By G. G. Parker, M. W. Van Alstyne, Sangeet Paul Choudary

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1 One implication is that growth can be much faster for Airbnb or any rival platform than for a traditional hotel company since growth is no longer constrained by the ability to deploy capital and manage physical assets. It may take years for a hotel chain to select and purchase a new piece of real estate, design and build a new resort, and hire and train staff. By contrast, Airbnb can increase its “inventory” of properties as quickly as it can sign up users with spare rooms to rent. As a result, in just a few years, Airbnb has achieved a scope and value that a traditional hotelier can hope to reach only after decades of often risky investment and hard work.

Threadless’s business model arose by accident. The founders originally thought they were in the web services business, selling consulting to firms who needed websites. But selling web consulting didn’t scale: each project had to be negotiated individually, each project required dedicated staff, and after completion, no project could be resold without modification. The company founders launched the T-shirt contest website as a side project to illustrate their capabilities. It was simply an online copy of an offline contest that one of the founders had entered.

In this shift, the simple pipeline arrangement is transformed into a complex relationship in which producers, consumers, and the platform itself enter into a variable set of relationships. In the world of platforms, different types of users—some of them producers, some of them consumers, and some of them people who may play both roles at various times—connect and conduct interactions with one another using the resources provided by the platform. In the process, they exchange, consume, and sometimes cocreate something of value.

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