Building businesses on platforms

I recently saw a comment by Fred Wilson saying 8 out of 25 of his portfolio are building on platforms. It is a rather high number and I wonder about the risk on riding on a single platform. On close inspection though, you will realise these 8 businesses tend to span across platforms. This implies that the value may lie, not only in leveraging on platforms, but in bridging the different platforms.

This goes in line with what Tim O'Reilly was saying about building your software above a single device. In this case, it is building your businesses above a singel platform. The benefits of doing so are obvious.

First, building across platforms achieves network effects faster.

Second, servicing multiple platforms allows aggregation. Disqus is a great example. Now, I can see my comments whether they are in blogger or wordpress.

Third, it spares you the problem of being dependent on one source of success. If you are dependent on Twitter and it goes down in service, your business will be badly affected as well.

Fourth, bridging platforms has the potential to unlock new value. This is the most important. Advantage in this network economy comes from the flow of information. By building bridges across different platforms, you are allowing information to flow more smoother. That is a big strategic advantage.

So, if you are building a startup on top of a platform, is it better to build on one or across different platforms?

Posted in: network