Wednesday, March 31, 2010

"Platforms" aren't just for developers: Accelerate your startup by empowering others

This idea now feels so obvious to me that I almost didn't bother to write it down. But I keep having conversations with entrepreneurs who aren't yet using the pattern and their eyes always light up when they see a way to apply it to their own business, so if this post turns on the lights for just one young company out there it will have been worth it.

"Platforms" are familiar to anyone in the tech business - the companies that find a way to build the dominant platform tend to reap monopoly-scale economic rewards by enabling - and skimming profits from - the collective work of their developer ecosystem, e.g.
Technology platforms are so powerful because they eliminate huge amounts of hard and unglamorous work - what Jeff Bezos famously refers to as "muck" - letting developers focus on the sexy and differentiating bits of their apps. If the platform is effective at this, developers generally don't mind paying "rent" (in one form or another) to the platform owner for dealing with the muck.

But "platforms" aren't just for developers. In fact, there are dozens of successful "platform" companies across a wide array of industries that take away muck and make good money doing it:

In this broader view, a "platform" is any opt-in system that:
  • Makes individual contributors / entrepreneurs more successful
  • By removing common operational obstacles and sources of friction
  • And - in some cases - creating / aggregating market demand for the entrepreneur's goods or services
The best platforms are accretive, meaning the total value of the platform to all contributors (and the platform owner) is increased by every incremental entrepreneur that chooses to participate.

As an entrepreneur and early-stage investor I absolutely love companies with a platform angle - even if it's not the primary focus of the business. Individuals and small teams can create amazing amounts of value, and *any* system that honestly seeks to makes life easier for passionate individual entrepreneurs to chase their vision and realize their dreams is nothing but goodness in my book.  A few examples I'm super-excited about right now - some for developers and some not - include:
  • iPhone / iTouch / iPad + App Store
    • Apple gets credit for blowing up the entire mobile software ecosystem and making it possible for developer-entrepreneurs to create, distribute and monetize their creativity.
  • Android + Android Market
    • Modeled on Apple's success, but with much greater global potential due to the open + free distribution model for the OS
  • Etsy + Artists / Craftspeople
    • Etsy takes away the muck of distribution, discovery, order handling and payment processing for some of the most brilliant artists and craftspeople in the world.
Unsurprisingly, you'll see this pattern at work in several of our Founder's Co-op portfolio companies as well:
  • Urban Airship + mobile developers 
    • Push messaging and in-app transactions are "mucky" enough on iPhone or Android - running these services across multiple platforms is the nightmare Urban Airship takes away for 2,000+ (and counting) smartphone developers, including some of the biggest names in the business.
  • Nearlyweds! + invitation designers
    • Every modern bride needs a wedding website to keep guests informed about the big day, but brides that care about design want their website to match their wedding colors and invitation design. Nearlyweds makes it easy for any wedding designer to offer (and charge for) wedding websites that match their custom design.
  • AppStoreHQ + mobile developers
    • With over 150,000 iPhone apps now available in the App Store and 30,000 more Android apps on offer in Android Market, getting your app found is way harder than building it. AppStoreHQ is the most-visited independent app discovery platform on the web (and also powers app search on a long list of app review blogs). Thousands of app developers now use AppStoreHQ to promote their apps in search results both on and off the site.
  • LookStat + digital photographers
    • The global transition from traditional stock to microstock has been hugely painful for professional photographers. LookStat helps take away some of that pain by automating the submission of large stock catalogs across the leading microstock sites, and providing sales analytics to help photographers know where they're making money and what to shoot more of to boost yields.
If you're building a web software business and haven't yet considered how your product might be used as a platform to help others succeed, take a minute and do the thought experiment - you just might unlock a powerful accelerant for your own success along the way.