Three Reminders about Platform Businesses (Apple, Twitter, and Facebook)

This has been a really interesting week in the world of platforms. Between Fred Wilson’s blog post on filling holes and the subsequent Tweetie acquisition announcement and Apple’s announcements about some of the social gaming features that will be part of the next iPhone OS release, it reminded me of some things I’ve thought about as it relates to building on someone else’s platform:

If you’re going to work on a feature that ought to exist (filling a hole, so to speak), you might end up in a single or zero winner situation – It seems to me that the danger of building an application on someone else’s platform that you think ought to exist is that there’s likely only going to be one (or possibly no) winners in the end. If it is in fact a hole, there’s probably one company that the platform owner could anoint as the winner and either give that company preferential treatment or acquire the company itself. Even worse, if it’s an obvious hole, the platform might build it on their own, leaving everyone out in the cold.

If you’re really just filling a hole that the chosen platform just hasn’t gotten around to filling, that might be okay if you’re in a build-to-flip type of opportunity. If you’re trying to build something sustainable, it seems like this is a tough way to go.

It’s very dangerous to build on platforms where the platform itself hasn’t figured out it’s own monetization strategy – I’m surprised nobody talks about this more often. If the underlying platform on which you’re building hasn’t figured out its own monetization strategy, you’re taking a lot of risk with your own business. Until you know the strategy and business model for the platform you’re on, there’s always the risk that your product and strategy could become obsolete once they do figure out a business model. Even worse, your chosen model could end up being at odds with their own strategy.

Make sure you understand the cultural orientation of the platform on which you’re building – Some platforms are really about letting a thousand flowers bloom (Facebook) while others are more tightly controlled (Apple). With that cultural orientation in mind, it’s hard to be surprised when Apple does something with the iPhone / iPod / iPad platform that feels like a land grab – they have a history of exercising tight control.

This is what makes the Twitter situation so interesting to me. They have historically (as in the last few years) been all about letting innovation flourish. It appears that they now might be changing their perspective. Living on someone else’s platform requires that you understand this stuff really well.

  • http://twitter.com/shyamster Shyam Subramanyan

    I think the entrepreneurs understand the risk. The fact that these platform provide an opportunity to experiment quickly makes it worth the risk.

    Twitter still needs developers to continue building apps (not straight up clients) that leverage the Twitter social graph. They might be signaling that Twitter clients have been overdone to the point of their detriment (less traffic on Twitter.com).

  • http://twtpick.in Shyam Subramanyan

    I think the entrepreneurs understand the risk. The fact that these platform provide an opportunity to experiment quickly makes it worth the risk.nnTwitter still needs developers to continue building apps (not straight up clients) that leverage the Twitter social graph. They might be signaling that Twitter clients have been overdone to the point of their detriment (less traffic on Twitter.com).

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