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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 ...
info@praxent.com @PraxentSoftware
SERVICE ENABLEMENT
& DIFFERENTIATION
VIA DATA
SAAS
PRODUCT DESIGN &
DEVELOPMENT
PLATFORM...
info@praxent.com @PraxentSoftware
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...
info@praxent.com @PraxentSoftware
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 ...
VS
VS
Founded 1927
200,000 employees
$26.4B market cap
Founded 2008
5,000 employees
Est. $24B market cap
info@praxent.com @PraxentSoftware
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 ...
VS
Founded 1916
116,000 employees
$53B market cap
Founded 2009
7,000 employees
$66B market cap
VS
info@praxent.com @PraxentSoftware
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...
info@praxent.com @PraxentSoftware
Platforms
Pipeline
VS
creates value by orchestrating interactions
between external produ...
info@praxent.com @PraxentSoftware
There are three
essential ingredients:
INFORMATION
ENABLED
LEVERAGED OUTSIDE
ASSETS & TA...
info@praxent.com @PraxentSoftware
Information enabled:
Improves experience
INFORMATION ENABLED MEANS:

• Smarter products
...
info@praxent.com @PraxentSoftware
Information enabled:
Improves experience
info@praxent.com @PraxentSoftware
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...
info@praxent.com @PraxentSoftware
How can information enabling your product
or service create value for your customers?
Ho...
info@praxent.com @PraxentSoftware
VS
Owns 5,700 properties
in over 110 countries

T H E I R F O C U S :
Scouting, acquirin...
info@praxent.com @PraxentSoftware
51% of Uber drivers were not
driving professionally
BENEFITS FOR ECONOMY:

• Supply of r...
info@praxent.com @PraxentSoftware
What dormant assets or talents do your
customers, employees, partners, suppliers,
distri...
info@praxent.com @PraxentSoftware
GOALS:

• He/she enables you to leverage
their social network of relationships
because y...
info@praxent.com @PraxentSoftware
Airplane sharing app?
How could you entice a customer to
share his/her network with you ...
info@praxent.com @PraxentSoftware
What’s enabling the shift?
Source: Exponential Organizations
UBIQUITOUS
INTERNET
CONNECT...
info@praxent.com @PraxentSoftware
How to launch
a platform
info@praxent.com @PraxentSoftware
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...
info@praxent.com @PraxentSoftware
Staging value
creation
The platform managers
arrange for the creation of
value units tha...
info@praxent.com @PraxentSoftware
8 Launch Strategies
F O L L O W - T H E - R A B B I T
Open your existing business
to ext...
info@praxent.com @PraxentSoftware
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
Fo...
info@praxent.com @PraxentSoftware
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...
info@praxent.com @PraxentSoftware
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 solut...
info@praxent.com @PraxentSoftware
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 ...
info@praxent.com @PraxentSoftware
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...
info@praxent.com @PraxentSoftware
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 Evangelis...
info@praxent.com @PraxentSoftware
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 ...
info@praxent.com @PraxentSoftware
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 ...
info@praxent.com @PraxentSoftware
Platforms
accelerate the
creation of value
info@praxent.com @PraxentSoftware
$19 billion valuation
20X revenue
After 5 years
$10 billion valuation
40X revenue
After ...
info@praxent.com @PraxentSoftware
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
th...
info@praxent.com @PraxentSoftware
Greater revenue and profitability
info@praxent.com @PraxentSoftware
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
Hol...
info@praxent.com @PraxentSoftware
The rate of value creation
is accelerating
Agricultural
Revolution
8,000
years
Industria...
info@praxent.com @PraxentSoftware
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 i...
info@praxent.com @PraxentSoftware
Wondering how these ideas
could apply to your business?
Email Kevin at
kevin@praxent.com...
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Launching a hyper scalable platform business by praxent

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We are all familiar at this point of industries that have been upended by technology platforms. Whether it is Wikipedia relegating encyclopedias to the history books, Netflix taking over the home entertainment industry, or Uber disrupting transportation, traditional ways of serving customers are rapidly giving way to next generation business models.

Successfully launching a hyper-scalable platform business, however, presents unique challenges relative to traditional product and service businesses. A platform is only valuable to users if it has a critical mass of adoption. For example, riders would not see value in the Uber app without a large number of drivers and drivers will not be motivated to sign up until there are a significant number of riders. This presents a difficult "chicken and egg" problem.

This deck presents eight proven launch strategies used by hundreds of successful platform businesses to begin the virtuous cycle of platform adoption and value creation. In addition, the presentation clarifies the key differences between a traditional product business and a platform business, including case studies of organizations that have successfully pivoted from one to the other.

Launching a hyper scalable platform business by praxent

  1. 1. 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
  2. 2. 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
  3. 3. info@praxent.com @PraxentSoftware 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
  4. 4. info@praxent.com @PraxentSoftware 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
  5. 5. VS
  6. 6. VS Founded 1927 200,000 employees $26.4B market cap Founded 2008 5,000 employees Est. $24B market cap
  7. 7. info@praxent.com @PraxentSoftware 0 7.5 15 22.5 30 5 10 20 40 60 90 T I M E ( I N Y E A R S ) Same valuation in one-tenth the time VALUATIONINBILLION$
  8. 8. VS
  9. 9. Founded 1916 116,000 employees $53B market cap Founded 2009 7,000 employees $66B market cap VS
  10. 10. info@praxent.com @PraxentSoftware 0 17.5 35 52.5 70 3 6 12 24 48 100 T I M E ( I N Y E A R S ) Same valuation in one-tenth the time VALUATIONINBILLION$
  11. 11. info@praxent.com @PraxentSoftware 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
  12. 12. info@praxent.com @PraxentSoftware There are three essential ingredients: INFORMATION ENABLED LEVERAGED OUTSIDE ASSETS & TALENTS Source: Exponential Organizations SOCIAL SHARING 
 & FEEDBACK
  13. 13. info@praxent.com @PraxentSoftware 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
  14. 14. info@praxent.com @PraxentSoftware Information enabled: Improves experience
  15. 15. info@praxent.com @PraxentSoftware 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
  16. 16. info@praxent.com @PraxentSoftware 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 :
  17. 17. info@praxent.com @PraxentSoftware 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.( )
  18. 18. info@praxent.com @PraxentSoftware 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
  19. 19. info@praxent.com @PraxentSoftware What dormant assets or talents do your customers, employees, partners, suppliers, distributors, and investors own and how could they be leveraged? A S K Y O U R S E L F : 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 :
  20. 20. info@praxent.com @PraxentSoftware 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
  21. 21. info@praxent.com @PraxentSoftware Airplane sharing app? How could you entice a customer to share his/her network with you by providing a benefit for doing so? 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 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 :
  22. 22. info@praxent.com @PraxentSoftware 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
  23. 23. info@praxent.com @PraxentSoftware How to launch a platform
  24. 24. info@praxent.com @PraxentSoftware 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 ?
  25. 25. info@praxent.com @PraxentSoftware 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
  26. 26. info@praxent.com @PraxentSoftware 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
  27. 27. info@praxent.com @PraxentSoftware 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 :
  28. 28. info@praxent.com @PraxentSoftware 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:
  29. 29. info@praxent.com @PraxentSoftware 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 : C A S E S T U D I E S :
  30. 30. info@praxent.com @PraxentSoftware 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 : C A S E S T U D I E S :
  31. 31. info@praxent.com @PraxentSoftware 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 : C A S E S T U D I E S :
  32. 32. info@praxent.com @PraxentSoftware 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 : C A S E S T U D I E S :
  33. 33. info@praxent.com @PraxentSoftware 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:
  34. 34. info@praxent.com @PraxentSoftware 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 : C A S E S T U D I E S :
  35. 35. info@praxent.com @PraxentSoftware Platforms accelerate the creation of value
  36. 36. info@praxent.com @PraxentSoftware $19 billion valuation 20X revenue After 5 years $10 billion valuation 40X revenue After 7 years $66 billion valuation 44X revenue After 7 years $24 billion valuation 26X revenue After 8 years
  37. 37. info@praxent.com @PraxentSoftware 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
  38. 38. info@praxent.com @PraxentSoftware Greater revenue and profitability
  39. 39. info@praxent.com @PraxentSoftware Platforms have displaced energy and banking Source: Visual Capitalist
  40. 40. 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
  41. 41. info@praxent.com @PraxentSoftware 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)
  42. 42. info@praxent.com @PraxentSoftware 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)
  43. 43. info@praxent.com @PraxentSoftware 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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