Build Platforms not Products

Cloud Elements 2017 - Confidential & Proprietary
Build Platforms,
Not Products
Using 4 Superpowers of the Network Economy

MEET THE
Eric Prugh
Co-Founder and COO
PactSafe
@eprugh
Ross Garrett
Head of Product Marketing
Cloud Elements
@gssor
SPEAKERS

“
Marc Andreessen, Wall Street Journal
August 2011
SOFTWARE
IS EATING THE
WORLD
https://www.wsj.com/articles/SB10001424053111903480904576512250915629460

PROLIFERATION
OF PUBLIC APIs
757% .
Increase in Web APIs
January 2010 - January 2016

YOUR API IS NOT ENOUGH
There aren’t enough developers on
the planet to consume all the APIs
available today.
Integration needs to be made easier.
BE A PLATFORM.

DEFINING A PLATFORM
In construction, a platform is something that lifts you up
and on which others can stand. The same is true in
business. By building a digital platform, other businesses
can easily connect their business with yours, build
products and services on top of it, and co-create value.
“

PLATFORMS OFFER GREATER UTILITY
CREATING AN INTEGRATION FABRIC
THAT ENABLES USERS
DEMOCRATIZING INTEGRATION AND
MAKING IT ACCESSIBLE

MULTI-SIDED BUSINESS MODEL
A platform company enables other businesses to
build products on their technology
Uses 3rd party integration to create adhesion and
relevance across their market domain
While also delivering service directly from their
core product offering
1
2
3

Platform
Examples

SOMETHING INTERESTING
IS HAPPENING...
“Uber, the world’s largest taxi company, owns no
vehicles. Facebook, the world’s most popular
media owner, creates no content. Alibaba, the
most valuable retailer, has no inventory. And
Airbnb, the world’s largest accommodation
provider, owns no real estate.”
https://techcrunch.com/2015/03/03/in-the-age-of-disintermediation-the-battle-is-all-for-the-customer-interface/

The Network
Effect
Introducing the 4 Superheroes

PLATFORMS
=
THE
NETWORK ECONOMY
Network effects are the
phenomenon whereby goods or
services becomes more valuable
when more people use them, so
there is a relentless focus on
building as large a network as
possible.

NETWORK ECONOMY
4 SUPERPOWERS OF THE
MAGNETIC
INFINITE
REAL-TIME
INTIMATE

MAGNETIC
Networked companies are able to detect, organize, and expose
very small units of value. Their competitive advantage is to
deal efficiently with billions of small transactions
and to capture value created outside their walls.

HOW IT WORKS
MAGNETIC:
STANDARD ECONOMY NETWORK ECONOMY
Companies take raw materials in input and
produce finished products that are sold to
consumers.
Companies identify & abstract value - as small
as it is - and redistribute it to consumers and
producers while taking a cut.

USE OTHER’S APIs TO BENEFIT FROM
EXTERNALLY-CREATED VALUE
IFTTT offers a unique service allowing
users to create recipes (trigger + action)
between 200+ services. 15M of these
triggers are realized everyday.
IFTTT has raised more than $38M to date.
All the value captured and distributed by
IFTTT comes from API integrations.
“

INFINITE
Networked companies use highly scalable software and
services to achieve near zero cost delivery. They can grow
indefinitely in revenue with minimal impact on costs. Their
competitive advantage is speed of scale and
profitability.

HOW IT WORKS
INFINITE:
Companies see growth is constrained by
their production capacity and by the
marginal cost of production.
Companies can serve additional customers at
virtually no additional cost, giving them an
infinite growth opportunity.

USE OTHER’S API TO BECOME
SCALABLE AND BENEFIT FROM
LOW MARGINAL COSTS
Implementing Stripe’s API allows business to
adopt a powerful and scalable payment
method where they handle the responsibility
of storing cards, processing subscriptions,
billing clients, offering coupons, or anything
related to payments.
A secure way to accept payments form nearly
any country in the world, on any channel at a
very low marginal cost.
“

REAL-TIME
Networked companies use real-time data feedback to
instantly optimize market fit and improve products’ value.
Their competitive advantage is first mover
time-to-market.

HOW IT WORKS
REAL-TIME:
Companies produce and publish products to
the market every other year. They don’t
have information about their product usage
for months.
Companies produce and perpetually
improve products through iterative
development. They closely monitor the
usage to answer user needs in real-time.

USE OTHERS API TO
UNDERSTAND AND ADAPT
TO THE MARKET IN REAL-TIME
Through its APIs, Google Analytics lets
businesses understand their customer’s
journey across channels. Through a
comprehensive set of dashboards, businesses
can track their performance and adapt their
strategy in real-time to improve their reach or
increase their conversion rates.
For examples, GA improved National
Geographic's CTRs by 21% for content
promotions.
“

INTIMATE
Networked companies use customer knowledge to fine-tune and
personalize the experiences they deliver to each customer. Their
competitive advantage is customer engagement and
loyalty.

HOW IT WORKS
INTIMATE:
Companies produce and sell an identical
product to all their customers, regardless of
channel or segment.
Companies offer tailored products and
customization possibilities to each of their
customers, creating an intimate and long-lasting
experience.

MANAGE API EXPERIENCES FOR
DIFFERENT CONSTITUENCIES
The API development team learned quickly
that a “one-size-fits-all” approach to API
integration wasn’t going to work.
The team found that different client
applications (such as a desktop browser, a
mobile application or a smart television)
required different functionality as they
accessed the Netflix API.
They introduced an API experience, or
mediation, layer on top of their existing API
platform that allowed each UI team and even
partners to optimize the API experience for
their specific app or device.
“

Creating the
Network Effect

THERE IS NO FUTURE OF
HERMETICALLY SEALED CLOSED
SYSTEMS IN THE NETWORK
ECONOMY. EVERY TIME A CLOSED
SYSTEM OPENS, IT BEGINS TO
INTERACT MORE DIRECTLY WITH
OTHER EXISTING SYSTEMS, AND
THEREFORE ACQUIRES THE VALUE
OF THOSE SYSTEMS.
“
Kevin Kelly, Wired Co-Founder

IN A NETWORKED WORLD,
[THE THREE MOST DESIRABLE THINGS ARE]
CONNECTIONS
“
CONNECTIONS
CONNECTIONS
BREAKING SMART, Marc Andreessen & Venkatesh Rao

APIs offer an easy way for companies to establish these
essential connections. APIs enable any business to
connect to other businesses in order to give each other
access to information, customers, or products.
CONNECTIONS ARE EASY,
INTEGRATIONS ARE HARD

8 Ways Defined
on how to start and run a successful
platform business, explaining ways
to identify prime markets and
monetize networks

FLEXIBILITY
This allows a multitude of companies to leverage the platform for
their (often very different) use cases, opening the door to a much
wider market segment. It also allows the provider to re-use the
platform for their own benefit.

FLEXIBILITY
Adapting to user needs
1
2
3
Enabling new types of integration users
But it’s more than technology

LONGEVITY
Platforms are often deeply integrated into the infrastructure of businesses.
Integration requires a greater commitment up front, but platforms are
sticky. This, added to the flexibility, means that businesses can generally
stick around and adapt the platform to their needs over time.

LONGEVITY
Longevity doesn’t mean be static
1
2
Think about how to deliver ongoing value
Ensure integration changes with the times
3

In many cases, the value of a platform is directly proportional to
the number of people who use said platform. Integration is the
foundation of how people are brought to, and stay with the
platform.
INTEGRATION

INTEGRATION
The power of the crowd
1
2
Make it easy to do business with you
Platforms aren’t just for developers
3

WHY ARE PLATFORMS SO ATTRACTIVE?
For the platform provider, there is one key reward in offering
a platform over a traditional product...

GROWTH
CLASSIC GROWTH NETWORK GROWTH
T
Network GROWTH
OPPORTUNITY
REWARD IS GROWTH

QUESTIONS
FOR THE SPEAKERS
Eric Prugh
Co-Founder and COO
PactSafe
@eprugh
Ross Garrett
Head of Product Marketing
Cloud Elements
@gssor
CREDIT : FABERNOVEL, GAFAnomics, October 2014 - https://www.slideshare.net/faberNovel/gafanomics/2-2_This_work_was_made

Build Platforms not Products

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