President of RollKall, the only complete off-duty management platform that works with law enforcement agencies, officers, and businesses.
The internet connects the world, but the companies that utilize it are truly the ones that unite us. From getting a ride and booking a vacation house on the beach to sharing photos or selling products online, we congregate on these massive online platforms to conduct our lives and business.
Many top U.S. companies are platforms (i.e., Amazon, Google, Airbnb, PayPal, etc.), yet so many others have failed (i.e., Quibi, Vine, Sidecar). What separates the winners from the losers? How can you identify a good opportunity before creating a platform?
At their core, successful platform companies identified a pain point, saw it lacked a solution and then created one that solved people’s problems.
In this article, we’ll cover ways to identify strong platform business opportunities and things to look out for.
How We Found Our Place In The Platform Economy
RollKall connects police officers with off-duty professional security details. Our co-founder, Chris White, is a retired law enforcement officer who also personally provided oil fields and homeowner’s associations with security services. Chris struggled to handle the manual administrative work that came with connecting other officers with growing off-duty job requests.
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“This has to be easier,” Chris thought. That realization of a need not being properly served is the breakthrough idea needed to begin developing a platform-based solution.
Chris reached out to Ben Poch about finding a system to manage the tedious tasks and ongoing coordination, and when they couldn’t find one, Ben built it himself. RollKall was born.
That’s our journey, but no two paths look the same. Here are methods for identifying potential opportunities and problems that can arise and for finding your own platform-based opportunity:
Rational Investment Approach
Standard advice — and it’s not bad advice — says to look at the total addressable market (TAM) that estimates the revenue opportunity available for a product or service. If there’s a need and a market, build a minimum viable product (MVP) with enough features to serve the early adopters. Test it, and see what happens.
If only it were always that simple…
What’s the TAM for “you can stay in my spare bedroom”?
TechCrunch points out that some of the largest companies today, such as Amazon and Uber, started with a near-sighted TAM. For example, Airbnb’s initial market was couch surfing and estimated its market to be $200 million. At the end of 2020, Airbnb soared to a $100 billion valuation in the vacation rental property management market.
A rational investment approach won’t always work, but how do you predict a TAM that hasn’t evolved yet? Don’t be afraid to predict the future.
Look To Where Society Will Evolve
Social norms change. The concept of Uber likely would have never taken off in the 1980s. If you went back in time and asked, “Would you like to get into a strangers car and have them drive you?” society would have laughed you out of the room. Our society has evolved since the ’80s to accept social economics and come to trust that these companies have taken steps to ensure we’re safe.
Look To Where Technology Will Evolve
Technology evolves even faster than society. Today’s APIs, such as GPS mapping and online payments, serve as the backbones to new platforms. Other current and future microservices will make creating new platform businesses feasible.
You Have To Go For It
All this is good advice, but in the end, you have to just go for it.
There’s not a repeatable, predictable, or formulaic way to identify market opportunities. In reality, you must have a thesis you believe in, start acting on that thesis, and see what works.
Once you have initial results, iterate until you find your market and audience. If one thing is certain, it is not simple.
It’s art, science, timing, community and some luck. However, there are some consumer habits that could indicate failure lies ahead.
People Don’t Want To Change
This is a big and obvious red flag. When approached with new technology, people respond, “No, I’m not interested. I’ll just keep doing it the way I’m doing it.”
People Don’t Want To Pay For It
Every great company found a group of people with whom their product or service resonated, but what happens when you ask them to pay?
Too often, focus groups conclude with, “That’s awesome! You should do that.” So you build that really awesome platform and bring it to the same group and find out they were just being polite. They say, “Oh, it was a good idea, but I don’t really want to use it,” or, “I’ll totally use it… as long as it’s free.”
The distinction between users being simply intrigued and committed enough to pay can break a company. Avoid this by being direct and asking the hard questions about your platform toward the end of a focus group: “Would you pay $X a month for this?”
Find Your Early Adopters
More importantly, don’t rely solely on focus groups before you go to market. Find a small, loyal group of early adopters who will pay and advocate for your product/service and leverage them for growth. Look for people who do things differently and have already identified the pain you’re trying to solve. They’ve already thought creatively about solving it on their own. These are the people who’ll be receptive to your pitch. Delight them, and they will become the loyal fans you need to expand your base.
Anyone Can Create A Platform, Yet Few Can Truly Connect
The platform economy has shown to be prosperous for startups that understand how to apply leading technology to solve problems. Focus on simply solving problems and easing pain points rather than the bells and whistles. Identify the right problems, have the courage to build a platform, test the waters and set sail. Good luck!