You don’t get to decide if you’re a platform

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Seeing lots of startups pitch themselves as a platform play right out of the gate. The reality is, you don’t get to tell people you’re a platform, they tell you. The platforms we think about today (e.g. Twitter, FB, Android/iOS) all started out as services which attracted end user interest. Then they evolved into a platform in order to grow their business, solve non-core use cases and answer the demands of developers who were otherwise hacking at the product inelegantly or uneconomically.

A platform doesn’t just mean that others can integrate or use your services, it means you have a compelling technical and business proposition which creates enough value for both you and developers to run sustainable and competitive businesses. I would push further and suggest that other companies are able to develop on your platform using a standard deal or terms of service — if access and business rules require a negotiated agreement, it’s not a true platform.

Businesses that start off calling themselves a platform often:
(a) fail because they cannot bring enough value to platform developers in order to get their attention. Or they attract developers but are unable to create enough additional value, meaning the platform cannot extract their own economic rents from the service. Note, in this case “fail” doesn’t necessarily mean “your technology is not interesting” but rather you didn’t find a business model. In these situations the technology is often eventually open-sourced or sold to another company via small acquihire or asset transfer.
(b) realize success not as a platform but as middleware or component technology. Somewhere along the path to Web2, being infrastructure became a dirty word. You wanted to pitch yourself as a “platform” because that was sexy and ubiquitous, but in reality if you’re supplying, for example, lat/long data for a given location lookup, you’re not a “geo platform” you’re infrastructure. I don’t think Twilio started thinking of themselves as a platform so much as a kickass piece of technical infrastructure.
So my best advice to entrepreneurs is to not anoint yourself a platform prematurely – it ultimately won’t be good for your product or business. Start out with an API strategy and broaden to a platform strategy if it’s the right strategic decision.
* Since it’s the beginning of the year and everyone is piling on with “2012 Ones to Watch” type of posts, i’ll add three potential next meaningful technology/service platforms (outside of YouTube which i normally don’t comment on because of my employment).
  • G+ — not a surprise here as they’ve already discussed the API development. Platform value will be derived from access to audience, circle graph, one-click payment model via Google Wallet, identity authentication, cloud storage, etc
  • Spotify — they’ve started with the platformization — i like their app strategy w/in Spotify although the UX is very clunky. What i’m even more excited about is Spotify as an external music OS – allowing users of music products to authenticate against their Spotify account in order to access full music streaming. For example, perhaps SoundTracking support full song listening for Spotify customers instead of 30s samples.
  • Square — Square has several interesting big dollar dollar opportunities (such as SMB CRM, dynamic pricing optimizations, loyalty programs, merchant discovery and promotion) beyond payment processing and i think they’ll likely pursue those before any platformization occurs.