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How to become a platform business?

E22 with Satya Singh, Director of Product Management at @Expedia Group, who previously led product, data strategy and analytics in Discovery Inc, Chevron 🚀. Platform business model from a product management perspective, why some platforms succeed where others don’t, how platforms will evolve and how to think about data in platform play.

- Satya, I'm very excited to speak with you because a lot of companies and experts speak about platforms and ecosystems, but not that many people actually had experience of building them. Can you tell a little bit more about your experience in building platforms, maybe explaining what is the platform strategy and what's been your experience in this.

- I'll probably go back a few years when I started my shoe business. It was a fashion startup and I wanted to build a brand in the UK for baby boomers and folks who don't get stylish shoes. So I didn't go after the millennial market. Then I quickly realized as working with the likes of Alibaba and few other companies, who are platforms in the fashion business, that their strategy is to bring more value to the ecosystem than the company itself. And that's how I learned about the platform business model. So if you think about this being a dimension, a plane if you will, I was a point in that plane. The lines could be companies who connect these fashion retailers, so the website which connects different fashion retailers and the plane was Alibaba, which was essentially facilitating different points, different brands and different lines within that plane. And that's what fascinated me to work in a platform or a digital ecosystem. And that's where I joined Discovery Channel and worked on the subscription business of direct to consumer propositions and how do you attract producers and consumers. So producers being people who produce content on your platform or producers who bring value to your platform, and consumers being subscribers who then subscribe to that platform. So the more producers you have, the more consumers you get and the flywheel continues. And that's where I thought that every product would eventually become a platform at some point. And if you see the last decade how the iPod started, when Steve Jobs inaugurated iPod. To me iPod was a product, it was a brand, but then when the App Store came in, that was more of a platform. And I thought that every company was slowly pivoting, not every company but every tech company more or less wants to move away from just being a brand. Unless you have a really good value proposition and you don't see that being saturated, there are obviously ways to become platforms. So my last few years of career has been in platforms as a product manager, really thinking through what metrics drive both on the producer side and on the consumer side.

- I think what is interesting about you is that you've been working across different industries, such as oil and gas, media and so on. Do you think platform play is just focused on digital first companies or you think other companies could be actually also thinking about that?

- I would say every company can think about it. I think the traditional business model has been built in a more centralized fashion, where you think of a company - you think of your brand. And then as companies such as Walmart or other retail industries identified different partnerships where they could co-create values and build more trust by inviting more players into the retail sector, people started thinking of platforms. So I think tech has always been at the forefront of building the infrastructure, building the connections. But that doesn't mean that the big retail companies, such as Walmart or the big car manufacturer, such as Ford or other companies can't think along the lines of Tesla or along the lines of other companies who were trying to be a platform right from the beginning. So I think every industry can play that role, but it depends if you want to play that role. So when I worked in oil and gas, when I worked in media, when I worked in the fashion startup, I've seen a common theme of challenges. The challenges being that if you lock your company and not let partners enter your ecosystem, you don't create network effects and I think social media companies realize this right from the beginning. Some of the platform companies such as Uber taps onto it, App Store taps onto it. So all of those network effects, if you want to tap into the strategic partnership in the old age and how Walmart used to partner with big retailers. I think if you tap into that and transform your non-tech company into a platform, I think you can drive those network effects. So working in oil & gas I've seen that happening, working in the media sector I've seen that happening. And I think there's a joke or there's a meme around somewhere, which says every company would end up becoming a fintech platform company, because ultimately you want to drive transactions and you want to have producers and consumers. I don't know if that joke is true, but I can totally see why you want to drive towards transactions and why you want to drive towards platform.

- What I think is tricky in this platform play is how do you launch this flywheel? How do you open up your product if you start from a product play? So what is a good example that you've seen of companies who actually open up and transform themselves into platforms. How do they launch this network effect and bring initial adopters into the platform?

- That's a loaded question, so i'll start from the first part of the question. One is the metrics, so how do you measure and how do you understand if you're becoming a true platform. I'm a product manager so I always think of the success metrics. And the success metrics for me are your customers, are not just consumers of your product, but also the producers of your product. So when a typical product company makes that pivot towards becoming a platform, they think of not just the customers, but they think of developers, consumers, people who contribute towards our infrastructure. And that shift helps them to measure how the producers are bringing valuable content towards consumers. And you can talk about YouTube, Twitch even Tick Tock and how some of these companies knew that from the beginning. But there are other companies who didn't know this from the beginning and wanted to get into the video player business, but totally thought that as a product rather than as a platform. And I think that shift is important if you can measure the contribution, which a producer has, measure the contribution of consumers. What value units do they provide, whether that's a feed, whether that's a YouTube video, whether that's a social feed, and what filters does that ecosystem apply on top of it. For example, Twitter has certain filters, Facebook feed has certain filters. So as a product manager I've always thought through what those metrics are if you want to move from a traditional product towards a platform. There are many companies or many examples who are currently in that transition, we'll probably know in next five to ten years whether they've been successful or not. But I think in the travel sector, in the media sector there are companies who are moving away from that product model and opening the doors because they've seen what Facebook has done, they've seen what Netflix has done, and trying to measure not just consumers, but what value units producers bring in their ecosystem.

- As a product manager, what are the product questions that you're asking yourself or others should be asking themselves when they think about platform play?

- It depends what sector you're in, but I think one of the questions, which you absolutely have to ask is the segmentation or your product- market-fit. So where are you entering the market and what segment are you addressing? And I think if you try and address everything at once, it's really hard to build the platform business. So I would ask, who's the customer? For example, if Uber was starting tomorrow and they were building the platform they built so far, who are the customers they're going after? Are they going after customers in San Francisco who can pay a little bit more than what they pay taxis? And then how do you scale from there for the rest of the customers? So I think entering the market is probably the biggest question, because the starting platform has a lot of friction. Who do you build for? Do you build for producers or do you build for consumers, or do you build for both? I think to me the most fascinating or the difficult part is entering the market, so you have to find one niche whether that's going after. And I think Deliveroo was another example. They went after a certain cohort of customers in central London when they started. They didn't go after every producer and every consumer. And then from there they scaled. They had the tech capability to scale after they successfully entered the market. So to me that is the most important point while building a platform.

- Let me follow up on this, because there are some companies in Asia, such as Grab in Singapore, WeChat, who take one or multiple steps further, comparing this Uber or Deliveroo. And they build a super app, you know a platform on top of a platform. Why do you think they're so successful and why do you think other companies are not able to replicate them so far?

- I don't know if you've read the book called "Smart business", but I love that book. And it talks about the Southeast Asia and how Alibaba and few other players have built platforms over platforms and have been super successful. I think the two primary reasons, one is it's easier for them to disrupt, it's a new ecosystem and they don't have these old strategic alliances or partnerships. It's really hard to disrupt old alliances. So one example I've seen is moving from the UK to US, the fintech sector in the US is not as advanced as probably what I've seen in the UK or even in India. You could buy a vegetable using your phone in India and I have to still pay checks for my rent in the US. It's really hard to change the strategic alliances which companies have built over the last few decades. I think that's definitely one reason so Southeast Asia does not have those barriers. The other one is, especially in the West, I've seen traditional models being applied, but in Southeast Asia people don't apply traditional models, they just try to go after network effects. The population's there, the flywheel is there, which might not be there in the West if you don't get the users in the beginning, or the producers in the beginning Maybe that's another another thing, which they have in their favor. And some of the tech startups I've seen recently coming out of there are purely tapping into the network effects. And that's how they're building platforms over platforms, because they have those growth loops and you gave an example of Grab. I think there's another example. I forgot the name, but they're building a video business through which you can actually pay on the video. For example, you can buy fashion products. They show you a clip of that product and then within the video there are certain indicators which let you pay for that product itself. It's almost like a mixture of YouTube, Instagram and a payment channel on top of it, which I haven't seen in the West yet. So I guess there's a lot of disruption which is happening. because they don't have these old barriers to cross through.

- If you think about recent research by Accenture and Google Cloud and everyone else, a lot of executives are actually thinking about building platforms. Two questions - whether it's something that everyone can do, and what are the prerequisites would you say should companies get to so they will be able to build platforms.

- It depends on the company itself, but to me being a product manager I would say having a really good mindset of your success metrics when you're trying to become a platform. And if you think of this as a dimension of x and y axis, are you becoming a plane or are you becoming a line? People confuse between [them], and when I gave you this example of if you are a point, if you're a social media influencer you are a point on the plane. If you are a marketplace, which connects these social media influencers, you're a line in that plane. But the plane could be the infrastructure, the ecosystem, which brings more lines and more points, brings more influences, brings more marketplaces. And people sometimes confuse these marketplaces to be platforms. It depends if you want to create more value for your partners, so that they co-create more value than what that whole plane is worth? If that's the case, then yes you want to be a platform. But then you also need to understand how do you pay your suppliers, how do you pay your producers and consumers. To me getting into a platform business you need to answer those questions and see if your company has the infrastructure or the product mindset to get there, because that's a lot of work. Or are you happy being just a point or a line within that plane itself. Those are some of the questions which a company needs to answer before transforming themselves into a platform.

- Tech is widely accelerated by COVID, how do you think this platform and ecosystem play will change over the next couple of years?

It's a hard question, I can only speculate or see the trends, but one thing for sure that the COVID situation has accelerated the digitization of this world. I saw one of the trends of how the world was getting digitized quarter on quarter. And I think it has increased by 27 percent in the last quarter just because of COVID, and it was on an average 10 to 11 percent. I forgot the study, which quoted this, but just the sheer number of companies now getting digitized just to not only capitalize the COVID situation but also to survive. I think specifically in the platform world, trust is the biggest factor, which I see increasing over the years. Because if you look at the trajectory back in the 80s and 90s, every company used to be very centralized and platforms are breaking those barriers and moving towards a decentralized model. I think with blockchain and other innovations, if they pick up in the next decade or so I can totally see the pure platform play in the decentralized space. Because then you have a reward system for every player in the ecosystem and they're all part of a platform. I can only see this increasing, because as Southeast Asia builds platform over platforms, at some point they will get into decentralized platforms. So there's no one centralized owner, but every player has a stake in the ground and every player has a reward to contribute towards that platform. I guess I'm defining blockchain. I don't know if that's the answer, but I do see it slowly moving towards that model as you build more and more of platforms.

- You have also experience in data engineering, so you work a lot with data. One of the questions that comes up a lot recently, especially regarding platforms, is data privacy and using personal data, in B2B this is company data. How do you think this question might evolve in the next years and what do you think is the best practice for companies to think about using data in a platform play?

- There's definitely PCI and PII concerns with data and with the GDPR regulation and some of the similar regulations in the US. Companies are now trying to understand or they're now adhering to those regulations and making sure that the personal data is capitalized in a way that individual is happy with. I can only see those kind of regulations helping the individual to protect that data, but I also see companies doing it as a check in the box. It's almost like checking the box exercise. Especially with GDPR a lot of organization did that just to be compliant. So it depends, I think in future as you become more decentralized and if the individuals start owning their data, this might change. So for example I saw one of the videos, where in the future what if you get to sell your medical data and you get paid for it, rather than a centralized organization owning that data. That could be one model of every individual has the ownership to approve how their respective data is utilized, but that's the utopian model. I think we're still far away from that, but in the interim I can see that we do need a lot of trust and safety around PCI and PII data for individuals. And a lot of companies now are building products around that.

- Looking in the future and thinking about this platform businesses and more collaborative environment and building products around that, what are you most excited about?

- I'm most excited about being open source and how we can break down the barriers. I think open source used to be a big taboo back in the 90s as it developed a product, but Linux has been one of the great examples of how it's still a useful product. So I think getting into the open source business and not just building platforms, but how do you open source your code for other companies to tap into and then see how that brings network effects. I'm quite excited about that and I think I'm also excited about decentralizing, using some of the blockchain products, which might come in next 10-20 years depending on how much innovation goes into them. I think those are the two factors which excites me within the platform business, because I think if you trust other partners, obviously you have to make sure that they tie into your value proposition, but if you find similar partners which enhance your value proposition, I think it can definitely build a more trusted environment and also make you the FinTech in the platform industry if you will.

- Super quick follow up on this. Do you think we'll see a resurgence of blockchain and a lot of things built on it or what's your hypothesis on this?

- My belief is I think wherever the talent goes that industry automatically quadruples or increases. And the addressable market and their value proposition. So it all depends if the youngsters or people coming out of universities or colleges go into blockchain rather than picking up jobs in big industries, if you will. So it depends if blockchain is able to attract the right talent in the next 10 years, then yes I definitely see that industry taking some market share, but it could be slow if it doesn't get the talented needs.


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