By Simon Bond

The rise of the technology stocks has always been the focus of what we attempt to share with you, we study and write prolifically on what has happened and what is going to happen next.

The fact is, that for a brief time in July, the stock markets, the arbiters of future fortunes, anointed five technology companies — Apple, Google, Microsoft, Amazon, and Facebook — as the top five American companies by market capitalisation. Of course, market value changes all the time, but, still, for that moment in time, they were the Big Five.

If Uber and Airbnb were listed, it would come as no surprise to observe their ascendancy to the top over time as well. These are businesses that can be described as "platforms".

A platform is essentially a business model that thrives because of the participation and value added from third parties with only incremental effort from the owner of the platform. We obsess about the impact of networks and the network effect. Our analogy of the lilies in the pond and their doubling in size every day continually comes to mind.

Our economy, for a long while, has been transitioning from one reliant on industrial strength to one based on digital information. The next step in this transition is a digital economy shaped by connectivity, and networks. As connectivity grows, so will the networks. This is not make believe, it is simply a fact.

We attribute some of these economic advantages to the ability of digital networks to scale with nearly zero marginal cost (e.g., the cost of each additional good and service made and sold). Digital platforms scale upward very inexpensively compared with other assets. Consider the following. To scale up an asset builder, you need additional input materials, plans, and production time in order to build more things. To scale up a service provider, you need to recruit, train, and deploy more people. To scale up a technology creator is less expensive (for example, selling many copies of software), but it is still not as low cost as a network orchestrator. To scale up a network orchestrator is often free; your company need not provide all the value, because the network itself contributes products and content.

In fact, network orchestrators rely on their networks to contribute goods, services, information, or relationships to the platform, something that also reduces the burden on the company. This rapid, inexpensive scaling creates favorable profit margins for network orchestrators.

Kevin Kelly ex Wired Magazine sums it up so simply in the diagram below.

Revisit the investments in your portfolio and ask yourself, will they be part of the future or the past?