AGILEVC My idle thoughts on tech startups

August 22, 2011

I have the great privilege of meeting lots of entrepreneurs every day and hearing about the startups they’re building.  

Countless startups pitch themselves as “platforms” these days, in part because it’s become a buzzword in the last 18 months or so.  I suppose many folks simply believe “platform” seems sexier than just a “product” or a “service”, even a great product.

But the reality is that most software-based startups aren’t really platforms.  At least for me, pitching a business as a platform when it really isn’t tends to degrade what might be a really interesting vision and story in and of itself.

A software platform is truly a foundation on which entire businesses can be built.  It encompasses not just a technical infrastructure but also a user experience framework, usually some form of a selling channel, and a defined large-scale developer ecosystem.   Facebook is a platform and companies like Zynga have been built upon it.  Apple’s iOS is a platform.  Microsoft has two massive platforms in Windows and Xbox, and has been thrashing about for a decade trying to build one in mobile.  Google of course has Android.  Salesforce is trying to create a platform both through internal efforts on Force.com and acquisitions (e.g. Heroku).

Simply having an API doesn’t make your company a platform.  Similarly, simply having a piece of software that gets embedded in other products doesn’t make your company a platform… that just means your product is usefully extensible or perhaps you’re a dev tools business.

There’s lots of incredible companies that aren’t platforms.  Not Groupon.  Not Dropbox.  Even Amazon isn’t a platform… yes they have AWS but it accounts for <3% of their revenue and isn’t terribly profitable given the capex & opex currently going into growing it.

So I’m sorry to say, but odds are your startup probably isn’t a platform.  And that’s totally ok.  Just be an killer product or an awesome service, and if you can succeed at that (a hard challenge itself) good things will likely happen.