Platform Businesses Turning Traditional Businesses On Their Head
The first-ever network effects that happened was not through a platform but that set the ground rules on how things will change in the future. Microsoft Excel was the first product that witnessed network effects. The product was so superior that every accountant, mathematician, and business strategist wanted their hands on it. There was no product-market fit that was envisaged but the superiority of the product laid down roots for what eventually became a must-have for everyone who was receiving a file. More and more people started sending excel sheets over emails and the only hack to access the file as if one had an excel software on the receiving end and thus began the first of many network effect products we are witnessing today.
The superiority of a product build cannot happen every day and that is how inter-dependability and symbiotic relationships took centerstage were without a virtual handshake environment, business growth wasn’t going to happen. That combined with the internet as an opportunity, several businesses were born.
Some of those businesses are billion dollars in valuation, some are extremely profitable, and some have the potential but are currently not profitable. This last proposition is what bothers the common man’s understanding because billions of dollars are invested in such firms who have made life easy for the consumers with ease of use as the main proposition where they connect businesses to consumers in an on-demand environment.
We all know about AirBnB, which is valued more than the assets owned by Hilton Worldwide, Uber or Ola being in the transportation business; though these categories did take a hit during the pandemic across the world. However, the ones in the essentials and the entertainment space did see massive growth. FoodTech companies like Zomato or a Swiggy or even FireTV stick from Amazon, which I consider as a platform in the devices space, considering they bring in entertainment to your TV sets and make a regular TV set to function as a connected TV of sorts.
The true digital India wave started with our Honorable PM bringing in the Demonetization of the then 500 & 1000 Rs notes. It was a three-month struggle for the citizens; however, what that did was the massive takeoff of digital currencies, which sometimes I believe was the real reason than controlling black money. Though it did in many ways because it brought in the larger part of India into the banking eco-system to transact thus giving the government much-needed visibility of how money was moving. That got India on the fast-track with its global peers and Fintech platforms started thriving. Whether PayTM, PhonePe or even the global players who did not want to miss the bus like Google and WhatsApp, joined the Fintech revolution in India.
That (Demonetization) was immediately after the launch of Jio in September of 2016. An indication of what’s in store given the deep penetration Jio was committed to with the advent of 4G in India.
Everything hit the roof with the launch of Jio, smartphone sales, content consumption, use of utility apps, fintech, platform businesses like Zomato, Swiggy, BookMyShow, MakeMyTrip and the likes saw massive consumption. Gaming took off in the app stores too and with Android driving the growth in India through the smartphones, it was not a surprise to see the peaking of some of the google products too including YouTube and Maps. This was also the time when a flurry of unicorns was born with large investments in the eCommerce, Fintech and other platform-driven businesses.
Sanjiv Bikhchandani was in the thick of it with some serious investments since he is the pioneer of the ConsumerTech space in India with Naukri being the first platform business that connected job seekers to jobs listed by Corporates. Now, this model did not need network effects to play up,
However, it is still the first platform business in India. He was quick to back Zomato since he knew the power of the proposition and reaped the benefits, if you must, look at how Zomato’s IPO has performed. Is Zomato making money? that is a different debate; however, does it have the potential? then of course the answer is yes. With around 11.2M captive transacting users every month (Statista), it sure has various opportunities that can come out as new business within the Zomato eco-system.
Deepinder Goyal, the Founder CEO recently said, “Today is a big day for us. A new day zero. But we couldn’t have gotten here without the incredible efforts of India’s entire internet ecosystem. Jio’s prolific growth has set us up for unprecedented scale”. The power of 4G penetrating across India created those big opportunities for various platform businesses in India including Zomato and I can’t wait for PayTM and the others from the consumer internet businesses in the queue to list their organizations.
What I am still looking for is a global product from India in the lines of an AirBnB or an Uber which is an absolute platform businesses with network effects. While India is a massive market for global players and we Indian entrepreneurs are doing a fabulous job of the available opportunity, I am curious to see how we can shape some of the other markets. Not taking away some of Zomato’s international presence or PayTM’s foray into Japan, but you know what I mean.
That said, I have never been as proud as many of you are of how we have really come this far. I have seen the early days of the Indian Internet in the early 2000s and had it not been for the resilient Indian DNA, we would not be where we are today, so kudos to the platform business opportunities that internet has provided, we are seeing innovation at its very best. There is so much more than India has to offer where traditional businesses need to modernize through platforms, and it makes India intriguing in terms of what it has to offer to the world. Technology will keep changing but human intellectual capability cannot be replaced, and India has a whole lot of that to offer.
I am excited about the future, are you?
The author is Rammohan Sundaram, Country Head & Managing Partner - Integrated Media, DDB Mudra Group
