The Platform Delusion

September 20, 2021
Giant tech companies aren’t the invincible disruptors they’re traditionally seen as, suggests Columbia Business School professor Knee in this in-depth survey (after The Accidental Investment Banker). The generally accepted narrative that posits digital platforms—notably those of Amazon, Apple, Facebook, Google, and Netflix—are “a kind of unstoppable virus,” doesn’t hold up to scrutiny, he writes. That “platform companies are sucking all the value, returns, and growth out of the companies that actually do things” may seem true, but many analog businesses functioned as platforms, Knee writes (defining the term as a business whose core value proposition is enabling and enhancing connections), and did it better, such as Diners Club’s early foray into credit cards. Knee presents a cogent, arresting argument that digital companies don’t have “supernatural powers” and, in fact, the same basic investing rules apply to both digital and analog companies, and covers what this means for e-commerce (Amazon’s not as monolithic as one may think), travel (old reservation systems predated the internet and are still going strong), and big data (algorithms aren’t so new, either). Knee’s untangling of the complexities of platforms and their backers is steadily accessible and surprising. Readers will come away with their deeply held myths debunked.