While ideating, one of the most important question one should ask is, if they wish to chose a pipe or platform business model.
The platform business model existed earlier too, but if it was not for Internet, most of us would have never heard of the model.
Pipe Vs Platform
In Pipe business model, value is produced upstream and consumed downstream, which means, a product is created and sold to the consumer. Its simple.
In Platform business model, value is just not created and pushed, but allows users to create and consumer value. For example, YouTube. YouTube allows users to create content, use their platform to monetise, takes a cut of the revenue and also allows users to consume the content.
Challenges of Platform model
There are 2 key challenges if you wish to build a platform business model – How to enable users to create value and How to bring both creators and users on-board. It’s not easy, its a tightrope walk.
Choosing the right business model needs research and the end goal of the business.
Today, consumers want to have a one-stop place for everything. Bringing everyone together and keeping them together is one of the biggest challenges.
Let me give you my personal example. I was exploring various tools to have all my calendars, and tasks at one place. I do not want to use multiple apps (like Todoist, Apple Reminders, Google Calendar and Microsoft Calendar). I found few tools like Akiflow. Its a fantastic idea which also automatically creates some time for you to focus by automatically rearranging your activities in the day. The challenge is, it integrates with Google but for Micrisoft I need to use another tool IFTTT. My $15 / Month now went up to $25 because I need to subscribe to IFTTT too. Another challenge is if i create a reminder in Apple reminders, then I need to use Zapier, it becuase another additional expense and another integration. Even though Akiflow is an amazing tool, I deleted because of the complexity of pricing and integrations.
You see what I am saying? It’s not easy and I do understand the challenges of Akiflow, but it will take a while for them to figure out a solution to bring everything together.
So, as an entrepreneur, demonstrate a true value of your product or service. Choose the model which benefits the consumer and you will have a winner.