What drives business quality in an era of AI and digital platforms?: Jonathan Knee of Evercore
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What is the central thesis of Jonathan Knee’s “The Platform Delusion”?
The idea that because we have entered the internet era or the platform era or the AI era, that now the laws of strategy are oh, those are old. We have a whole different series of heuristics that are relevant. That notion is what I was trying to attack.
Welcome to Orbit, the HG podcast series, where we speak to leaders and innovators from across the software and technology ecosystem to discuss the key trends in building businesses that endure. Today I'm delighted to be joined by Jonathan Knee, Professor at Columbia Business School, Senior Advisor at Evercore. Former managing director at both Goldman Sachs and Morgan Stanley, and author of multiple books, most recently The Platform Delusion. We'd love to talk today a bit about the central thesis of the Platform Delusion. But before we get into that, I'd like to say on a personal level, I'm delighted that you're able to join us, Jonathan. Of course, your lineage at Columbia Business School is well deep and many investors listening in will I'm sure relate to the history from Graham and Buffett, Bruce Greenveld and now yourself with some of the courses that you're taking there.
So I'm really delighted that we can hear from you and try and stand on the shoulders of some big giants of the of the industry.
Thank you. That's incredibly kind. I don't know that the faculty at Columbia necessarily think that I'm in the particular epitome of that lineage, but I'm more than happy to take it.
Well maybe to start with, it would be wonderful to hear how you feel the sort of central thesis of the platform delusion lies. I guess
at the end of the day, the central thesis is very much a Buffett like thesis about what makes a business great. And that has not changed. So I would say the central thesis is that, that the laws of economics do not change with changes in industry structure. When industry structure changes how the laws of economics apply in a particular context change and requires thoughtful analysis. But the idea that because we have entered the internet era or the platform era or the AI era, that now the laws of strategy are oh those are old. We have a whole different series of heuristics that are relevant. That notion is what I was trying to attack.
Well, it it came across to me very strongly in the book, in your highlighting of some of the analogue offline examples of great platform businesses which people tend to overlook. I think one of the examples was the shopping mall example of a the marketplace and the natural kind of network. I don't know if maybe you could use that.
Sure, that's a good example for a few reasons. One, a lot of people think that platforms is like a modern concept. And it is true that Jean Tierrol, the Nobel Prize winning French economist, is the person who popularized the term platform as a business model to be analyzed separately around two thousand. But if you read the article he wrote around two thousand, all of the examples of platform businesses that he uses are quite old. So So all a platform is is a business whose fundamental value proposition comes from making connections rather than making things. So A real estate broker is a platform because he creates value by connecting somebody who's trying to sell their house with somebody who's trying to buy their house.
That is not a modern or high tech concept. However, when a company called Compass, which is basically a real estate broker, tried to go public in twenty twenty one and did successfully. Their S1 uses the word platform about 300 times to get a very, very uh high valuation. Back to the example of malls, obviously that's a pretty low tech business. But what is a mall? It's a uh real estate developer who is going to serve as a platform to connect retailers of various stripe with the local community. And it is a fabulous business because what a smart real estate developer does is a lot of research about the demographics of the area, both in terms of how much money people have and what they like to buy, as well as what kind of uh retail options they have.
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Chapters
8 chapters
1
What is the central thesis of Jonathan Knee’s “The Platform Delusion”?
0:01–4:51
2
How do traditional economic laws apply to modern platform and AI businesses?
4:51–8:54
3
Why are offline examples like shopping malls still relevant to platform economics?
8:54–13:22
4
What are the core drivers of business quality according to Knee?
13:22–17:07
5
How does scale differ from size and why is relative scale crucial?
17:07–20:38
6
When comparing Uber and Airbnb, which business demonstrates stronger economics and why?
20:38–24:34
7
How do specialization and niche expertise create durable advantages against mega‑platforms?
24:34–28:40
8
What role do barriers to entry and network effects play in long‑term profitability?
28:40–32:22
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