Platforms beat pipelines because platforms scale more efficiently by eliminating gatekeepers. Until recently, most businesses were built around products, which were designed and made at one end of the pipeline and delivered to consumers at the other end. Today, plenty of pipeline-based businesses still exist—but when platform-based businesses enter the same marketplace, the platforms virtually always win.

One reason is that pipelines rely on inefficient gatekeepers to manage the flow of value from the producer to the consumer. In the traditional publishing industry, editors select a few books and authors from among the thousands offered to them and hope the ones they choose will prove to be popular. It’s a time-consuming, labor-intensive process based mainly on instinct and guesswork. By contrast, Amazon’s Kindle platform allows anyone to publish a book, relying on real-time consumer feedback to determine which books will succeed and which will fail. The platform system can grow to scale more rapidly and efficiently because the traditional gatekeepers—editors—are replaced by market signals provided automatically by the entire community of readers.

The elimination of gatekeepers also allows consumers greater freedom to select products that suit their needs. The traditional model of higher education forces students and their parents to purchase one-size-fits-all bundles that include administration, teaching, facilities, research, and much more. In their role as gatekeepers, universities can require families to buy the entire package because it is the only way they can get the valuable certification that a degree offers. However, given the choice, many students would likely be selective in the services they consume. Once there is an alternate certification that employers are willing to accept, universities will find it increasingly challenging to maintain the bundle. Unsurprisingly, developing such an alternate certification is among the primary goals of platform education firms such as Coursera.