Idea in Brief
The Challenge
Digital platforms are attractive businesses because they create significant value and network effects protect competitive advantage. But they face considerable start-up challenges.
Why It Happens
Every platform is empty at the outset. And most require multiple types of users. It’s not enough that many people want to book taxis by smartphone, for instance. Drivers must also be willing to accept smartphone bookings.
The Solution
To launch a platform successfully, consider quickly attracting a large group of users, offering features that provide value even if few users sign up, establishing credibility, and ensuring that the platform works with legacy systems.
For online platform businesses, customer mobilization challenges loom large. The most successful platforms connect two or more types of users—buyers and sellers on a shopping portal, travelers and hotel operators on a booking service—and a strong launch usually requires convincing early users to join even before the platform reaches scale.
