The last twenty years have seen a large transformation in businesses that can be described as a shift from a "pipeline" model to a "platform" model. Traditional pipeline models operate like an assembly line where each step adds value to deliver a final "product" to a customer. Each step extracts a percentage of the value created.

A platform model is based on ecosystem participation where different members of the ecosystem contribute and extract value in a circular model of value creation and extraction. As Sangeet Choudary defines it, in Platform Thinking, "A Platform is a plug-and-play business model that allows multiple participants to connect to it, interact with each other and create and exchange value".

Platforms are better models. They allow AirBnB to register as many bookings per night as the next three competitors combined, without owning any property or inventory. They allow Uber to book more rides than taxis without owning any cars. They create value without the traditional cost, can scale faster, and are more efficient. Perhaps most importantly, they create a competitive moat - in a platform economy, winner takes all.

Which is why over 70% of so-called unicorn startups are platform businesses. In 1995, at the height of the dot-com bubble, the 15 highest value internet companies had a combined value of $16 Billion. Twenty years later, the 15 largest platform companies had a combined market value of $2.5 Trillion - over 15,000% more.

And it's not just startups that are realizing this new model. In 2015 IDC predicted that "by 2018, 50% of large enterprises and 80% of enterprises will create or partner with industry platforms". Accenture claimed that "platforms are the foundation for value creation in the digital economy". Many traditional companies have completely transformed their core businesses to platform businesses including Nike, Philips, Disney, and Microsoft in an effort to be leaders in an increasingly winner-takes-all market.

Platforms have been praised and criticized in equal measure for their ability to scale rapidly; for "revolutionizing" industries; for inventing a gig economy; and for creating billionaire founders and investors in record time. They garner headlines and watercooler discussions about the "uberization of everything", likening platforms to "giant death stars" for incumbents. Some argue that platforms "go too far" in disrupting industries and society. Somewhat ironically, I believe the problem is that they haven't gone far enough. They have "platformized" their product, but continue to use traditional models for operations, governance, and profit / value distribution which concentrates power and revenue to very few. When companies operate as monopolies, the concentration of power and money becomes a social problem.

The Challenge: Current Models Are Broken

Building strong networks is complex and have different properties and elements at play. As networks grow, power shifts from members to the platform. In smaller, nascent networks, the members have all the power. Joining, participating, and leaving the platform has a great effect on the total value of the platform. But when the network is very large, individual members have very little power - the platform operates like a monopoly by becoming the most efficient (and sometimes only) place to make transactions.

The "playbook" for building platforms is well known: The platform subsidizes the costs of joining and participating on the platform through an unsustainable or temporary contract with members. Nearly every platform grows this way. Uber subsidizes both the driver and the rider (paying drivers more than the rider, who gets a cheaper rate than taxis) and avoiding legal and regulatory costs (similar to AirBnB). Udemy paid early instructor adopters a higher percentage of course fees for promoting their courses to new users. Once Udemy hit a critical mass, they cut the rates paid to instructors. Facebook, twitter, and other social networks offered a platform to share updates with friends and family and then sold their users' data and attention to advertisers. "This isn't what I signed up for" is the frequent refrain from Uber drivers, Udemy instructors, and social media users. Because it wasn't what they signed up for. But working as monopolies at scale, these platforms become necessary for earning a living (or paying back debt created by the platform), and communicating with friends and family. The technology will "platformize" every industry possible with VCs pouring more money into these bets than ever before. When all aspects of our daily life depend on platforms, there will be no choice to leave...

Companies are able to build and operate platforms and subsidize early adopters by selling equity (ownership) through "venture capital". Equity equals ownership and is concentrated among the founders, early employees, and a majority to investors whose singular objective is to maximize the return on their investment. While profit-maximization is a functional model in an open, competitive market, it rarely does in a monopoly.

Operating in a monopoly has several valid concerns:

• Usury / Extortion:
• Gig workers / economy
• Social impacts
• Data security / privacy
• Social alignment

The root cause of the problem is the ownership of these platforms. Unpacking this further, in today's prevalent model, ownership = Purpose + Governance + Value capture.