Three years ago, a coaching client called me excited about his “Uber for lawn care” idea. He planned to raise money, build an app, connect homeowners with lawn services, and scale nationally. Eighteen months and $200,000 later, he shut it down.

The problem wasn’t execution. It was the model. He needed a pipeline business. He built a platform. That expensive lesson taught both of us something crucial: the business model you choose matters more than the idea itself.

Here’s what most entrepreneurs miss. Platforms and pipelines aren’t just strategies. They are fundamentally different types of businesses that succeed under different conditions. Choose the wrong one, and you’re fighting uphill against market reality.

Pipeline businesses follow a linear value chain. You create something, sell it, and deliver it.

Think consulting firms, bakeries, software agencies, or manufacturers. You control the entire process from creation to customer. Your value comes from what you make or do. Platform businesses work differently. They connect buyers and sellers and facilitate transactions between them.

Airbnb doesn’t own hotels. Etsy doesn’t make crafts. Uber doesn’t own cars.

Platforms create value by reducing friction, building trust, and leveraging network effects. As Reid Hoffman observed, in a network effect business, the most important asset is the network itself, not the technology. But without the network, you have nothing.

Platforms can scale exponentially in ways pipelines cannot. Once built, adding users costs almost nothing, while value increases dramatically. A 2023 MIT study found that platform businesses grew 2.4 times faster than pipeline businesses and achieved 3.1 times higher market valuations.

Platforms work best when markets are fragmented and transaction costs are high. Before Airbnb, finding short-term rentals meant calling hotels or scrolling Craigslist. The friction was enormous. Airbnb didn’t create supply or demand. It connected existing supply to latent demand.

But here’s the trap. Platforms are worthless until they reach critical mass. You need buyers to attract sellers, and sellers to attract buyers, at the same time. This chicken-and-egg problem kills most platform attempts. My lawn care client couldn’t attract homeowners without providers, and couldn’t attract providers without customers. He needed both immediately. He had neither.

Pipeline businesses let you start day one. You don't need a network—you need a customer and the ability to deliver value. You control quality, customer experience, and margins directly. As Sara Blakely, Spanx founder, noted, "Don't be intimidated by what you don't know. That can be your greatest strength and ensure that you do things differently from everyone else."

Pipelines dominate in specialized expertise, regulated industries, and high-touch services. Why hasn't anyone "platformized" brain surgery, custom furniture making, or executive coaching? Because the value is in the specialized capability, not in connecting people who have it. Quality control matters more than scale.

A Harvard Business Review analysis found that pipeline businesses in specialized markets had 23 percent higher profit margins than platform attempts in the same spaces.

Sometimes smaller and profitable beats bigger and struggling.

Ask yourself five questions:

If you answered "yes" to questions 1-2 and "connecting" and "network" to 3 and 5, consider a platform. Otherwise, build a pipeline.

➔ Start Pipeline, Layer Platform Later. Build revenue with a pipeline model first. Once profitable, add platform elements. A marketing consultant I know built a $500K pipeline agency, then created a platform connecting freelancers to clients. The pipeline funded the platform's development without outside capital.

➔ Test Before Building. Before creating platform technology, manually connect buyers and sellers. If you can't make it work manually, technology won't save you. One client tested his "platform" idea by literally calling both sides and facilitating transactions. Learned in two weeks it wouldn't scale.

➔ Don't Force Platform Where Pipeline Wins. Indra Nooyi wisely said, "Just because you are CEO, don't think you have landed. You must continually increase your learning." Apply that to business models. My lawn care client eventually built a successful pipeline lawn care company serving 200 homes directly. Smaller vision, bigger profit.

Your business model isn't about what's fundable or exciting—it's about what serves your market reality. Choose wisely.