Pros and cons of building on platforms

slack

As I’ve written previously, a lot of my founders aspire to creating platform companies. But many don’t pay enough attention to what it takes to create an ecology of developers around a platform and the many platforms out there already competing for developers’ attention.

But there’s another route developers can take – develop for a popular platform, like Slack. In fact it’s clear that Slack aspires to be the workOS of the enterprise.

The article Why we’ll see more startups built on platforms like Slack by ANDREW KIRCHNER on VentureBeat provides a very good list of the pros and cons of taking of such a pilot fish strategy.

  • Pro: You’re fishing where the fish are – I consider customer acquisition as the major challenge for most tech startups. As I tell my engineering mentees, I believe engineers can build just about anything, but I don’t believe they can sell just about anything. The goal of a platform is to be a demand aggregator. Instead of your venture spending gobs of money finding customers you just have to present a compelling proposition to the customers of your chosen platform. Still a challenge, but much less expensive. The key to success is choosing the right platform. Years ago Evernote was hot; now it’s not. Today it’s Slack, but tomorrow it could be something still incubating in someone’s garage. You also need to make sure there’s a match between your competencies and the tools your chosen platform provides. Choosing an integration-first product like Salesforce is similar to choosing iOS or Android or Windows or Mac – but far more complex, as there are at least two orders of magnitude more would be platforms to choose from than operating systems.
  • Pro: No extra login for customers Estimates put the total number of cloud products per enterprise at more than 1,000! Who wants to deal with even 10% of those logins and passwords?!
  • Pro: It’s easier and cheaper to get to market. By developing for a platform you can use their UI and save lots of development time and effort. Plus you eliminate 90% of the learning curve for your customers. Much, much more efficient for a small startup to join an existing ecosystem of a giant than to go it alone. 
  • Pro: You’re immersed in the culture of your clients. This is the weakest argument, but certainly you want to choose a platform that shares your values.
  • Con: Smaller customer pool. The total size is not as important as the growth rate. You want to choose a platform with a high growth rate, not one that is stagnant or even shrinking. It’s not as simple as a pure numbers game. You are going to have to predict the future – just like any other startup – by picking a winner.
  • Con: You may struggle for visibility.  This is an issue of timing. Getting in early with a platform gains you visibility, but increases your risk. Apple’s App Store and Google Play with their millions of apps, make invisibility the norm, as they are mature platforms. So once again you have to pick wisely, a young but growing platform versus a larger, but mature platform.
  • Con: You’re at the mercy of the platform. Some platforms, like iOS and Windows, have years of experience and teams of engineers supporting their ecosystems. But others, like Twitter have even shut down their platforms after a period of time. So once again you have to measure risk versus reward and choose wisely.

Let’s face it, startups are risky. Typically investors consider there to be three risk factors: technical, market, and team. Riding the wave of an existing platform can do a lot to reduce the technical and market risks. But that path introduces a new type of risk: your chosen platform may not grow or may even shut down to outside developers.

Author: Mentorphile

Mentor, coach, and advisor to entrepreneurs, small businesses, and non-profit organizations. General manager with significant experience in both for-profit and non-profit organizations. Focus on media and information. On founding team of four venture-backed companies. Currently Chairman of Popsleuth, Inc., maker of the Endorfyn app for keeping fans updated on new stuff from their favorite artists.

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