Platforms, Ecosystems, and Aggregators

hanks to the internet, Thompson observed, Aggregators created value not by controlling scarce physical resources, but by aggregating user demand and attention, which then attracts suppliers to the platform.

The business model follows from these fundamental differences: a platform provider has no room for ads, because the primary function of a platform is provide a stage for the applications that users actually need to shine. Aggregators, on the other hand, particularly Google and Facebook, deal in information, and ads are simply another type of

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Then, once an aggregator has gained some number of end users, suppliers will come onto the aggregator’s platform on the aggregator’s terms, effectively commoditizing and modularizing themselves. Those additional suppliers then make the aggregator more attractive to more users, which in turn draws more suppliers, in a virtuous cycle.

This raises broader questions about the tech ecosystem and its investment model. I’ve been making the case for a long time that the natural endpoint is likely very large platforms and Aggregators on one-side, and a flourishing ecosystem focused on niches on the other, but implicit in the latter is that venture capital is not simply unncessary, it i... See more