Launching a hyper scalable platform business by praxent

Launching a  
hyper-scalable
platform business 
8 P R O V E N L A U N C H S T R A T E G I E S F O R  
S T A R T U P S & E S T A B L I S H E D F I R M S
Hi! We’re Praxent.com! FIND US AT @PRAXENTSOFTWARE

info@praxent.com @PraxentSoftware
SERVICE ENABLEMENT
& DIFFERENTIATION
VIA DATA
SAAS
PRODUCT DESIGN &
DEVELOPMENT
PLATFORM
STRATEGY &
BUSINESS MODELS
Custom software & technology solutions
designed to make your competition irrelevant.
W E B M O B I L E D E S K T O P I N T E R N E T O F
T H I N G S

W H AT W E W I L L F O C U S O N T O D AY:
What is a Platform?
3 Essential Ingredients
8 Launch Strategies
5 design characteristics
3 parts of the core interaction
4 ways to monetize

Source Material
O V E R 3 0 Y E A R S O F C O M B I N E D E X P E R I E N C E
S E R V I N G O V E R 3 0 0 C L I E N T S I N A U S T I N , T X
Tim Hamilton
F O U N D E R & C E O
Kevin Hurwitz
M A N A G I N G PA R T N E R

VS
Founded 1927
200,000 employees
$26.4B market cap
Founded 2008
5,000 employees
Est. $24B market cap

0
7.5
15
22.5
30
5 10 20 40 60 90
T I M E ( I N Y E A R S )
Same valuation in one-tenth the time
VALUATIONINBILLION$

Founded 1916
116,000 employees
$53B market cap
Founded 2009
7,000 employees
$66B market cap
VS

0
17.5
35
52.5
70
3 6 12 24 48 100
T I M E ( I N Y E A R S )
Same valuation in one-tenth the time
VALUATIONINBILLION$

Platforms
Pipeline
VS
creates value by orchestrating interactions
between external producers and consumers
Source: Platform Revolution: How Networked
Markets Are Transforming the Economy
creates value in a linear fashion with centrally
employed staff and owned assets
Platform

There are three
essential ingredients:
INFORMATION
ENABLED
LEVERAGED OUTSIDE
ASSETS & TALENTS
Source: Exponential Organizations
SOCIAL SHARING  
& FEEDBACK

Information enabled:
Improves experience
INFORMATION ENABLED MEANS: 
• Smarter products
• Contextual awareness
• Personalization
• Better search
TRENDS AS A RESULT:
• The connected home
• Self-driving cars
• Artiﬁcial intelligence

Information enabled:
Improves experience

Information enabled & the customer experience
R E D U C E S T H E D I S TA N C E B E T W E E N
A N Dwhere the customer is where they want to go
Eliminates:
Time, distance, work, customer borne risk

How can information enabling your product
or service create value for your customers?
How can it strengthen your value proposition?
A S K Y O U R S E L F :
S O M E C O M PA N I E S E M P L O Y I N G I N F O R M AT I O N E N A B L E D P R O D U C T S & S E R V I C E S W E L L :

VS
Owns 5,700 properties
in over 110 countries 
T H E I R F O C U S :
Scouting, acquiring, building,  
marketing and managing resort properties
Owns 0 properties
 
T H E I R F O C U S :
Building a platform that enables hosts 
to list their unused guest rooms for rent
Leveraged assets It’s not about owning the resources,
it’s about having access to them.( )

51% of Uber drivers were not
driving professionally
BENEFITS FOR ECONOMY: 
• Supply of rides increases
• Availability increases
• Wait time decreases
• Price decreases
BENEFITS FOR DRIVER: 
• Get to be own boss
• Manage own schedule
• Supplement income
• Earn more money
T H E AV E R AG E C A R S I T S I D L E 9 5 % O F I T ' S L I F E
It’s not about owning the resources,
it’s about having access to them.Leveraged talents
18% Pros - been on the Uber platform for more than
6 months
18% Crossovers - previously drove taxis or black
cars, but have been active on the Uber platform for
less than 6 months
12% New Enthusiasts - New to the platform, and
have taken up driving with uberX consistently
52% Part-timers - The largest group of partners on
the uberX platform and most likely to be seeking a
ﬂexible earning opportunity. 75% of this group hold
other jobs besides Uber.
( )
Good for rider + driver + economy

What dormant assets or talents do your
customers, employees, partners, suppliers,
distributors, and investors own and how
could they be leveraged?
S O M E C O M PA N I E S L E V E R A G I N G O U T S I D E R E S O U R C E S W E L L :

GOALS: 
• He/she enables you to leverage
their social network of relationships
because you provide value in
exchange
• E.g. social currency (reputation) and/
or social feedback
• The customer and his connections
become your product
Social sharing & feedback
Customers promote Warby Parker products because they get
fashion feedback from their network of friends
Create a symbiotic
relationship with
the customer
Willing to give LinkedIn access to his network of
contacts because his social reputation increases with
the number of established connections

Airplane sharing app?
How could you entice a customer to
share his/her network with you by
providing a benefit for doing so?
S O M E C O M PA N I E S E M P L O Y I N G S O C I A L S H A R I N G & F E E D B A C K W E L L :

What’s enabling the shift?
Source: Exponential Organizations
UBIQUITOUS
INTERNET
CONNECTIVITY
CHEAP
COMPUTE
POWER
MOBILE  
SOCIAL ERA
}
REDUCES
TRANSACTION
FRICTIONS: 
• Central curation
• Slow certiﬁcation
• Costly gatekeepers
• Inefﬁcient search
• Gap between supply
and demand

How to launch
a platform

Which came first?
OR
THE
H O W T O S E C U R E E N O U G H U S E R S O N O N E S I D E O F  
T H E N E T W O R K T O AT T R A C T U S E R S O N T H E O T H E R S I D E ?

Staging value
creation
The platform managers
arrange for the creation of
value units that will attract one
or more sets of users and
demonstrate the potential
benefits of participating in the
platform. E.g. Huffington Post
3 General Techniques
I N G E N E R A L , T H E S E S T R AT E G I E S I N V O LV E 3 T E C H N I Q U E S
Designing the
platform to
attract one set
of users
The platform is designed to provide
tools, products, services, or other
benefits that will attract one set of
users— either consumers or
producers.  
E.g. OpenTable
Simultaneous
on-boarding
To start, the platform creates
conditions such that value units
can be created that are relevant
to users even when the overall size
of the network is small.
E.g. Facebook

8 Launch Strategies
F O L L O W - T H E - R A B B I T
Open your existing business
to external suppliers
P I G G Y B A C K
Build off of
another platform
S E E D L I N G
Produce your own
value units first
M A R Q U E E
Initial members that will attract
others & encourage core interaction
S I N G L E - S I D E
Start with a one-sided
product business
P R O D U C E R  
E V A N G E L I S M
Create a platform for producers
that will bring their customers
T H E B I G B A N G
Attract both at once with
traditional marketing
M I C R O M A R K E T
Target a tiny market consisting
of members already engaging
in interactions
Source: Platform Revolution: How Networked
Markets Are Transforming the Economy

O P E N Y O U R E X I S T I N G B U S I N E S S T O E X T E R N A L S U P P L I E R S
Follow-the-rabbit
• Leveraged by many of the largest platform companies
• Network effects can be added without risking core business
• Avoids the chicken-and-egg problem entirely
• Requires careful consideration of how open to make the platform
• May introduce reputation risks
• Could require reset of consumer expectations
P R O S :
C O N S :
C A S E S T U D I E S :

B U I L D O F F O F A N O T H E R P L AT F O R M
Piggyback
• Gain access to content
that would make the
platform valuable
• Leverage an existing
network to grow virally
• Some platforms may have legal
restrictions on how its content is
repurposed
• There may be stiff competition from
others leveraging the platform for
the same purpose
P R O S : C O N S : C A S E S T U D Y:

P R O D U C E Y O U R O W N VA L U E U N I T S F I R S T
Seedling
• Cost effective solution
• Allows platform to be vetted
• Models good content for other producers
• Could be difﬁcult to produce enough content
• May generate ethical issues
P R O S :
C O N S :

I N C E N T I N I T I A L M E M B E R S T H AT W I L L AT T R A C T
O T H E R S I N WAY S T H AT W I L L E N C O U R A G E T H E
C O R E I N T E R A C T I O N
Marquee
• Generate interest on a large scale quickly
• Can crack a difﬁcult chick-and-egg problem
• Could be cost prohibitive
• Must be carefully designed to create intended effect
P R O S :
C O N S :

S TA R T W I T H A O N E - S I D E D P R O D U C T B U S I N E S S
Single-Side
• Enables traditional business launch strategies
• Allows for additional time to learn about the industry
• May calcify before becoming a platform
• Requires single-side value proposition
P R O S :
C O N S :

D E S I G N Y O U R P L AT F O R M T O AT T R A C T P R O D U C E R S
Producer Evangelism
• Incentivizes producers to market the platform on your behalf
• Allows invited consumers to become producers
• May require strong connection to inﬂuential producers
• Could be unworkable if there are no well-known producers in
the market
P R O S :
C O N S :

U S E T R A D I T I O N A L P U S H M A R K E T I N G S T R AT E G I E S
Big Bang
• Can get to market quickly
• Leverages core strengths
of traditional marketing
strategies and executives
• Difﬁcult to be heard over the noise
• Can be cost prohibitive
• Must attract a sufﬁcient number of
producers and consumers
P R O S : C O N S : C A S E S T U D Y:

TA R G E T A S M A L L , C O N C E N T R AT E D C O M M U N I T Y
Micromarket
• Enables marketing to be done in-person or
through existing networks
• May be time-consuming or cost-prohibitive if
there are no overlaps in micromarkets
P R O S :
C O N S :

Platforms
accelerate the
creation of value

$19 billion valuation
20X revenue
After 5 years
40X revenue
After 7 years
44X revenue
After 7 years
26X revenue
After 8 years

0
2.25
4.5
6.75
9
2
2.6
4.8
8.4
2X
4.8X
8.2X
ASSET  
BUILDERS
Develop physical assets
that they use to deliver
physical goods, like Ford
and Walmart
SERVICE  
PROVIDERS
Employ workers who
provide services to
customers, like Accenture
and UnitedHealthcare
TECHNOLOGY 
CREATORS
Develop and sell forms of
intellectual property, such as
software and biotechnology,
like Microsoft and Amgen
NETWORK
ORCHESTRATORS
Develop networks in which
people and companies
create value together— in
eﬀect, platform businesses
2.6X
Four Business Models
Source: HBR
W H AT I S Y O U R C H I E F E C O N O M I C A C T I V I T Y ?
PRICETOREVENUERATIO

Greater revenue and profitability

Platforms have
displaced
energy and
banking
Source: Visual Capitalist

1000
2000
3000
4000
1900 1920 1940 1960 1980 2000 2020 2040
IBM
SSEC,
BINAC
1
10 26
10 20
10 15
10,000,000,000
100,000
Hollerith
Tabulator
E L E C T R O M E C H A N I C A L R E L AY S VA C U U M T U B E S T R A N S I S TO R S I N T E G R AT E D C I R C U I T S
IBM
Tabulator
National
Ellis 3000
COMPUTERRANKINGS
BYCALCULATIONSPERSECONDPER$1,000
Zuse 2 & 3
Colossus
The electric computer
with 1,500 vacuum tubes
helped the British crack
German codes in WWIIAnalytical engine
Never fully built, Charles Babbage’s
invention was designed to solve
computational & logical problems
UNIVAC I
The first commercially
marketed computer used
to tabulate the US Census
occupied 943 cu. ft.
Power Mac G4
The first personal computer to
deliver more than 1 billion floating-
point operations per secondApple II
The first compact
personal machine
for $1,298
Nvidia
Tesla GPU
& PC
Mac
Pro
Dell
Dimension
8400
Pentium
II PCIBM
PC
Compac
Deskpro
386
Datamatic
1000
IBM
1620
DEC
PDP-10
Intellec-8
Surpasses
brainpower of
human in 2023 Surpasses
brainpower
of mouse
in 2015
2045 - Surpasses
brainpower of all
human combined
The exponential growth
in computing power
Source: Singularity University

The rate of value creation
is accelerating
Agricultural
Revolution
8,000
years
Industrial
Revolution
120
years
Light-
bulb
90
years
Moon
Landing
22
years
The
Internet
9
years
Human
genome
sequenced
And it’s because we have transitioned
from an economy based on
physical materials and assets
into an increasingly virtual economy
Source: Exponential Organizations: Why new organizations are ten
times better, faster, and cheaper than yours (and what to do about it)

We can help take you there
O U R C L I E N T S U C C E S S S T O R I E S
300% increase in sales*  
for First Crush Tastings
$80 millionin new revenue  
for NRG Home Solar
$40M in savings
for the City of Houston
(*without hiring)

Wondering how these ideas
could apply to your business?
Email Kevin at
kevin@praxent.com and
we’ll setup a free consult
Would you like to learn more?
Subscribe to our podcast about
platform innovation called:
 
(available on iTunes and
Stitcher Radio)
Sign up to attend our next webinars
(all at 12pm CST)
10/13: Launch Strategies
http://bit.ly/launch_strategies
10/27: Monetization
http://bit.ly/monetize_platform
11/10: Platform Design
http://bit.ly/platform_design
C O N TA C T U S L I S T E N I N J O I N U S L I V E

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