Platforms and Aggregators

Today’s dominant internet platforms are built on aggregating users and user data. As these platforms have grown, so has their ability to provide value — thanks to the power of network effects — which has enabled them to stay ahead.

A subtext to last week’s article, Tech’s Two Philosophies, was the idea that there is a difference between Aggregators and Platforms; this was the key section:It is no accident that Apple and Microsoft, the two “bicycle of the mind” companies, were founded only a year apart, and for decades had broadly similar business models: sure, Microsoft licen... See more

These successful companies in most cases weren’t true platforms, but aggregators, locking in demand and exerting central control.

The most successful enterprises today are networks - which extract as little value as possible so they can grow as big as possible - and the platforms on which those networks are built.

The best examples from the last two decades are Google and Facebooks’s multi-sided network effects. People prefer searching and connecting with each other on these properties, so advertisers and content creators keep using them. It creates a virtuous cycle, and makes the self-interested move on every player’s part one that reinforces these companie... See more

What followed was probably my first clear articulation of Aggregation Theory, albeit without the name. The point about effectively infinite competition, though, is a critical one. Neither reach nor timeliness were differentiators, but rather commodities; the companies that dominated on the Internet were those — Google and Facebook in particular — t... See more

In the consumer internet, many of the most interesting technology platforms are, at their core, networks. As with most complex systems, small changes can have large consequences, and the structure of a network can materially impact consumer experience, many times changing the core way that people interact with the service.

A decade ago, I was only a couple of years into my venture career. I believed that growth and progress were synonymous – in an industry where scale was the ultimate target, platforms that achieved it were glorified. A decade later, I have learned that success is more nuanced, and we have to take accountability for the outcomes we encourage. New dom... See more