Because of the great success of so many internet giants like Facebook and Twitter, the door has been opened for web developers and entrepreneurs to leverage the large masses of users and data to build great products and services. Once a great internet company provides access to their platform through their open API, you can be off to the races creating the next Farmville or TweetDeck.
However, building your product or service on the platform of a bigger company has its costs and its benefits. Here is a list of risks and rewards that any entrepreneur should be aware of prior to getting the wheels rolling on a platform-dependent startup:
– If the platform shuts down or kicks you off, the livelihood of your business is in jeopardy
– There may be a limited number of competitive advantages because other startups may have access to same information that you will
– Significant less development costs and development time = Quicker time to market
– Scale very quickly gaining rapid user growth/adoption
– Streamlined/pre-established marketing channels
– Investors & potential hires may want to get involved based on the success of the platform itself
When building any business, you assume the many risks that revolve around whether or not people will actually use your product or if you can even make it successful. However, when developing a concept that is dependent on another platform, there are additional concerns. As someone who is building an exciting project that is an example of platform dependency, I have become extremely interested in the ideas and opinions of building on established channels.
As large social networks or popular developer platforms continue to grow in notoriety and user base, startups will continue to build on them. Investors and entrepreneurs alike seem to be discussing this concept as it becomes more relevant. Mark Suster, of GRP Partners, wrote an excellent post about why the threat of internet giants eating your lunch shouldn’t scare you. His argues that you should diversify your functions and dependency, while constantly striving to create more value than anyone else in your space. Furthermore, just because your startup will be under potential threat of attack by these platforms doesn’t mean that you shouldn’t do it.
With that being said, continue to add value to this tech ecosystem. Whether it is by way of building on existing platforms or by creating new ones, use the successes of those companies that have come before you to propel your startup. Don’t fear the giants, but don’t be naïve to potential threats. Build, prepare and continue to innovate.