Platform Strategy (2022) Principles for Achieving Exponential Growth

1. Platform
Strategy
How companies can unlock new revenue
streams and transform beyond linear
growth to unlock their exponential potential
Layne Sadler
Compiled synopsis of these & other works

2. Tap into External Assets of Production
■ Airbnb owns no hotels & employs no hospitality workers.
■ Uber owns no cars & [used to] employ no drivers.
■ Social media platforms employ no content producers.
■ eBay owns no product manufacturing plants.
■ Python employs no package developers.
Airbnb Revenue ($ millions)

3. Relying on Internal Assets of Production Limits a Company to Linear Growth
Typical Product Lifecycle
■ Employees (FTE costs)
■ Equipment (depreciation)
■ Finance (debt)
■ IP (legal)

4. ■ Uber is just a digital taxi dispatch system.
■ The merchant class got rich as middlemen.
Connect Consumers to Producers via a Platform
Consumer Consumer Consumer Consumer
Producer Producer Producer Producer
Platform
75:25
revenue share

5. Exponential Value of the Network Effect
■ Quadratic Growth - with each person that joins the network, the marginal number of connections formed
between participants, and therefore the value of the network, increases quadratically.
■ Beware, this phenomenon also works in reverse (Blackberry Messenger, MySpace) aka decreases quadratically.
■ Incumbent network provides a significant barrier of market entry for would-be competitors.
➢ First-to-market, winner-takes-all (AT&T, Edison Electric, Facebook).

6. Investing in Producer Growth to Capture Long Tail Revenue & Decrease Marginal Costs
Driver Growth at Uber
Economies
of Scale
Cost
per
Producer
Longtail
Production

7. Software Platform Components
Marketplace
Allow consumers to
discover, review, &
purchase apps.
APIs & SDKs
Enable developers to
interact with
platform services.
Multi-Tenant Hosting
Reduce cost &
complexity to both
developers & consumers
by sharing infrastructure.
Platform Services
User mgmt, metering,
monitoring, batch jobs,
security, payments,
& databases.

8. Harness the Python Ecosystem
Market Gap: Python is at peak monopoly
status. Yet there is no dominant platform
player for Python user interfaces (aka apps).

9. Connect Apps to Form Workflows
The output of one app becomes the input of another app. The enables chains apps together to
form workflows. This enabling, connective technology reinforces the network effect.
2025 Update: This approach is ideally suited to capitalize on vibe coding and agentic AI.
App #1
Generate Image
App#2
Crop Image
Data
Input
Data
Output
Encourage & facilitate
collaboration on the platform

10. The Innovator’s Dilemma
The market entrants (Streamlit) start as “good enough” with an easy-to-adopt
product before disruptively moving up market. Don’t get disrupted.

11. Allocating R&D Resources to Enable a Transformation
Platform
Invest revenue from reliable “cash cows”
to fund R&D of high growth “stars”
Enterprise
Licensing
Consulting
IBM, the king of consulting, transitioned
from services to cloud platform