Decoding Platform Companies: Andrei Hagiu on Platform Strategy and Building Your Business
“I skate to where the puck is going, not where it has been.” – Wayne GretzkyWhen Andrei Hagiu wrote a Harvard Business Review case study on AppDirect, he used this quote from Canadian hockey legend Wayne Gretzky to show the mindset each founder should have before starting their company. Andrei is an expert in platform strategy and started a career in academics as an Associate Professor at Harvard Business School, as well as at MIT Sloan. Andrei's research and teaching focus entirely on platform businesses (e.g., Airbnb, Amazon.com, Facebook, etc.) and their unique strategic challenges. Today, Andrei is an Associate Professor of Information Systems at Boston University’s Questrom School of Business. In today’s episode, Andrei talks about the difference between virality and network effect, how to create a successful, multi-sided platform business, and the future of Web3’s decentralized platforms. Press play to hear Andrei’s thoughts on…Making your platform user-friendly"You want to make it very easy for individual users to adopt it, right? That's the key because it matters to you to have a lot of users, and then it's easier from there to actually become a platform later on." The difference between virality and network effect"Virality just means...if you do a marketing campaign and your customers tell other customers about your product, it's of course a very useful tool. But that doesn't mean that your product all of a sudden has network effect. Network effect is basically my willingness to pay us higher for this particular platform or product if there are other customers on this platform."Creating a healthy relationship between buyers and sellers"Make it easier for you to transact with them, which in itself is an insurance against leakage, right? If all you're doing is making it easier for buyers and sellers to find each other, why would they come back to you once they found each other?"