At the Mercy of Platforms

Posted in Startups

When and how do you move off of someone else’s platform?

I read a few articles recently that espoused the idea of small startups focusing on doing just one thing well, and not owning the entirety of the “stack.” By leveraging others’ systems and integrations, it only takes a few people to hone a system and build a business out of it.

The deal is always a tradeoff, though: leverage someone else’s systems/visibility/reach while they find the relationship mutually beneficial, but scramble for an alternative when the rules change to suit the platform owner’s new goals. I experienced this first-hand as a Facebook app developer trying to work through the iterations of Facebook’s news feed, and Meerkat famously got cut off by Twitter.

Sometimes there is no alternative. Bloggers and most e-commerce sites are at the mercy of Google’s search algorithm tweaks, and mobile app developers (who want to charge for their software) have to follow Apple’s rules. Other times, it feels like running from one platform to next as the benefits eroded: sellers who migrated from eBay to Etsy and Amazon Marketplace have had similar complaints about their treatment. Leaping off the shoulder of giants can be hard; just ask Zynga and their efforts to mitigate their dependency on Facebook.

To be fair, the fear of getting subsumed by the platform owner is only realized usually when the product has enough scale. When the niche becomes interesting or big enough to influence the platform directly, the platform owners take notice and can either copy, buy, or lockout the dependent product. Apple’s flashlight functionality in iOS7 killed hundreds of flashlight apps, but those apps enjoyed 6+ years of profits for a very basic feature. Game mods have been enabled by the Steam Workshop for years, and while the recent attempts at monetizing those mods have been rebuked, the announcement made it clear that paid mods – with a substantial portion of the revenues generated – will be in Steam’s future.

Single-layer, single-focus businesses may thrive, but they do so at the mercy of the all-powerful platform owners.