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of this particular type of business model. By occupying a mediating role in a
multi-sidedmarket environment, the platformsmentioned reduce transaction costs
for supplyanddemand, simplify theoccurrenceofdirect interactions, and thusbind
bothmarket sides to their own infrastructure. The economicpower of digital giants
such asAmazonandApple stands for platformsuccess that drivespractical interest
in this model from different industries. But for startups and traditional companies
(incumbents), setting up a platform business also seems desirable. According to
Gründerszene (2018), five of the eleven fastest-growing startups in Germany
operatedamulti-sidedplatformbusinessmodel in2018.Althoughdigital platforms
holdhighgrowthandearningspotential causedby itsmediatingcharacter, the setup
phase is particularly challenging. This is so because instead of one stakeholder
group, with suppliers and buyers, two or more groups are to be addressed. How-
ever, this is not unusual for firms that have supplier networks or network-based
value chains.Thedistinctive aspect of platformbusinessmodels lies in thedemand
for an ecosystem of direct transactions between the actors involved, which grows
through network effects, without taking on the steering role, e.g., of an original
equipmentmanufacturer (OEM) in the automotive supply chain.Howdifficult it is
todevelopaviablebusinessmodel even inadvancedstagesofbusiness activitydue
to themechanismsof themulti-sidedmarket is shown, for example, byUber’shigh
loss statement ofmore than 2.5 billion dollars in 2019, 10 years after the company
was founded.Operating in theon-demandmobilitymarket,Uber is still looking for
approaches to keep drivers and customers on its own platform, to integrate them
into related ecosystems such as public transport, to leverage the regionally created
added value beyond the regions, and to compile its operations into sustainable
profits.This special breedof aplatformbusinessmodel entailsmanychallenges for
digital entrepreneurs to develop andvalidate their platformbusinessmodel.Ghezzi
(2019)highlights thatmostdigital startupsuse the leanstartupapproach in theearly
phases of their existence. However, Ghezzi (2019) also points out that the same
digital startups struggle to define proper tests and to design appropriateminimum
viable although having a validated toolset at hand. In this chapter, we align a
structured process to validate/invalidate different facets of a business model with
the unique characteristics of a platform business model in order to help digital
entrepreneurswhendeveloping andvalidating a platformbusinessmodel.Webase
our thoughts on the developments in the previous chapter ofGöcke andWeninger
(2020)with regard to thedevelopment andvalidationprocessofnewventure ideas.
2 Background
2.1 PlatformBusinessModels
The concept of a platformhas come a longway frombeing a rather fuzzy concept
that is sometimes understood as making companies more efficient through lever-
aging economies of scale and scope to the understanding of platform business
88 L. Göcke and P.Meier
Digital Entrepreneurship
Impact on Business and Society
- Title
- Digital Entrepreneurship
- Subtitle
- Impact on Business and Society
- Authors
- Mariusz Soltanifar
- Mathew Hughes
- Lutz Göcke
- Publisher
- Springer Verlag
- Location
- Cham
- Date
- 2021
- Language
- English
- License
- CC BY 4.0
- ISBN
- 978-3-030-53914-6
- Size
- 16.0 x 24.0 cm
- Pages
- 340
- Keywords
- Entrepreneurship, IT in Business, Innovation/Technology Management, Business and Management, Open Access, Digital transformation and entrepreneurship, ICT based business models
- Category
- International