Your startup probably isn't a platform

http://finance.fortune.cnn.com/2011/08/22/your-startup-probably-isnt-a-platform/

by gregpilling • 15 years ago

38 29 15 years ago

finance.fortune.cnn.com

jgilliam• 15 years ago

How is Amazon not a platform? Completely leaving aside AWS (which the author does mention):

a. it has zillions of stores selling through it b. a whole generation of small businesses have been built by people selling used books, cds and dvds. c. anyone can publish their own books, cds and dvds d. anyone can use their fulfillment services and payment services e. digital video and music f. kindle

maaku• 15 years ago

The author lost all credibility at that point.

davedx4• 15 years ago

It's an (albeit extremely large and diverse) e-commerce website, not a platform. What software do you build that runs on top of Amazon?

lukeschlather• 15 years ago

You don't build software, you build businesses. I don't know what percentage of the merchandise available on Amazon is available from 3rd party retailers through the marketplace, but there is a lot.

byoung22• 15 years ago

It's an (albeit extremely large and diverse) e-commerce website, not a platform. What software do you build that runs on top of Amazon?

Ignoring AWS, there are lots of complex systems you can build on top of Amazon. One example is Fulfillment by Amazon. You can integrate this service with your ecommerce website, and Amazon can warehouse your inventory in its facilities nationwide, charging you based on the volume of your inventory. They will automatically select a warehouse closest to your clients that has your item in stock and pack and ship it, and even order more inventory from your supplier when a certain warehouse inventory level falls below a certain threshold. It is basically S3 backed CloudFront for physical goods.

cwp• 15 years ago

Not only that, but the author dismisses AWS because it's expensive and brings in a small portion of Amazon's revenue. By that standard neither Android nor Xbox are platforms.

jcc802• 15 years ago

"At least for me, pitching a business as a platform when it really isn't tends to degrade what might be a really interesting vision and story in and of itself."

I suppose, but that's a pretty small downside. For others pitching yourself as a platform can lead to more buzz, more possibilities and of course...maybe a higher valuation. And, fact is you can't know where things are going so you might as well build & position yourself as a platform if it makes sense.

hack_edu2• 15 years ago

So, vigorously insist it's a duck even if it can't quack. Sleaze is the fastest route to funding?

I'm all too reminded of Saturday's NYT article[1]

[1] http://www.nytimes.com/2011/08/21/technology/silicon-valley-...

davedx4• 15 years ago

Marketing 101 ;)

jcc802• 15 years ago

"vigorously insist" & "sleaze"? Someone may have a case of the Monday's...:) Maybe you read something into it that wasn't written (you'll notice I ended w/ "if it makes sense.") Anyways, point was you don't know where you'll end up so think big and go for it.

freddealmeida• 15 years ago

The use of platform, in the creative agency space is somewhat different. A platform doesn't need to have an eco-system if it creates value for the consumer and develops a community around that value. In this sense Nike+ is a platform. Twitter is too.

The idea that a startup is only a platform if one can build on top of it, may be taking the idea too far.

cek4• 15 years ago

What you are building is either an app or a platform. If you try to make it both you will fail. And there are very few (if any) examples of successful platforms that started as a platform.

cek4• 15 years ago

Surprised this got down voted. Maybe I should explain further.

Point 1: If a startup tries to be both an "app" and a "platform" it will fail.

In my experience, when building a new product, teams need to make a choice very early on whether they are building something that is all about end-user value/experience ("an app") or all about 3rd party value ("a platform").

Groups that attempt to do both lack focus. They don't do a great job building a great user experience and they don't do a great job building the platform because these two things are in tension. Example: enabling a 3rd party plug-in model requires the creation of UI that is often complex from a user's perspective. The investment in that UI to make it great (especially at an early stage when you don't really know what or how many 3rd party extensions will get built) could be better spent on building end-user-valuable functionality in the core of the product.

This point is all about focus. To be successful startups need extreme focus.

Point 2: There are very few (if any) examples of successful platforms that started as a pure platform.

Name a few successful "platforms". Before you do, for the sake of argument, agree with me that "successful platform" implies the platform has a vibrant set of independent partners who both contribute to and "profit" from the platform. I could also use the term "virtuous platfrom" which has come to mean a platform composed of a multi-sided market where each side of the market derives value in a symbiotic cycle with the others.

[EDIT added link] http://en.wikipedia.org/wiki/Virtuous_circle_and_vicious_cir...

The "virtuous platform cycle" that most people use as the prototypical example is the Windows ecosystem. The market sides were: Windows, Intel, OEMs (e.g. Compaq, DELL), IHVs (e.g. ATI, HP printers), ISVs (e.g. Lotus, Adobe, Office), retailers & channel (e.g. Egghead), and of course, end users.

All of these "market sides" drew great value from one another as part of the Windows ecosystem. They all made money, hand-over-foot, because the "virtious platform cycle" snowballed.

There are many examples of other platforms with a virtuous cycle today. Google's search engine, Apple's iOS, and on a smaller scale something like Minecraft (although that's a nascent example).

For each example YOU come up with, ask this question: What came first, "end user value" or "developer/3rd party platform"? In my case, I struggle to find examples where the platform STARTED as something that was focused on developer/3rd party value. You might argue Java, but then I'd say "in what way did the creator of that platform make any money off the platform?".

Discuss. :-)

robfig• 15 years ago

Isn't every social network out there a counter to #1? e.g. Facebook, Twitter

Both are Apps, and both allow you to write code against them (or maybe Twitter doesn't count because it doesn't run on their site?)

orcmid• 15 years ago

I would have thought that Windows is an example of a platform created as a platform. It was seeded by ability to also run MS-DOS apps, and it had some starter apps, but the effort to fire up the platform-developers-apps-users-hardware-... cycle was pretty clear. In many ways MS/PC-DOS was similar (with Basic as an important developer tool) with the attraction of IBM's imprimatur for applications (many of which were seeded/transposed from CP/M).

But that's history. These days, with the Internet for infrastructure, creating user-facing platforms and use of social-software provisions blurs everything, with an increase in user-facing provisions (and users for addition of value), the process is short-circuited, sometimes massively. But today's attention to ecosystems and the effort to establish Windows Phone as one platform of an ecosystem is further example.

Also, I think there are other reasons for apps to be modularized in a way that supports plug-in extension and customization in larger integrations. Attention to extensibility and customization can be valuable in the development progression of the app itself. That might make it a mini-platform without growing to a platform as we think of them in todays distributed ecosystems. It is useful to have an eye on such matters so that early releases can grow there from initial rudimentary (essentially-private) provisions.

eaglejackson• 15 years ago

Totally agree. Most companies that have platforms start out building an end user focused app, gain success, and then open up some level of their internals to become a platform. For example, Facebook. It was just an app, and then, after it had success, launched a platform. Even the iPhone initially did not have apps. Amazon is another example. It started as an app and expanded to be a platform that other partners could plug into and take advantage of Amazon's services, particularly logistical ones.

Further, most startups that try to build a platform from the beginning fail, because to have a platform you need a vibrant set of partners who make money off your platform, and it's very rare for a startup to be something that others will build a business on.

Perhaps those that build a marketplace could be viewed as both an app and a platform, like an Ebay. Of course it's necessary to get scale as the marketplace for it to really be successful and provide value to both sides of the transaction (buyers and sellers).

Note that the Amazon example shows how Amazon transformed from an app to a platform by adding the marketplace.

andrewtbham• 15 years ago

This guy appears to be frustrated because he is using the term platform in a very narrow sense. By his definition it requires a "developer ecosystem." Whereas the people he hears use the term are referring more correctly to a two sided market.

http://en.wikipedia.org/wiki/Two-sided_market

jmitcheson• 15 years ago

"or perhaps your a dev tools business"

Your / you're error in published article.. ugh

edanm• 15 years ago

The argument about Amazon is wrong - it may account for 3% now, but it's still a work in progress, a growing business. Much as the e-commerce business was unprofitable for most of the early life of Amazon, because it was still growing.

Your startup probably isn't a platform

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