Startups that Ride a Platform Advantage

March 13, 2013

in Marketing, Product Management

Some startups ride a platform advantage. The platform creates a uncommon advantage that leads to big success. Here are some platform advantages I’ve recently noticed startups ride:

  • Blinq Media – Facebook Platform – Became one of only 5 Facebook partners authorized to sell advertising. This elimination of other competitive forces gave Blinq an excellent head start and created an uncommon advantage. Eventually Facebook opened up to many other competitors.
  • Cloud Sherpas – Google Platform – Jumped on the Google Apps reseller bandwagon. Got to sell high-quality Google products from the beginning, eliminating a lot of the product development steps most startups face. Raked in two types of revenue: 1) commissions from Google for the Apps deals they closed and 2) big upsell follow-on profitable services to help users migrate their data. The data-migration turned out to really be a vital requirement for most enterprise customers. This follow-on service created a positive reinforcement by which Google was incentivized to promote Cloud Sherpas over other competitors. The continual positive feedback loop gave Cloud Sherpas an uncommon advantage.
  • AirBnB – Created their own AirBnB Platform – They created a new platform which is re-shaping behaviors in the hotel industry. This article defines the three-pronged strategy that is common to startups creating new platforms: 1) creation of new sources of supply, 2) creation of new user behaviors on the demand side, and 3) architecting a strong curation system.

The presence of a platform advantage does not guarantee success. The platform advantages are also more often derived by smart entrepreneurial chutzpah than by happenstance.

Just as platforms can create an advantage, they can also be a source of great risk. Chris Dixon has two nice articles on platform distribution risks and subsumption risk.

Many startups tie themselves to a platform. Fred Wilson says every product is a platform. Whether or not that platform eventually generates an awesome ride, a neutral playground, or a fatal stab in the back is anyone’s guess.

How have you seen platforms affect your startup? What other examples do you have of startups that are tied to a platform or creating their own platform?

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