Platforms and user-generated content
Thanks to Jeff Lau for contributing ideas.
A recent article on User-Generated Content (UGC) in gaming by Decentralised.co really got me thinking. Regarding UGC, it points out how games go from linear storylines, where the gaming experience is produced by the game studio, to multiplayer modes, where the gaming experience is created on-the-fly thanks to interaction with other players, to a platform mode, where players themselves create the gaming experience for other players:
Most games tread a proven path of launching with an engaging storyline (e.g., Assassins creed or Call of Duty) and eventually transition to outlets where UGC is a subsection of the broader content offering....The randomness that comes with large multiplayer games becomes the hook that attracts users, as the gameplay is unpredictable...Minecraft and Roblox are the exceptions to this norm; they have transcended to being platforms. A game that has become a platform usually has relatively little IP and can have fluid storylines depending on who is building on it. These are games where users spend more time on user-generated gaming experiences than storylines or levels developed by the studio behind the game. Fortnite is in a unique period of transition to being a platform. According to reports, roughly half of the user’s time in the game is now spent interacting with UGCs.
This got me thinking about platforms in general. The power of building platforms as scalable businesses is nothing new. For the sake of what I'm writing here I'd like to first of all aim for a low-level definition of platforms.
Platforms = "Infrastructure"
Platform products function similary to real-world infrastructure like highways, airports, telephony networks, etc. They connect people together, who then create content for each other. What's really powerful is that even if I build a road between two groups of people who know nothing about each other they will eventually develop an understanding and commonalities thanks to the ability to communicate and trade.
But most digital platform products aren't even connecting strangers with nothing in common - they're connecting people who would already want to connect with each other, and who simply didn't have an efficient means for doing so yet. It's no surprise that they have the ability to scale to large numbers of users in a relatively short space of time. Momentum begets momentum and network effects, resulting in Aggregation Theory.
It's interesting to note just how many of the most well known and successful startups are platform plays, by the above definition:
- Google/ChatGPT - Users search for content created by other users (the wider web).
- Facebook/Twitter/Instagram/Whatsapp/OnlyFans - Users create content for other users.
- eBay/Amazon/Depop - Users sell to other users.
- Uber/Grab/AirBnB - Users provide services to other users.
Even for blue-chip crypto projects such as Uniswap and AAVE the same applies: users both seek and provide liquidity to each other. At the very base level blockchains themselves are platforms.
Not every app can be made into a platform play (e.g a news website), but it's an interesting thought experiment to consider if it's possible. It leads to an understanding of how and why even for apps you wouldn't typically think of as platforms, there can be an opportunity when one is able to connect one's users together in some way.
For example, Figma has a marketplace through which users can share pre-made design templates, plugins and the like. And very soon they plan to support paid items, enabling users to earn from their creations through the Figma ecosystem itself.
It's a similar case for paid browser plugins. Unlike Figma - which bills itself as a multi-person collaborative design tool - you don't normally co-browse the web with anyone. Your browsing decisions and history are yours and yours alone. And yet browsers today are platforms, with users able to create plugins for other users and even earn revenue doing so.
I recently started using flashcards for my language practice. Anki is popular Android app. And guess what, you can download flashcard sets created by other users. But not yet monetizable; they're missing a trick here!
Value chains
Platforms can be built upon. This is especially the case with digital platforms since changing architecture is usually just a matter of deploying new code. This makes them very sticky since they're literally needed by the applications running on top of them.
In the normal world of value chains, dependent products can become so successful to the point where they will try to gain more control over their dependencies by building out their own alternatives. Samsung developing Tizen OS in an attempt to move away from Android is a good example of this. Apple shifting from Intel chips to their own in-house silicon is another.
Does the same thing happen with platforms as outlined above? Less so since the platform usually already provides a means for people to connect with each other. And this means of connecting, communicating and transacting continues to remain strong despite the success of any apps on top. However, normal competition rules still apply. If a superior alternative platform comes along then the risk is very real.
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As an entrepreneur it's worth considering if/how one's product can be a platform. And to consider this from the get-go. It not only makes for a stronger business model but also a stronger case for investment of both time and money.