Insights to platforms from Silicon Valley

This signal post discusses the experiences gained by interviewing different platform experts in Silicon Valley and the San Francisco Bay Area, California, in April 2019.

What is different in Silicon Valley?

Silicon Valley and the Bay Area are known as the birthplace of many technological achievements and innovations, including the platform economy. The biggest platform companies – Facebook, Apple, Microsoft, Airbnb, Uber and Slack, for example – have their origins and headquarters in the region. There are clear reasons for this development: investment funds, expertise and networks are available all in the same place. It is possible to get the attention in the start-up phase, get funding and support and build networks to grow the company. The good reputation of Silicon Valley certainly also contributes to its importance.

Even though Silicon Valley is known for its B2C (business to consumer) platform giants, other types of platforms also flourish there. One could say that the innovation and business networks are also organized like platforms. For example, the start-up incubator SVAdvantage connects innovators and companies that need solutions. They also offer facilities to develop and test technologies. Suchlike B2B (business to business) platforms are not as well-known as the B2C platforms.

The other difference between Silicon Valley and Finland is the mindset. In the Bay Area, trust is born from success and from sharing it. This in turn creates a positive feedback loop resulting in even more success. It is pure business even though there is often an element of tribal – referring to fostering of loyalty between employer and employee – culture in technology companies too. In Finland, emotions – reflecting traditional responsibility culture – are important also in creating business. In the US, to set up a company with the intent to quickly sell it to a larger company interested in their technology versus grow the business themselves, is a popular strategy, whereas in Finland we may regard such exit strategies even as treachery or failure. The same difference appears in the attitude to going bankrupt: in Finland, it is a shame, but in the US, learning from ones failures can be viewed as a precondition for success and people are encouraged to try again. The cultural differences appear also in the attitude toward copying or emulating business ideas and strategies from others in the US, whereas it is not at all a popular ideology in Finland.

Security, privacy and ethics

Freedom is a distinctive feature in the US, and it applies especially to business. Data – the essence of a platform – is a free resource to be exploited. However, security is an important issue for a company as well as for the whole nation. One of the crucial preconditions for safety and security is situational awareness, which can be the essence of a security platform. The fast grown platform company Slack is a good example of a platform that has developed new security related solutions. They are using their own product in-house, “drinking the company Kool-Aid”, and pioneering in showing how Slack can be used in security.

The traditional physical security business, on the other hand, is heavy with old risk averse thinking and legacy. Culture change is needed, and platforms can offer a solution. The physical environment is being digitalized. For example, ID batches or keys are disappearing and replaced by biosensors and the need for human physical presence in a space for surveillance and monitoring purposes is being replaced by robots. Integrating security data on a platform, will allow for any situation to be shown, monitored and controlled on a single pane of glass. On the regulatory level, the role of government is to provide safety and security for the citizens participating in the platform economy.

Due to some local privacy and ethical cases (e.g. Facebook and Uber) and due to the developments in Europe, the privacy and ethics discussion has started also in US.

What next? Future of platform economy

The typical thinking of rapid and continuous growth seems to dominate the platforms economy discussion. New technologies enable capacity to integrate more and more functions and operations at lower cost and thereby advance integration. Platforms can also be integrators forming “platforms of platforms” or “meta platforms”. For example, traditional safety and security services may be disrupted by new platforms, which offer the situational awareness in the digital form on a single pane of glass.

The giant US based platforms have lately got negative publicity for privacy and ethical reasons. A new attitude in platform development seems to, however, be about to emerge, aiming to offer trust, ethics and empowerment.

References and links

Slack
SVAdvantage

Raija Koivisto

Principle Scientist VTT Technical Research Centre of Finland Ltd
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