Platforms and Aggregators

Platforms

I’ve used the word “platform” a couple of times without defining. The word is horrendously overloaded, and you can never be sure what is meant without more context. When it comes to the business of software, though, you can do a lot worse than listen to Chamath Palihapitiya quoting Bill Gates:

“I was in charge of the Facebook Platform. We trumpeted it out like it was some hot shit big deal. And I remember when we raised money from Bill Gates, three or four months after — like our funding history was $5M, $83M, $500M, and then $15B. When that $15B happened a few months after Facebook Platform(…), Gates said something along the lines of, That’s a crock of shit. This isn’t a platform. A platform is when the economic value of everybody that uses it exceeds the value of the company that creates it. Then it’s a platform.”

He’s right. The Bill Gates line defines platforms as serving an ecosystem that exists because of them but is also much bigger than them. Because platforms are such tremendous economic centers of gravity, we need to differentiate them from your average, run-of-the-mill marketplaces (which, I hope I have established, are powerful economic engines already).