Airbnb changed the way we travel without purchasing any hotels. Uber made it easier to get around without amassing their own fleet. And DoorDash took care of breakfast without cracking a single egg.

The common thread between these companies is that they’re platform businesses. Rather than selling products directly, they’re providing a platform that conveniently connects sellers and buyers.

How do you follow in their footsteps? Professor Mohanbir Sawhney has four steps that can help you build a platform of your own.

‍

Step 1: Identify the pain points

What’s something about the status quo that people can’t stand, but put up with because there’s no alternative?

Before Uber, for example, hailing a cab used to mean shouting on a busy street corner or waiting in a long queue outside your hotel.

To help uncover pain points, ask yourself these questions. We’ve filled in the answers for Uber to give you a sense of how a leading company does it.

What inefficiencies do you see in the current market?

Friends sometimes bail. It’s hard finding a last-minute ride to the airport, especially when you don’t know upfront how much that’ll cost.

How fragmented is the market?

There’s a lot of taxi services on Yelp. Maybe even too many. How do you find the right one?

‍Is there a trust deficit?

Will they arrive when they say they will? Will the meter run fast? Will they take me on a less-convenient route to make more money? 

‍What are people willing to pay?

Missing your flight means missing your meeting. How much would you pay to avoid that?

‍

Step 2: Identify which two markets can be connected

A platform business needs both buyers and sellers to function. In the case of Airbnb, that would be travelers and homeowners.

Get to know both markets you’ll be trying to connect by asking these questions:

Are there enough people on both sides?

How many people will be looking for a place to stay on any given weekend? Are there enough property owners willing to solve that problem?

‍What talents, skills, or assets both markets can contribute to your platform?

The homeowner has a guest house that’s going unused. The traveler has a network they can recommend it to for the next conference.

What’s the size of the transaction and how often will the services be needed?

The traveler will only be in town a few nights. The homeowner only has so many spare rooms. That means the booking fee will have to be high enough to make it worthwhile.

‍

Step 3: Create a value proposition

Your platform can’t rely on just one benefit. To be successful, it needs to lean on a variety of factors to build up a compelling value proposition.

If you need help around the house, TaskRabbit can bring someone to your home same-day but they also offer a lot more to make it a valuable service. You can sort by price, browse through reviews, and zero on a specialist who has experience with whatever it is you’re trying to tackle.

Here are some of the value drivers your platform should go after:

Choice

This Tasker has done 157 mounting jobs but requires a three hour minimum. This other one has done 140 but can probably get it done in an hour. Seems like a no-brainer.

‍Trust and transparency

The Tasker has great reviews – plus, they’ve gone through a criminal background check. They can be trusted to swing by while you’re at work.

‍Convenience

You can just type out what you need done and they’ll let you know if they can handle it. So much easier than a phone call.

‍Control

Thursday doesn’t work? Get someone for Friday. Or Saturday. Sunday’s good too.

‍

Step 4: Design interactions that connect both sides

Platforms are all about making connections, so naturally there’ll be plenty of interactions.

As one of the earliest online platforms, eBay made it easy for sellers to auction off just about anything, whether that was old baseball cards, used lawn furniture, or a kidney stone that passed through William Shatner. (A must-have for any Star Trek fan, I guess?)

To facilitate these sales, eBay made it easy for bidders to ask questions and buyers to flag shady customers.

There are the three interactions you should design for:

Between the buyer and seller.

Is this really a signed Dusty Baker rookie card? Has the autograph been verified?

‍Between the buyer and platform.

The highest bidder left feedback complaining about the condition of the card but it was clearly listed in the description as “Good” and not “Mint.” Can it be removed?

Between the seller and platform.

My item never showed up and the seller deleted their account. Can you step in?

‍

Coming up with a great idea is the first step in developing a new platform. To learn more about product strategy, disruption, and building a great business, become a Section4 member today.