Why are Community-Oriented Businesses so successful?

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Community-oriented businesses are booming. Also, platform businesses because they create value by bringing together two or more interdependent groups. As illustrated by some of the most illustrious ambassadors Airbnb, Uber, Etsy, TaskRabbit, Wework, and Amazon. The model has been disrupting traditional businesses for decades and there is no sign of slowing. They dominate the economic landscape like never before. Due to strong competition, legacy companies are embracing the model or they will face dark days.

Takeaways:

platform businesses can scale rapidly by leveraging the power of their community. That is certainly, the reason why investors love platforms so much. Consequently, They are more valuable than linear businesses. They have been growing rapidly both on the local stage and globally. The graph below illustrates how platform businesses in the S& P 500 grew over the past decades. In addition, the graph also portrays a forthcoming reality they will overtake all major traditional linear businesses by 2020.

Platform businesses in the S& P 500 over the last forty years.

More interesting globally, nearly 60% of today’s billion-dollar “unicorn” startups are platform businesses. For that reason, entrepreneurs  need to shift from building products to build platforms. If you are looking to invest, platform businesses or community-oriented businesses are the way to go.

Advantages of community-oriented businesses :

  • Rapid growth: platform businesses leverage the power of their community to scale fast after validation of the concept.
  • Shared value: The most important impact of a community-oriented business model is the shared value created for all its community. It provides the opportunity for users to interchange role from consumers to producers of goods or services.
  • Investor love platforms: Investing in platform businesses can yield great returns.
  • Community impact: Platform businesses create an enormous impact on the communities they served. Just think of Uber,lyft, and Airbnb.

Wanna learn more: The process, the business model, the impact and how they create value check this excellent piece: https://www.applicoinc.com/blog/what-is-a-platform-business-model/

 

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