A very common discussion among Entrepreneurs is the discussions about building platforms vs building applications.
The general experience and rule communicated is that platforms are hard to build, and applications is a lot easier to succeed with. Platforms hold a very attractive position when you succeed, because you will be in the center of an eco-system and have others creating traction for you by their applications. Think about Windows, think about Google. There are huge eco-systems around these platforms
But succeeding in getting that position is extremely hard, because you do not only need to persuade people to use your service/product/technology, but to bet their own success of their product on your offering. It’s a game of critical mass, and a catch-22 situation.
The general rule, is that for a startup it is almost impossible to build a platform. Many even say that if you business idea starts with “We are building a platform to…” you will fail.
The above is true, but this wisdom is widely abused, and people shy away from platforms. The above wisdom and reasoning is all about a platform as an offering.
When you build a technology or platform that you can use yourself to quickly leverage a number of different offerings (applications), that gives you a very competitive edge, because you own and control an infrastructure that allows you quickly adopt to new opportunities, customer demands and try new products in the market.
In example, why should you build a authentication, payment system, a CMS system, CRM system (or even if you buy of the shelf, it all have to be integrated, which takes time and costs a fair bit to do), for each of Web 2.0 product offering you do, most of these components can be re-used, and in a platform they are even integrated. Also with a platform you build-in the knowledge you acquired between products you launched using the platform, thus you are getting more value as you go.
A platform can be an huge competitive advantage to offer services. If you look internally this is exactly what Google does and it is what many media companies do. They build an infrastructure to quickly and efficiently create and manage Internet properties.
This is one of the things I am bringing in to my new Silicon Valley company, bootstrapLabs, that will commence after the summer (more information to come about that!).