Decoding nervous system of fastest growing internet companies

Ever since companies such as eBay and Google were founded, consumers have been experiencing the contribution of Internet in their daily lives.

Internet has touched almost all the industries and has transformed the world of scarcity to the world of abundance by organising the unorganised resources, delivering them at the right time and at the right price to consumers in need. Hypergrowth and appreciation in valuation of several Internet companies have made people curious to understand what is so special about these companies.

Like nervous system is the control and communication system of a human body and has two main organs- brain and spinal cord, likewise, , the fastest growing Internet companies also have a nervous system with two main concepts --Multisided Platform and Crowdsourcing.

Multisided Platforms: Platform is an intermediary that facilitates exchange of products and services between two (or more) user groups. User groups form sides of multisided platform and are attracted to the platform due to network effects. A network effect is a phenomenon that makes a platform more valuable when more people use it.

When members in user group on one side get attracted towards members of user group on the other side, the network effect is called cross-sided network effect. For instance, patients (user group on one side) would prefer to go to a hospital (platform) that has more numbers of reputed doctors (user group on other side). When more members join a user group on one side and make that specific side stronger, then the network effect is called same-side network effect. In this case, hospital that has good doctors would be able to attract more good doctors and when more good doctors join a hospital, strength of hospital as a platform increases.

Below is the list of a few traditional platforms that we have been using for decades, much before the age of Internet:



Crowdsourcing: Crowdsourcing can also be seen as outsourcing to crowd. It is a process of getting ideas and work done through a crowd of people instead of full time resources hired for that particular work. For instance, in the famous quiz show, Kaun Banega Crorepati, contestants used to get few lifelines including audience poll. In this lifeline, participants outsource question to audience (crowd) and get their opinions on answers. Similarly, contests such as case study competitions and programming contests organised by corporates in business schools and engineering schools etc. are also the examples of crowdsourcing as students (external crowd) put in efforts to come up with multiple solutions for a given problem.

When businesses add power of Internet with the concepts of multisided platform and crowdsourcing, they are able to scale up very fast, to aggregate supply from various sources, remove bottlenecks between demand and supply, provide transparency through reviews & ratings and are able to provide niche products that not available locally. Now, let’s have a look at examples of Internet based platforms that are powered by crowdsourcing.

Uber: Uber is mobile Internet app that connects commuters with taxi drivers. Uber doesn’t own any taxi, crowd of taxi drivers register with Uber and Uber outsources the commuter’s requirement to one of the registered drivers. In this kind of model, both demand and supply side gets benefited by addition of more people in the respective groups.



Facebook: Facebook is an Internet based social networking site. Crowd of users joins Facebook to network with other users and get to know happenings in the life of people in their network. Users keep on generating content in the form of news, videos, pictures etc. that keeps other users engaged. As Facebook has over 1 billion users, it is a great platform for advertisers and developers to reach out to their targeted audience.



Below is the list of a few Internet companies that are based on concept of multisided platform and crowdsourcing.


Note: Based on interpretation and evolution of business model, a few of the above platforms may have more crowd sources & sides.

In these kinds of businesses, best performers or leaders capture huge market share and make it difficult for competitors to grow. But, to remain the market leader, companies have to put in a lot of efforts to gain credibility for their platforms and make users and crowd experience pleasant so that they don’t switch to competitor’s platforms.
Orkut, the social networking platform owned by Google was very popular, but Facebook gained more credibility and eventually people switched from Orkut to Facebook. By providing proper user experience, Facebook has been able to retain its users and has been giving tough competition to Google+. Similarly, Google was not the first search engine in the market, but by providing better search results, it became the market leader and with time its competitors moved out of market. By maintaining its credibility and popularity, Google has been able to create barriers for new competitors.

(Image: Indiatimes)