1.
VALUE CREATION
IN COMPANIES 2.0
> FREEMIUM,
> PLATFORM BASED BM
> TWO SIDED PBBM
> MULTISIDED PBBM
MICHAL GROMEK
RESEARCHER ON FINTECH & CROWDFUNDING
#SE.LINKEDIN.COM/IN/MGROMEK
STOCKHOLM
SCHOOL OF ECONOMICS
1320 ENTREPRENEURSHIP AND OPPORTUNITY
STOCKHOLM, MARCH 3RD 2017
PICTURE: HTTPS://WWW.FLICKR.COM/PHOTOS/DICK-SIJTSMA/

2.
"100 YEARS AGO THE
LIFE EXPECTANCY OF
FIRMS WAS 90 YEARS.
TODAY IT IS DOWN TO
10-15 YEARS "
SOURCE: HTTPS://WWW.YOUTUBE.COM/WATCH?V=DBRXOXJUV_C, SSE, MASTER IN BUSINESS AND MANAGEMENT,
ACCESSED 15TH OF FEBRUARY 2017

3.
STOCKHOLM
SCHOOL OF ECONOMICS
"HALF OF THE FORTUNE
500 COMPANIES HAVE
DISAPPEREAD
SINCE 2000"
PIERRE NANTERME, CEO ACCENTURE, 2016, BASED ON HTTP://WWW.SLIDESHARE.NET/ETEIGLAND/NEW-INDUSTRIAL-
REVOLUTION-AND-DIGITAL-BUSINESS-MODELS?QID=61CF5C5C-CE83-4E1E-BEBF-4571B011D7C4&V=&B=&FROM_SEARCH=2

4.
SOURCE: HTTP://WWW.VISUALCAPITALIST.COM/CHART-LARGEST-COMPANIES-MARKET-CAP-15-YEARS/
HTTP://WWW.SLIDESHARE.NET/ETEIGLAND/NEW-INDUSTRIAL-REVOLUTION-AND-DIGITAL-BUSINESS-MODELS?
QID=61CF5C5C-CE83-4E1E-BEBF-4571B011D7C4&V=&B=&FROM_SEARCH=2 (ACCESSED FEBRUARY 2017)
IN ORDER TO GROW, WALMART HAD TO BUILD MORE
STORES - AND FACEBOOK?

5.
MARKET CAP VALUATIONS
—INTERNET VS. PLATFORM
COMPANIES
STOCKHOLM
SCHOOL OF ECONOMICS
SOURCE: HTTPS://WWW.ACCENTURE.COM/FR-FR/_ACNMEDIA/PDF-2/ACCENTURE-PLATFORM-
ECONOMY-TECHNOLOGY-VISION-2016-FRANCE.PDF (ACCESSED 3RD OF MARCH)
1995
2015
Alibaba
Alphabet
Amazon.com
Apple
Baidu
eBay
Facebook
JD.com
LinkedIn
Netflix
Priceline.com
Salesforce
Tencent
Twitter
Yahoo!
Tech Companies and
Born-Digital Organizations
Apple
Axel Springer
Copart
Fox Communications
IAC/InterActive Corp
iLive
iStart Internet
Live Microsystems
Netcom Online
Netscape
PSINet
RentPath
Storage Computer Corp.
Wave Corporation
Web.com
Internet Companies
$2,560,902 $MM
$16,752 $MM
+15,187.1%
GROW OF
PLATFORM
COMPANIES
1995-2015

6.
ADAPTED FROM PARKER & VAN ALSTYNE, WITH CHOUDARY, 2016, AND UPDATED JANUARY 2017
HTTP://WWW.SLIDESHARE.NET/ETEIGLAND/NEW-INDUSTRIAL-REVOLUTION-AND-DIGITAL-BUSINESS-MODELS?
QID=61CF5C5C-CE83-4E1E-BEBF-4571B011D7C4&V=&B=&FROM_SEARCH=2 (ACCESSED FEBRUARY 2017)
VALUATION OF THE COMPANIES FROM THE (UPCOMING)
"FOURTH INDUSTRIAL REVOLUTION"

7.
ADAPTED FROM PARKER & VAN ALSTYNE, WITH CHOUDARY, 2016, AND UPDATED JANUARY 2017
HTTP://WWW.SLIDESHARE.NET/ETEIGLAND/NEW-INDUSTRIAL-REVOLUTION-AND-DIGITAL-BUSINESS-MODELS?
QID=61CF5C5C-CE83-4E1E-BEBF-4571B011D7C4&V=&B=&FROM_SEARCH=2 (ACCESSED FEBRUARY 2017)
POWER OF MULTISIDED PLATFORM
WORLD LARGEST ACCOMENDATION
PROVIDER OWNS NO PROPERTY
WORLD LARGEST TAXI COMPANY
OWNS NOT A SINGLE CAR
WORLD LARGEST RETAILER DOESN'T
OWN A WEARHOUSE
WORLD LARGEST MEDIA COMPANY
DOESN'T CREATE CONTENT

8.
CLICK HERE FOR MORE INFORMATION ABOUT
PIPES VS PLATFORM BUSINESS MODEL
TRADITIONAL PIPE BUSINESS MODEL
EXAMPLE: CAR
CO
N
SU
M
PTIO
N
D
ISTRIBU
TIO
N
LO
G
ISTICS
PRO
CESSIO
N
PRO
D
U
CTIO
N
IN
PU
T
ADAPTED FROM PARKER & VAN ALSTYNE 2016 FROM
HTTP://WWW.SLIDESHARE.NET/ETEIGLAND/NEW-INDUSTRIAL-REVOLUTION-AND-DIGITAL-BUSINESS-MODELS?
QID=61CF5C5C-CE83-4E1E-BEBF-4571B011D7C4&V=&B=&FROM_SEARCH=2 (ACCESSED FEBRUARY 2017)
SELLER OF PRODUCTS AND / OR SERVICES
SMACIT TO MAKE LINEAR PROCESS EFFICIENT
SUPPLY-SIDE ECONOMIES OF SCALE
MANAGER OF THE FIRM WITH DISTINCT BOUNDARIES
FIRST MOVER ADVANTAGE
OWNERSHIP OF RESOURCES

9.
STOCKHOLM
SCHOOL OF ECONOMICS
SMACITS = Social M = Mobile A = Analytics C = Cloud IT = IoT
TRADITIONAL PIPE
BUSINESS MODEL
MULTI & TWO SIDED
PLATFORM MODEL
ADAPTED FROM PARKER & VAN ALSTYNE 2016 FROM
HTTP://WWW.SLIDESHARE.NET/ETEIGLAND/NEW-INDUSTRIAL-REVOLUTION-AND-DIGITAL-BUSINESS-MODELS?
QID=61CF5C5C-CE83-4E1E-BEBF-4571B011D7C4&V=&B=&FROM_SEARCH=2 (ACCESSED FEBRUARY 2017)

10.
STOCKHOLM
SCHOOL OF ECONOMICS
UNICORNS TEND TO BE PLATFORMS
(115 UNICORNS)
SOURCE: P. EVANS, CGE; CB INSIGHTS, CAPITAL IQ, CRUNCHBASE, 2015
NON PLATFORN
30%
PLATFORM
70%

11.
STOCKHOLM
SCHOOL OF ECONOMICS
PLATFORMS BY TYPE

12.
CLICK HERE FOR MORE INFORMATION ABOUT
PIPES VS PLATFORM BUSINESS MODEL
TWO SIDED & MULTISIDED PLATFORM BUSINESS MODEL
CU
STO
M
ERS
PRO
D
U
CERS
ADAPTED FROM PARKER & VAN ALSTYNE 2016 FROM
HTTP://WWW.SLIDESHARE.NET/ETEIGLAND/NEW-INDUSTRIAL-REVOLUTION-AND-DIGITAL-BUSINESS-MODELS?
QID=61CF5C5C-CE83-4E1E-BEBF-4571B011D7C4&V=&B=&FROM_SEARCH=2 (ACCESSED FEBRUARY 2017)
DESTINATION FOR SOLVING CUSTOMER NEEDS
SMACIT TO CO-CREATE VALUE
DEMAND-SIDE ECONOMIES OF SCALE (NETWORK EFFECTS)
LEADER OF AN ECOSYSTEM WITH FUZZY BOUNDARIES
FIRST TO SCALE ADVANTAGE
ACCESS TO RESOURCES
PLATFORM

13.
PLATFORM BASED BUSINESS MODEL
STOCKHOLM
SCHOOL OF ECONOMICS
EXAMPLE.
PHILIPS HEALTH SUITE, PARTNERED UP SALESFORCE,
AMAZON AWS, IOT, AND ALI CLOUD.
ALLOWS PERFORMING PATIENT MANAGEMENT, DATA
COLLECTION, AND MANAGEMENT OF HOME DEVICES.
SOURCE: HTTP://WWW.USA.PHILIPS.COM/HEALTHCARE/INNOVATION/ABOUT-HEALTH-SUITE (ACCESSED MARCH 3RD
2017)

14.
PLATFORM BASED BUSINESS MODEL
STOCKHOLM
SCHOOL OF ECONOMICS
EXAMPLE PRODUCT
PLEASE START WATCHING AT 2:02 MIN
SOURCE: HTTPS://WWW.YOUTUBE.COM/WATCH?V=8QPUUC6GH4G (ACCESSED 3RD.03.2017)

15.
STOCKHOLM
SCHOOL OF ECONOMICS
PICTURE: HTTPS://WWW.FLICKR.COM/PHOTOS/DICK-SIJTSMA/
TWO SIDED PLATFORM
SOURCE:2016 PARKER & VAN ALSTYNE, WITH CHOUDARY – LICENSED
UNDER CREATIVE COMMONS ATTRIBUTION-SHAREALIKE 4.0
INTERNATIONAL (CC BY-SA 4.0).
Phone Callers
Uber Drivers
eBay Sellers
Xbox Developers
Amex Merchants
Aga Khan Doctors
YouTube Videographers
AirBnb Rooms
Tesla Charge Stations
Mechanical Turk Laborers
LinkedIn Employers
Upwork Projects
Android Developers
Phone Callees
Uber Riders
eBay Buyers
Xbox Gamers
Amex CardHolders
Aga Khan Patients
YouTube Viewers
AirBnb Renters
Tesla Car Drivers
Mechanical Turk Jobs
LinkedIn Employees
Upwork Freelancers
Android Users

16.
HTTP://WWW.SLIDESHARE.NET/MARKETREVOLUTION/SHSU-SHARING-ECONOMY-COLLABORATIVE-CONSUMPTION FROM
HTTP://WWW.SLIDESHARE.NET/ETEIGLAND/NEW-INDUSTRIAL-REVOLUTION-AND-DIGITAL-BUSINESS-MODELS?
QID=61CF5C5C-CE83-4E1E-BEBF-4571B011D7C4&V=&B=&FROM_SEARCH=2 (ACCESSED FEBRUARY 2017)
POWER OF MULTISIDED PLATFORM

17.
STOCKHOLM
SCHOOL OF ECONOMICS
USERS ARE CREATING
VALUE FOR OTHER USERS.
SOURCE: CAÑIGUERAL “PLATFORMS ARE EATING THE WORLD” SLIDESHARE.NET

18.
CLICK HERE FOR MORE INFORMATION ABOUT
PIPES VS PLATFORM BUSINESS MODEL
PLATFORM LEVERAGE NETWORK EFFECTS >>>
HTTP://WWW.SLIDESHARE.NET/ETEIGLAND/NEW-INDUSTRIAL-REVOLUTION-AND-DIGITAL-BUSINESS-MODELS?
QID=61CF5C5C-CE83-4E1E-BEBF-4571B011D7C4&V=&B=&FROM_SEARCH=2 (ACCESSED FEBRUARY 2017)
METCALFE’S LAW:
MORE USERS = MORE VALUE = MORE USERS…
2 PHONES
12 CONNECTIONS
5 PHONES 12 PHONES
60 CONNECTIONS

19.
STOCKHOLM
SCHOOL OF ECONOMICS
PICTURE: HTTPS://WWW.FLICKR.COM/PHOTOS/DICK-SIJTSMA/
TAKE ONE MINUTE AND
LIST FIVE POINTS WHY
WHAT MIGHT NOT WORK
WITHIN THE PLATFORM
BUSINESS MODEL?

20.
STOCKHOLM
SCHOOL OF ECONOMICS
PICTURE: HTTPS://WWW.FLICKR.COM/PHOTOS/DICK-SIJTSMA/
PLATFORM
BASED MODEL
ENOUGH RESOURCES ON THE SUPPLY SIDE.
(UBER PL DEMAND 3X HIGHER THAN
SUPPLY)
CUSTOMER SERVICE THAT FITS THE
CULTURE OF CUSTOMERS (DIDI VS. UBER)
LIMITATION OF BAD QUALITY PROVIDERS
ON THE PLATFORM (UBER'S 4.5 RATING)
CHICKEN EGG PROBLEM
WINNER TAKES ALL MARKET

21.
STOCKHOLM
SCHOOL OF ECONOMICS
PICTURE: HTTPS://WWW.FLICKR.COM/PHOTOS/DICK-SIJTSMA/
SOURCE: PROF KARIM LAKHANI, OPEN INNOVATION HOW CAN I USE THE CROWD, ESBRI 26.02.106
FREEMIUM BUSINESS MODEL
EXAMPLE:
CHARACTERISTCS:
YOUR COST OF ADDING ONE ADDITIONAL USER IS MARGINAL OR
ZERO. (ECONOMY OF SCALE)
YOU HAVE OR WILL SIGNIFICANT TRACTIONS OF USERS.
FREEMIUM IS NOT ONLY FOR IT SERVICES, BUT MUSIC (SPOTIFY),
ANALYTICS (STATISTA), PRESENTATIONS, VIDEOS, ....
ONLY 8% OF THE USERS
BUY PREMIUM SERVICES

22.
FREEMIUM EXAMPLE:
STOCKHOLM
SCHOOL OF ECONOMICS
TOONIA COLOURBOOK
1 million downloads
doubling of price
paid
no traction
SINCE 2013:
2 MILLION DOWNLOADS (40K IN FEBRUARY 2017)
PRICE 9,99 EURO
BETTER RETENTIONS
BIG AMOUNT OF PROFIT ON THE "PACKS"
SOURCE: PARTLY FROM, HTTPS://WWW.SLIDESHARE.NET/JESSICATAMS1/RUNNING-A-
FREEMIUM-BUSINESS-MODEL-IN-THE-KIDS-CATEGORY-GORAN-IVASIC?
QID=16B1E5D5-50D7-41AC-99DD-ED4CD69FEBAE&V=&B=&FROM_SEARCH=4
(ACCESSED MARCH 2ND)
launch of free app

23.
FREEMIUM EXAMPLE:
STOCKHOLM
SCHOOL OF ECONOMICS
TOONIA COLOURBOOK
THE DEVELOPERS DECIDED TO CREATE AN ENTIRE PACKAGE OF
SUBSIDIARY BRANDS
SOURCE:
HTTPS://SENSORTOWER.COM/
ACCESSED MARCH 2017

24.
STOCKHOLM
SCHOOL OF ECONOMICS
PICTURE: HTTPS://WWW.FLICKR.COM/PHOTOS/DICK-SIJTSMA/
SOURCE: HTTP://WWW.BUSINESSINSIDER.COM/PROBLEMS-WITH-FREEMIUM-MODEL-2013-5?R=US&IR=T&IR=T
(ACCESSED 2ND OF MARCH 2017)
FREEMIUM
“IT CAN WORK WONDERFULLY OF COURSE,
BUT USUALLY IT CRUSHES AND DESTROYS
COMPANIES, NOT ONLY BECAUSE IT …. “

25.
STOCKHOLM
SCHOOL OF ECONOMICS
PICTURE: HTTPS://WWW.FLICKR.COM/PHOTOS/DICK-SIJTSMA/
SOURCE: HTTP://WWW.BOTHSIDESOFTHETABLE.COM/2012/05/23/ITS-MORNING-IN-VENTURE-CAPITAL/ (ACCESSED 1ST
OF FEBRUARY)
ADVANTAGES OF FREEMIUM
CONVERSATION. CUSTOMER SERVICE.
MARKETING EXPENSES:
EASY TO UPSET
STATS FROM INVESTORS
LOWER AND LOWER COSTS TO START
BIG USERBASE FOR USER ANALYTICS.
NOT USING THE COMPETITION.

26.
STOCKHOLM
SCHOOL OF ECONOMICS
PICTURE: HTTPS://WWW.FLICKR.COM/PHOTOS/DICK-SIJTSMA/
TAKE ONE MINUTE AND
LIST FIVE POINTS WHY
WHAT MIGHT NOT WORK
WITHIN THE FREEMIUM
BUSINESS MODEL?

27.
STOCKHOLM
SCHOOL OF ECONOMICS
PICTURE: HTTPS://WWW.FLICKR.COM/PHOTOS/DICK-SIJTSMA/
DISCUSS YOUR
ARGUMENT WITHIN YOUR
GROUP - IF FREEMIUM IS A
SUITABLE BUSINESS
MODEL FOR YOUR
STARTUP. (MIN. ONE PRO
AND ONE CONT
ARGUMENT?) YOU WILL BE
ASKED TO PRESENT.
3 MINUTES.

28.
STOCKHOLM
SCHOOL OF ECONOMICS
PICTURE: HTTPS://WWW.FLICKR.COM/PHOTOS/DICK-SIJTSMA/
SOURCE: 4% + HTTPS://WWW.FORBES.COM/SITES/BENKEPES/2014/02/24/CONFIRMATION-OF-DROPBOXS-MONSTER-
RAISE/#43B12BD17678 (ACCESSED 2ND OF MARCH 2017), 1%
+ HTTPS://WWW.FORBES.COM/SITES/VICTORIABARRET/2012/11/13/DROPBOX-HITS-100-MILLION-USERS-SAYS-DREW-
HOUSTON/&REFURL=&REFERRER= (ACCESSED WND OF MARCH 2017)
CHALLENGES OF FREEMIUM
CONVERSATION. CUSTOMER SERVICE.
MARKETING EXPENSES:
USERS DON’T CONVERT TO PAID USERS. DROPBOX HAS A RATE OF 1
PAYING USERS PER 25 FREE USERS. (OR 1% AS THE NUMBERS ARE
DISPUTED)
FREEMIUM USERS OUTNUMBER THE AMOUNT OF PAID USERS 100-TO-1 IN
SUPPORT FORUMS AND MIGHT DROWN YOUR CUSTOMER AND TECH
SERVICE. COMPANIES STATE: “CUSTOMER SERVICE IS NOT INCLUDED IN
THE FREE TIER, BUT CAN YOU REALLY IGNORE YOUR CUSTOMERS?”.
AS ONLINE MARKETING IS BEING BASED ON CTR AND AFFILIATE
MARKETING RELIES ON USER CONVERSATION IT THE ONLINE MARKETING
COSTS HAS TO INCREASE BY 96 TIMES TO RECEIVE FOUR PAYING
CUSTOMERS. (DROPBOX EXAMPLE). VIRAL PRODUCT OR YOU CAN’T
AFFORD TO ADVERTISE.

29.
STOCKHOLM
SCHOOL OF ECONOMICS
1. MAKE SURE TO BE VERY CLEAR ABOUT WHAT
IS AND IS NOT INCLUDED IN FREEMIUM.
2. CALCULATE THAT ONLY ONE OUT OF 100
USERS MIGHT PAY FOR YOUR SERVICE.
3. CREATE LEAN CUSTOMER SUPPORT TOOLS,
SEE AIRBNB OR FACEBOOK AS INSPIRATIONS.
4. THINK ABOUT DIFFERENT PREMIUM
PACKAGES CONNECTED TO SPECIFIC NEEDS.
(TONNIA DRAW BOOK EXAMPLES)
5. MAKE SURE, THAT USERS UNDERSTAND THAT
THEY USE A SERVICE THAT HAS BEEN CREATED
BY SOMEBODY AND IS NOT MECHANICAL.
6. PLAN YOU MARKETING COSTS CLEARLY AND
LOOK FOR UNIQUE PR STRATEGIES TO RECEIVE
ATTENTION.
7. PAY CLOSE ATTENTION TO ONLINE
MARKETING COSTS, (ADVERBS, SEO, AFFILIATE)
AND BUILD IN BUDGET BORDERS. THE
EXPENSES MIGHT RUIN THE BUDGET.
RECOMMENDATION
FREEMIUM

30.
STOCKHOLM
SCHOOL OF ECONOMICS
SLACK, A REAL-TIME MESSAGING, ARCHIVING
AND SEARCH FOR THE WORK PLACE, IS
OFFERING ITS USERS $100 TO ANSWER 6
QUESTIONS. I’LL SAY IT AGAIN, A NEW
COMPANY THAT HAS MADE IT TO A 1.1 BILLION
DOLLAR VALUATION WITH ITS FREE PRODUCT
BEING IN THE MARKET LESS THAN A YEAR, IS
PAYING USERS FOR INFORMATION.
LIFEHACK
FREEMIUM
SOURCE: HTTP://WWW.GEEKTIME.COM/2014/11/25/WHY-A-FREEMIUM-PREMIUM-
BUSINESS-MODEL-DOESNT-WORK (ACCESSED 1ST MARCH 2017(
DO SOMETHING UNUSUAL TO GET TRACTION
WHAT IS CHEAPER THAN TO USE TRADITIONAL
ONLINE MARKETING TOOLS.