Digital native Belgian platform-based startups: an approach of their operating model before maturity

Details

Supervisors

Neysen, Nicolas

Faculty

Louvain School of Management

Degree label

Master [120] en Ingénieur de gestion

Abstract

We are currently living what we refer to as a “platform revolution”. We have in the past seen examples of industries overcome by businesses which had adopted a platform-based model. This revolution has been made possible by the technological improvements that have happened during the last decades, in particular the information and telecommunications improvements. These new technologies have drastically reduced the transaction costs which led to the deconstruction of the value chain. And a shift from hierarchical structure towards market structure or networked firm has been observed. One type of these networked companies is called a multi-sided platform. This term generalizes the different types of platforms that can be observed (two-sided, three-sided, etc.). A platform as a model facilitates interactions between participants who need each other in some ways. The asset light digital platforms are able to facilitate interactions amongst a large pool of participants. And these platforms are thus able to manage supply-side demand economies of scale or “network effect”. These network effects provide a way for the platform-based models to scale up at a pace that had never been seen before. As simple as the role of platform intermediaries may seem at first analysis, these models are in fact endorsed with difficulties and most platform-based startups fail to reach a sustainable growth. In addition, as disruptive as these new businesses are, European based platform technologies are lagging behind compared to their American or Asian counterparts. Not only does this represent a significant business “lost opportunity” but it also weakens the overall position of our industries as many European businesses will be dependent on the freshly established monopolies in the USA or in Asia. This thesis provides a contribution to the understanding through an empirical research of an aspect that has not been studied by scholars: how do these platforms operate ? We focused our research on businesses presenting certain characteristics and built an approach to address this concern. Qualitative method analysis was required as this topic is relatively little known, and we conducted several interviews to collect triangulated data. Some clear patterns emerged from our study which could entice further researchers to study in the same direction. We found that digital born Belgian platform-based startups valorized complementary profiles (business and IT) which need to work in cross-functional team to operate. It clearly appeared that separating developers and other teams in a startup can lead to dramatic delay. Agile and Lean methodology are generally applied. Another finding is the necessity to dedicate a member of the team to one of the “sides” of the platform, and to apply the same processes for each side of the platform. It ensures that each side will be understood and taken into consideration during the development of the platform. When the business grows, an entire organization should be dedicated to one side only, and a duplicated organization will manage the remaining side(s). Finally, we found that processes are a key component of the operational part of a platform, even for a startup. Decomposing and sequencing tasks ensure a certain efficiency and reactivity, but most importantly it guarantees uniformity in the user’s experience. Feed-back processes are crucial. We tried in this thesis one approach to understand in an original way a complex and powerful phenomenon. Hopefully this will help a future enthusiastic entrepreneur in launching a platform-based startup, having the ambition to improve the world, … but also convincingly help boost the Belgian economy!