How can you make the most of the power of platform economics to drive success? Learn what to look for in a platform.
Last month, I wrote about my unfortunate experience with Facebook, which took it upon itself to broadcast my entire Spotify listening experience to the world, seemingly without my knowledge or permission.
This aggravated me to the point of proclaiming, quite publicly, that I was going to “commit Facebook suicide” and end my relationship with the social media behemoth. It turns out that is easier said than done.
As I was downloading my Facebook file to prepare for the big quit, I went to check in with my Yahoo Sports Fantasy Football league, and logged in using my Facebook credentials.
I immediately realized that Yahoo was merely the tip of the iceberg. Facebook suicide wouldn’t only make it nearly impossible for me to hit the waiver wire and grab newly available Green Bay Packers receiver Donald Driver, it would actually create the internet version of losing your wallet.
Right now I have 41 applications that interact with Facebook, mostly for credentials, but some with deeper integration, including Crunchbase, Yahoo, Bing, Foursquare, Spotify, Quora, Klout, CityPath, Slideshare, Eventbrite, LinkedIn, Gist, TweetDeck, Nintendo DSi, AIM, Yelp, and TripAdvisor.
Facebook is also a place for me to post articles, my database of “friends” (many of whom are schoolmates and acquaintances (as I am to many of them), but ones I like to keep in touch with.
You never know when a connection may come in handy. A Facebook desertion would impact my Klout score (heaven forbid!); make me remember by Photobucket password, which I registered for about five years ago, and make RSVP’ing to my friend’s Christmas party a lot harder than it needs to be.
In short, for the active web user, life without Facebook is like living in Los Angeles without a driver’s license. It’s weird and it’s hard.
Facebook is the definition of sticky. Not only because there is data in there that’s hard to organize elsewhere, but its basic utility makes the cost of switching extremely difficult.
Not to mention the fact that there is little to switch to. Google Plus is great, but a bit too late to the party. Nobody wants to manage two social networks. One is more than enough.
So, how did Facebook become the site that’s impossible to leave? Facebook is a great example of the power of platform technology. My former colleague, a longtime Microsoft employee, taught me a lot about the power of platforms and introduced me to this simple definition, written by Marc Andreessen in 2007.
A “platform” is a system that can be programmed and therefore customized by outside developers -- users -- and in that way, adapted to countless needs and niches that the platform's original developers could not have possibly contemplated, much less had time to accommodate
Andreessen identified three types of platforms (and we can associate these definitions with modern examples):
- Level 1: Platform's apps run elsewhere, and call into the platform via a web services API to draw on data and services (e.g., Google Maps, Flickr).
- Level 2: Platform's apps run elsewhere, but inject functionality into the platform via a plug-in API. Most likely, a Level 2 platform's apps also call into the platform via a web services API to draw on data and services. (Facebook, Firefox, Adobe Photoshop).
- Level 3: Platform's apps run inside the platform itself. The platform provides the "runtime environment" within which the app's code runs. (Salesforce.com, Ning, Facebook more recently).
My friend tells me that Microsoft somewhat accidentally created the platform business model, and continues to nurture the ecosystem of development and innovation around Windows with great success.
Microsoft was one of the first companies to support outside developers with financial and intellectual resources, and continues to make what they call “Developer Platform Evangelism” part of their DNA.
My colleague also rightly pointed out what a shock it was when Apple took a page from the Microsoft playbook and starting cultivating a developer-driven platform approach. (How many applications are available for the iPhone at the moment? Half a million?).
Building a flexible, extensible platform upon which others can build businesses is not about creating a product; it is building a living, breathing, sustainable ecosystem that can grow on its own.
Advertising technology is probably the best example of an industry crying out for open platform technology. The now familiar Kawaja map has become the rallying cry for integration, and marketers are looking for smart technologies that can bring disparate systems and point solutions together in a way that actually offers efficiency and performance (rather than being yet another tool to log into).
Whether its managing digital advertising workflow, or wrangling a mess of first and third party data, the answer can be found in a new breed of “open” platforms. When choosing a partner to work with, ask yourself these questions:
Is the platform safe? It may seem counterintuitive, but the most open platforms require the greatest levels of security.
Look no further than Facebook’s recent deal with the Justice Department to see just how serious platform security is to its ultimate ability to succeed.
This is important for all platforms, but most critical when it comes to data management, where a great deal of first party data is stored and aggregated.
Does my platform solution enable me to extend it’s utility via API (application programming interfaces)? In other words, how easy is it to plug in my billing numbers into my ad management platform, to make the reconciliation process more manageable?
Your platform should provide clean, well-written API documentation, and support the access to wide variety of data and services.
How viable is the platform? A good yardstick of long-term viability is the acceptance rate from the development community.
Is there an active and passionate community of businesses and/or individual users developing applications against the platform’s web services?
These are great starting points when considering leveraging a platform technology for your business, but you should also ask yourself how your company can use the principles of platform technology to be more successful.
This is happening every day, as companies leverage Saleforce.com’s awesome platform technology and cloud infrastructure to create new internal or client-facing applications.
How about online publishers? Instead of constantly putting together reports for their advertisers, what if they leveraged a platform that enables their biggest advertisers to build their own reports, and mix them with internal data to get new customer insights? The possibilities are endless.
I recently found out that is was impossible to quit Facebook. Understanding platform economics may inspire you to leverage technology to generate an ecosystem that your customers can’t leave either.