Question
Platforms beat pipelines because platforms unlock new sources of value creation and supply. Consider how the hotel industry has traditionally worked. Growth required hospitality firms
Platforms beat pipelines because platforms unlock new sources of value creation and supply. Consider how the hotel industry has traditionally worked. Growth required hospitality firms like Hilton or Marriott to add additional rooms to sell through their existing brands using sophisticated back-office reservation and payments systems. This means continually scouting the real estate markets for promising territories, investing in existing properties or building new ones, and spending large sums to maintain, upgrade, expand, and improve them.
Upstart Airbnb is, in one sense, in the same business as Hilton or Marriott. Like the hotel giants, it uses refined pricing and booking systems designed to allow guests to find, reserve, and pay for rooms as they need them. But Airbnb applies the platform model to the hotel business: Airbnb doesn't own any rooms. Instead, it created and maintains the platform that allows individual participants to provide the rooms directly to consumers. In return, Airbnb takes a 9-15 percent (average 11 percent) transaction fee for every rental arranged through the platform.1
One implication is that growth can be much faster for Airbnb or any rival platform than for a traditional hotel company since growth is no longer constrained by the ability to deploy capital and manage physical assets. It may take years for a hotel chain to select and purchase a new piece of real estate, design and build a new resort, and hire and train staff. By contrast, Airbnb can increase its "inventory" of properties as quickly as it can sign up users with spare rooms to rent. As a result, in just a few years, Airbnb has achieved a scope and value that a traditional hotelier can hope to reach only after decades of often risky investment and hard work. Can you explain, what paypal or platform did to beat banking industry in termof unlock new sources of value creation and supply, with references
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