The Founder’s Blind Spot: Product Over Platform

September 24, 2023 4 mins read

Most people overestimate what they can do in one year and underestimate what they can do in ten years.

Bill Gates

Dear Reader,

Your product solves a problem; but a platform shapes the market. If you’re not your platform’s first customer, you’re missing the largest value accelerator. Be the orchard, not the grape. #PlatformVsProduct (tweet this)

A product solves a problem, but a platform builds an ecosystem; a village, a community, an army. While a product fights for market share, a platform defines the market itself. A product is a standalone piece of software, a consumable, a single transaction, a quick exchange of value, but a platform is an entire economy, sets the rules, shapes behavior, and enables the unknowns.

The platform’s value accelerator isn’t just your innovation; it’s the unforeseen places others will take your product. It’s the art of the possible, fueled by people not even on your payroll. This external innovation atop your foundational platform moves you to indispensable.

Book: “Platform Revolution” by Parker, Van Alstyne, and Choudary. A decade old, but still applicable deep dive into the mechanics of platforms.

Last WeekWhen StartUps Become Empires: Customer Obsession 

Today’s startup acceleration cycle gives no grace period. Thinking you’ll just “add platform capabilities” later is as flawed as thinking product-led growth is a feature. By the time you wake up to pivot or extend, you’re staring down a Great Refactor or the Total Rewrite. Your category-leading speed will vanish. A platform can no longer be an add-on; it has to be a foundation.

Being platform-led isn’t about spending more money or time. It’s a strategic choice, it’s a blueprint for how you build, think, and design. It’s the DNA of you and your StartUp.

BlackBerry, Friendster, Kodak, Nokia, Internet Explorer – all cautionary tales of companies eclipsed by competitors who led with platform and ecosystem.

Salesforce, just a CRM product in the cloud, opened up the API and aggressively invested in partners to build atop it, transforming into a platform. Their marketplace has generated billions in revenue for them, their partners and their customers, becoming a one-stop-shop for everything sales and marketing.

I hear the contrarians or super early stagers asking, “Why build a platform when you don’t even know if your product has fit?” Fair point. But, if you’re not thinking platform from the start, you’re limiting your scalability and adaptability, boxing yourself into a corner. Sure, validate your product and fight to get a little traction, but do it in a way that leaves the door open for extension and integration. It’s a technical debt that is almost impossible to recover from.

Why should you care?

Integrate, Extend, Build On: Your platform isn’t a sandcastle; it’s a sandbox. It’s not just for you; it’s for everyone to innovate within.

Network Effect: Think of it as the startup’s version of compound interest. The more users and third-party integrations you have, the more valuable your platform becomes for everyone. It’s not just user addition; it’s value multiplication. Lower customer acquisition costs, higher retention, and an accelerating value curve are a few of the outcomes.

Nearbound Strategy: More than inbound and outbound; the future is nearbound sales aka go to ecosystem. Your partners aren’t just channels; they’re co-creators. Your platform is what makes this collaboration possible, turning partnerships into global sales channels.

There are so many more layers. Data Network Effects. Community and Content. Flexibility and Adaptability. Global Reach. Sustainability. Compliance. All hidden opportunities that when you get even moderately right are exponentially better than any “great” product.

And all of this comes full circle to why you, your employees, investors care. Platforms drive company value. Platforms have a force multiplier effect that products can’t touch. Every major company today is a platform. Products are becoming extinct, relegated to unscalable, single-use silos. If you’re building a product, you’re building a relic. If you’re building a platform, you’re building a future.

Platform is more than just solving a problem; you’re creating a universe of problem-solvers. That’s not just revenue; You’re building a true moat around your business.

Grappling with the transition from product to scalable platform, reach out. I’ll try to respond to as many as my bandwidth allows!

Build wisely.

— James

(LinkedIn | Twitter | Tiktok)

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