The bubble is over. Unicorns are losing their horns--or dying. All hail the unicorpses. Downrounds are coming, or worse. The sky is falling.

If you've read the tech press recently, you could be forgiven for thinking the end is nigh. The doomsaying about the always-looming crash has gotten just as bad, if not worse, than the unicorn hype that the same media lavished upon us when we were on the upswing of this economic cycle.

"Tech" is Not an Industry

Unfortunately, lumping all of these startups into one bucket ("tech companies") isn't particularly useful for analysis. Micro-booms and busts have already been happening within tech over the last few years.

Both daily deals sites like Groupon and social networks looking to be the next Facebook have come and gone. These industries got overheated and then deflated just as quickly. Booms and busts within specific industries will continue, as everyone scrambles to be the next X, Y or Z. But in the meantime, there are a number of companies with lots of real customers and real revenue that are building solid businesses.

Yes, if the broader market starts to crash, there could be some negative contagion effects among venture-backed startups. The failure of one company could mean trouble for a many others. This sort of problem isn't new. Even some of today's tech stalwarts, such as Amazon, nearly failed in the wake of the dot-com crash. But all of this crash hysteria, like the hype train that preceded it, misses the point.

From Products to Platforms

The focus on unicorns and huge valuations gets all the headlines, but it ignores the bigger economic shift that's happened over the last few years. If you look at the companies that have seen the most success and are building lasting businesses with real revenue, they're remarkably similar. What do Apple, Google, Facebook, Amazon, Tencent, Alibaba, Airbnb and Uber have in common, besides soaring market share? They're all platforms--a new business model that has quietly become the only game in town.


Today, platforms make up a relatively small part of our economy--just under 5% of the S&P 500--but that won't be true for long. Over the last decade, we've seen a massive shift from old business models (what we call linear businesses, because they are defined by a supply chain where value flows linearly, from supplier to manufacturer to consumer) to platform companies that harness and connect massive networks of users. Platform businesses generate value by using technology to facilitate exchanges between two or more groups. So rather than making things, platforms simply connect people.

If you look at the ranks of today's unicorn companies, you can see this change very clearly. Nearly 60% of these companies are platforms. Internationally, the difference is even more stark. Nearly all of the unicorn companies from developing economies like India and China are platform businesses. Yes, some of these businesses will fail, as will some of their linear unicorn counterparts. And yes, valuations may decline in some cases. But around the globe, the next generation of big business will be dominated by platforms.


For example, a number of successful platform startups are already primed to join the S&P 500. Uber, Snapchat, Airbnb, and Pinterest are candidates, as they already meet S&P 500 market cap requirements. And China's private sector economy is increasingly dominated by the BATs--Baidu, Alibaba, and Tencent, which are all platform companies.

Welcome to the Platform Economy

These modern monopolies organize commerce and information and shape the world as we know it. And they are driving the most profound economic shift since the Industrial Revolution. In the process, they're building new markets and communities and creating the digital infrastructure that will support nearly everything we do and consume in the decades to come. (I explore this phenomenon in much greater detail in my forthcoming book, Modern Monopolies.)

If you lump all tech companies into one bucket, as most of the press and many analysts do, you'd miss this change. But if you look beyond the headline valuations and the boom and bust hype, you'll see that platforms are already having a profound impact on our economy and our society. And with many more platform giants on the way, the impact of this new business model will only grow in the years ahead.

While a crash may come at some point, platforms are here to stay. Some of these unicorn companies may die off or lose value, but the end is not nigh. Rather, the age of platforms is just beginning.