Julius Neu

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There are apps and application market places on many different platforms. Not only smartphones can run apps, but they have also entered TVs, watches or even fridges. It is likely that there will also be apps for cars soon. Not only because it makes sense for the user to be able to access services such as Whatsapp or Spotify, but also because it makes sense for platform providers.

Marketplaces or platforms establish strong network effects that enable the platform provider to gain a share of the value created on the platform. Network effects are reasons why firms such as eBay, AirBnB, Skype, Apple and Google are so profitable. They only need to maintain the platform and value is created by other people. The more participants there are on the network, the higher the value of the network itself. This can both held true for users (one-side of the network) and producers (the other side of the network). There can be network effects on the same-side and across sides.

Still network effects might also be negative. This shows for example in privacy concerns. Many young users of Facebook are using the network less, as their parents and grandparents join. Now they need to pay more attention to what content they like or which pictures they share. Parents might not appreciate to see drunk pictures from the party last night.

The question is whether the app marketplaces for cars will be run by car manufacturers or rather traditional electronic companies such as Apple and Google. They can make use of their existing network of developers and users who are already participating in their platform. Much as in the phone market (except for Apple) it could be the case that car manufacturers continue specialising in the car (such as Samsung or HTC for phones) while a tech company provides the OS and app marketplace.

We could however also see tech companies make use of the so-called ‘enveloping’. Instead of providing only an app platform for a car, they might produce the whole car by themselves and envelope the offerings of car manufacturers. One can see that this move is not that unlikely as Google has been testing cars for years.

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One of the oldest known business models is rising again in the digital age. It’s the business model of a community. Back before there were cities people were living in communities and everyone was contributing to each others growth. Even though this can not really be called a business model, it is quite similar to what resurfaces on the internet again.

Communities became more specific and niche

A community can be defined as a “social, religious, occupational, or other group sharing common characteristics or interests and perceived or perceiving itself as distinct in some respect from the large society within which it exists.”

In today’s online world communities have much more specific purposes or characteristics than looking back to a thousand years ago. There has been a proliferation of communities from communities that had survival as a purpose to communities that are very niche in their outlook. As much as with anything on the internet there has been a proliferation and specialisation.

Communities from A to Z

There are countless types of communities on the Internet and they exist on different platforms. Typically you would of course think of social networks such as Twitter, Facebook or Snapchat as a place for communities to be build. However actually an astonishing number of web companies or applications are build on communities.

Uber is not much of a taxi booking service, but it rather also is a community. It’s a community of people who drive people from A to B. And a community of people who are in need of transport solutions. Uber connects these two communities and creates value this way.

Similarly AirBnB is a community that creates most of its value through having a large number of members in their community. AirBnBs contribution to the community is to run the platform the community is build on: They attract more members, create rules and help out in case there are conflicts.

So, Uber is a community for people looking to share a ride and AirBnB is a community of people who would like to share places to stay. Still if you look on any social media platform communities can get much more niche. An quite random example for this is Nerdfitness.com, a community for nerds and the average Joe aiming to become more fit and healthy.

From community to business model

Still a community doesn’t yet make a business model. However if you have a community of people you can make a business out of it by adding value. This value can be of any form.

You could sell products to your community that help members achieve their goals or solve problems.

You could charge a membership fee for members to be part of the community.

You could add value by creating rules & regulations for your community that create a safe environment for members to connect.

You could recommend products to members of your community and earn a commission.

So there are many ways to monetise a community and make a business out of it. But how many people does your community need? If you only run a business for yourself and do not have any employees it might be less than you think…

Kevin Kelly’s 1000 true fans

In a popular blog article Kevin Kelly calculated the number of people you need to make a living of your community. He argues that you only do need 1000 people, to make a living of your community. There are some caveats to his theory, however it still is an astonishing number and an interesting stream of thought to think about.

What do you think of communities as a business model and how do you make use of the power of communities in your business? Give it a thought, your competitors are doing it as well.

The importance of community also shows in the tile of the Rotterdam School of Management Leadership Summit 2016, which is “From Me to We”. Business is not about only you any more, but it is more and more about achieving things together. And you do not only need to get your own employees but also your customers on board with you to achieve your mission.

Will There Be Apps For Cars Soon?

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