The Yellow Pages, One of the Earliest Platforms

Today, the most valuable companies on the planet are all “platforms”, say the authors of The Business of Platforms. Huh, what are platforms? Naming them would make it easier to understand, so let’s list a few: Amazon, Facebook, the app stores of Apple and Android, Microsoft, Uber, Ola, Flipkart, Swiggy and Zomato.

 

Ok, now let’s look at the common theme. First, the platform owner owns very little of the content or assets that are transacted on the platform itself. Other firms produce and sell stuff on Amazon and Flipkart; other folks develop apps for the Apple and Android app stores; other people own the taxis availed via Uber and Ola; other companies develop most applications that run on Windows; other restaurants cook the stuff sold and delivered via Swiggy and Zomato.

 

Second, the platform’s value increases as it “tap(s) the innovation capabilities of outside firms to enhance value” e.g. the more apps that are available for the iPhone/iPad and Android phones, the more valuable their platforms become.

 

Notice how most of the value is being created by that italicized word, “other”? When you see the established platforms, it’s obvious why all those “other” entities are willing to add value to a platform owned by someone else e.g. via Amazon, the seller gets to be seen and bought by millions of customers. That’s what a platform brings to the table: access. Access to customers, to advertisers, to taxis, to restaurants etc. This creates a chicken and egg problem. People will join Facebook only if everyone else is already on Facebook. Sellers will come to Amazon only if there are enough customers, and customers will come only if there are enough sellers. Solving that isn’t easy (obviously), but if you somehow clear that hurdle, then you can become almost invincible. After all, who’ll switch out of Facebook? Or Amazon? Where would you even go?

 

Sometimes, governments intervene to encourage platformization. The US government, for instance, forced the standardization of railway gauges allowing them to interoperate leading to enormous economic benefits. In India, the government forced all major banks onto UPI, which then enabled the creation of those mobile apps for money transactions.

 

But far more common are private companies creating platforms without government help. Let’s look at one such pre-digital era platform, the now almost forgotten Yellow Pages. Yes, that was a platform. Let’s see how it came to be.

 

It started off with AT&T wanting to get more and more phone customers. It decided to give every customer a listing of everyone else’s phone number. If you could find people easily, you’d make more calls and others too would be incentivized to get a phone themselves. As luck would have it, one time, a printer ran out of white pages and thus used yellow pages for the business listings. The benefit of this accident was obvious: it was visually obvious which was which! And then AT&T realized another value of the yellow pages “platform”: customers could find businesses of interest easily, and businesses wanted to be found easily. Who should pay for it? One side or both sides? AT&T came up with a smart idea: they’d give the Yellow Pages freely to all its private customers. This made being on the Yellow Pages very attractive to businesses: in theory, they would be noticeable by everyone with a phone. And so businesses were willing to pay AT&T to be listed on the Yellow Pages.

 

And that is how one of the earliest platforms came to be.

Comments

Post a Comment

Popular posts from this blog

Student of the Year

Image
As a toddler, my daughter loved Alia Bhatt’s songs, esp. the ones from Student of the Year . (That movie did have many good songs and well-choreographed dances). Fast forward to present day, when she is 12 yo. She rarely watches Hindi movies now, but one of the few ones she likes of late, Raja aur Rani ki Prem Kahani has, yes, Alia Bhatt.   If I had any hopes that there was anything to be read in the name of her toddler-time favorite ( Student of the Year ), they have been dashed. Our conversations come exam time are perfectly captured by this photo and its caption: In fact, the pic below captures how she and I look at her answer sheets – me intently, she with an expression of “It’s over, so why are you even looking at it?”   Of late, we pull her leg and tell her that she isn’t showing any signs of academic prowess, she’d better find a rich guy to marry. Some time later, she showed us this meme on the Internet: “Me No Study, Me No Care Me Go Marry Millionaire If He Die
Read more

Animal Senses #7: Touch and Remote Touch

Instinctively, we think touch is based on contact. Not entirely true, explains Ed Yong in Immense World – there’s a more important aspect than contact: “These incredible feats are possible through movement. If you rest a fingertip upon a surface, you can get only a limited idea of its features. But as soon you’re allowed to move, everything changes. Hardness becomes apparent with a press. Textures resolve at a stroke.” As you run your fingers over a surface, they hit the tiny peaks and troughs and set off vibrations in the mechanoreceptors at their tips.   At the tip of its snout, the star-nosed mole has many pairs of hairless appendages. It uses them to touch things around itself. Alive or dead? Food or ignore? It does these movements at an insane speed. In the time it takes to blink our eyes, the star-nosed mole can probe, identify and swallow its food. “Light may be the fastest thing in the universe, but light sensors have their limits, and the star-nosed mole’s sense of
Read more

The Retort of the "Luxury Person"

Image
Coming up with biting and witty retorts. It’s something we dream of, but rarely manage to pull off. Worse, the more we stew over the offending remark, the more likely we are to come up with that dream retort, as Calvin ruefully points out: During our last holiday at the Taj Resort, seeing my wife carrying towels to our poolside chairs, one of the kids there mistook her for a member of the staff and asked for a towel. When my wife narrated this to us, I did not imagine that my 8 yo daughter would come up with her own retort. But a day later, my daughter recapped the incident, an incident that didn’t even involve her in the first place , and said, “You know what I’d have told that kid who asked for the towel?”. And without waiting for an answer, she told us anyway: “I don’t work here. I too am a luxury person who is living at this resort. Go get your own towel.” We were highly amused by the phrase she had coined: “luxury person”. It certainly captures the kind of holid
Read more