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:

Security

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.

Extensibility

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.

Adoption

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.