultimately make much of humankind and their skills redundant. But if platforms like Globality continue to create opportunities for diverse smaller businesss in this global marketplace, perhaps globalization can become a force for good.

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About the Author

This article was produced by Alice Bonasio.

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