Industry Platforms: Case Studies to Measure Platform Capabilities for US Unicorns

Large-sample empirical research by Cusumano et. al. found that US privately-held unicorns with platform capabilities command on average 123% premium over non-platforms. However, measuring the extent to which a company is platform or non-platform based is a difficult problem given the complexities of business organizations and how these activities interact with each other in non-linear ways. This thesis attempts to address this by proposing a systems thinking, case-based approach to evaluate the key business activities of a firm with potential platform capabilities using the author’s proposed Platform Classification Matrix on five of the largest US privately-held firms: Epic Games, Databricks, Plaid Technologies, Stripe, and Instacart. Each business activity for a firm is classified as platform or nonplatform, and if it is a platform then it is assessed based on its revenue contributions to the firm and three strength metrics: Network effects, strength against multihoming, and new entrant deterrence. This matrix generates a ‘platform strength’ metric and allows identification of the platform activity with the most potential towards a winner take all or most case. The author further proposes combining this matrix with a system dynamic approach to identify how differing business activities can boost or hinder the leading platform service which allows decision makers to assess whether retaining or subsidizing seemingly low-performing business lines is strategic for their leading platform. The thesis concludes by advocating for using both methods as well as the generated metrics to perform a holistic analysis when evaluating firms with platform capabilities potential.

Name thesis:degree_name

Master

Department dc:contributor.department

System Design and Management Program.

Grantor dc:publisher

Massachusetts Institute of Technology

Year dc:date.issued

2023

Author dc:creator

• AlSadah, Yousif Fayez

Advisor dc:contributor.advisor

• Cusumano, Michael A.

Statement dc:rights

• In Copyright - Educational Use Permitted
• Copyright retained by author(s)

Licence dc:rights.uri

• https://rightsstatements.org/page/InC-EDU/1.0/

Handle dc:identifier.uri

https://hdl.handle.net/1721.1/152746

OAI identifier oai:identifier

oai:dspace.mit.edu:1721.1/152746