Are you a platform?
Everyone calls their product a platform, but true platform opportunities are rare. Does your company have one?
Platform. Every product claims to be one, but what is a platform, really? What does it take to make the shift from product to platform, and how can we get there?
This post explores what it means to have a platform. I draw on thinking from others that I deeply respect, and try to help you diagnose whether your company has a meaningful platform opportunity at hand.
Steven & Alex’s Useful Platform Frameworks
Steven Sinofsky recently published the best platform-definition that I’ve read (and I have been working on platforms for my entire career!). I had the pleasure of getting to pre-read his content before it went live and a couple of things stood out:
Platform == an expansive term. Not in the new age sense, but literally. There are a number of ways to become a platform. You can do it with an API, with excellent UX, potentially through a plugin ecosystem, or by owning the data layer/storage (read Steven’s “Ultimate Guide” for a much more academic take on all of this). What you need to know is, the paths to “platform” are many.
It’s easy to fail. I love Steven’s failure path summaries, and have seen every single one of these failure modes at companies I’ve worked with. Perhaps encouraging - every successful platform has a number of small failures along the way.
Platforms connect different parts of the value chain. I am already using this term with clients because it simplifies an often complicated concept. In his words:
“…a platform brings together different parts of a value chain. Most frequently, a platform offers a clearing house for value where it provides distribution and then packages up one side of the market to be consumed by the other side.”
My other favorite way to understand platforms is Alex Komoroske’s “Gardening Platforms” principles. Take a spin through the deck if you’re thinking about platforms, you will be smarter for it. Here’s what I think you need to know from this content:
The most successful platforms are the ones that grow up organically. I can’t emphasize how important and true this is (failed platforms are usually forced. Inorganic.) Before we launched the platform at Slack developers were doing back bends to build with us - we did not make it easy for them, and it didn’t matter. The platform opportunity was organic, and much of what we did as the platform team was simply unblocking, streamlining, and amplifying developer and partner demand.
The platform paradox: expose too little functionality, and the platform isn’t useful. Expose too much functionality, and any product improvement you make breaks your ecosystem, which ticks off partners.
Platforms require ecosystems. Or, in Alex’s language, platform and ecosystem co-evolve. They are intrinsically dependent on each other.
This is where I’d like to spend the rest of this post - thinking about Steven’s concept of connecting parts of the value chain, along with Alex’s emphasis on how platform and ecosystem require each other.
Have we built a platform? Or just a product?
So let’s think about whether you have a platform opportunity or not. This is a conversation we often have with potential clients who are dabbling with platform, but are not entirely sold sold on the effort. There are usually a couple of internal stakeholders who are trying to push the platform vision, but other execs have revenue targets or growth goals, and platform feels slightly at odds with the platform push (though, they should not be at odds!).
We usually work with clients who either are building an API, plugin, or app store model - so we’ll constrain this exploration to those types of platforms.
You might have a platform opportunity if:
You can quickly identify where you can deliver on one or more of the three platform “value props” (detailed below).
You see organic demand for your platform, and ideally see demand increase when you meet it.
You’ve got internal buy-in. If leadership is not in agreement, you will launch the platform, get developer interest, and then watch the whole effort die on the vine as improvements are de-prioritized, quarter after quarter.
ONE: Asses your value chain. What does your platform provide? There are 3 reasons any partner, developer or customer builds with your platform. These reasons (or value props) are:
Useful technology: think OpenAI, Stripe, Twilio. Each of these APIs has a clear value that they bring to their developers/partners/customers. This is the most straight forward way to platform, and does not include two sided marketplace dynamics.
Distribution: Slack’s app marketplace provided distribution to b2b companies. This was our promise for third party developers, and especially in the early days, we delivered! Startups that launched on Slack reached hundreds of customers in weeks. The AWS marketplace is a great current example: developer products that we work with see a steady stream of new customers coming in because of their listing.
Revenue growth: distribution and revenue really go hand in hand, but there are platforms which provide more revenue opportunity than others. For instance, iOS apps make more money than Android apps (for a variety of reasons), which is why you see most developers building for iOS first. There are also multiple paths to revenue growth through platforms. You already guessed the first: take a cut of products sold through the platform. Alternative routes to platform revenue are harder to track: e.g. increased win rate because of platform, expansion revenue, decreased churn - you’ll need more tooling and customer conversations to measure these results.
TWO: Look for signs of organic growth, seed it where you can, then scale. The ecosystem as a garden metaphor is why we chose the name Calyx for our consultancy - a Calyx is the whorl that surrounds a flower before it blooms. We’re trying to invoke the organic nature of ecosystem development because it is crucial to ecosystem success. So - how can you asses yours?
Follow your users. Are developers/customers/partners using your product in unexpected ways?
Are customers asking for access to your API so that they can build custom configurations?
Are developers hacking your product in order to build solutions for your customers that you don’t offer?
Are you seeing large partner demand?
This all comes down to whether or not customers want to use some element of your platform, either via partner or with their own custom integration. So, follow your customers. If the answer is yes to any of the above questions, then you’ve got potential. How do you capitalize on that potential?
To start: build enough of your platform to prove that the opportunity is there. This is where we see a lot of companies struggle: they want to do a big platform push, but instead of tending the garden themselves, they want to launch the 100+ app ecosystem tomorrow, before their customer base and partners are ready. Again, to bring this back to the experience at Slack, our first 80 integrations were built in house, by our own platform team. We could observe how customers used those apps. We could improve them and see increased traction, we were controlled about which apps we added and monitored customer demand. There were also thousands of first party developers (customers, building their own custom integrations) that we observed and served with our platform efforts, and at different points the the journey we focused more on third and first parties. This is so obvious but, don’t spend a ton of money and time trying to build an ecosystem without seeing customer demand for it.
Three: leadership buy in is essential. Platform is a P0 or P1 initiative for the company. If points 1 and 2 are apples, really having to do with finding platform-market-fit, this is an orange. BuI’ve seen this movie so many times before that I consider it an essential ingredient to platform success. When ecosystem efforts:
Don’t clearly align with the company’s strategic priorities or goals
Are only a focus for a small set of stakeholders and don’t have buy in from leadership
Are going to be drowned out by other, louder initiatives
Then it’s best to wait, and spend time slowly seeding the platform and gathering internal buy-in. Platform work should be aligned with company goals. Platform efforts should visibly increase customer engagement, reduce churn, grow your customer base, and/or have an impact on revenue. Figuring out what customer behavior platform fuels will level-up the platform conversation so that ecosystem is not a side hustle, quickly forgotten after launch, but a key pillar for the company’s GTM motion.
All platforms are products, but all products are not platforms
And finally - not every company can platform. Becoming a platform is the “brass ring for product development” because platform success is elusive, and building a true platform is an exercise in transformation: turning a popular product into the core of a living, active, evolving ecosystem that gives rise to all kinds of new businesses, customer use cases and opportunities.
I hope this quick take is useful in your platform explorations and endeavors! More thoughts on building platforms and working with developers to come.
