In the final analysis, platform capitalism is lucrative and likely to get more lucrative in today’s world. Hence, you could make money by investing in platforms.
Here are my tips for investing in platforms:
1. Look for businesses in a position to collect tolls or rents. For example, Amazon collects “tolls” from merchants, Prime subscribers, movie producers, companies that use the AWS cloud, and many others.
2. Look for businesses like Microsoft, Apple, and Alphabet that generate a lot of cash. Remember, a toll booth with an an empty cash register is pointless.
3. Look for undervalued; or under-appreciated, landlords such as Microsoft and Apple.
4. Look for companies that own multiple platforms.For example; Microsoft, Apple, Amazon, and Alphabet.
5. Look for unusual and unlikely platforms other investors ignore. For example, Microsoft, and lesser tech companies like Oracle (NYSE: ORCL), the Ocado Group PLC (LSE: OCDO), NVIDIA (NASDAQ: NVDA), eBay (NASDAQ: EBAY), and PayPal (NASDAQ: PYPL).
6. There are platform possibilities far beyond Silicon Valley; for instance, Ford (NYSE: F) is building a Transportation Mobility Cloud to harvest data from vehicles. Furthermore, even retailers like Kroger (NYSE: KR) and the TJX Companies (NYSE: TJX) have platform attributes.
7. Remember that no platform is foolproof or permanent. Consequently, any platform can stop making money. In particular, the slow deaths of broadcast television and newspapers demonstrate that no platform lasts forever.
Finally, research platforms carefully before investing, and be leery of any new or unusual platform. Even though a few platforms generate lots of cash, most platforms will never make money.
Originally published at https://marketmadhouse.com on May 1, 2019, as part of a longer piece.