Great products win by solving a single problem better than anything else, but to stay ahead, companies need to innovate faster than their competition. Embracing your developer ecosystem and becoming a platform is proven way to create and sustain innovation. The world's leading companies have been doing it for years, and today more companies are winning by becoming a platform.
“A "platform" is a system that can be programmed and therefore customized by outside developers -- users -- and in that way, adapted to countless needs and niches that the platform's original developers could not have possibly contemplated, much less had time to accommodate.” - Marc Andreessen, Andreessen Horowitz
Why Platforms
Platforms work because it’s a case where everybody wins. Developers leverage a platform to build new applications and gain distribution, the company attracts more users by solving more use cases, and end users get more tools to fit their needs.
Wordpress, a leading CMS, powers more than 25% of the web despite being more than 13 years old. It’s staying-power isn’t because the product is necessarily faster or better, but because the over 40,000 community plugins make it possible for any business, from fortune 500 company to early stage startup, to easily create the website they need. More plugins and use cases attract more users, which brings even more developers, and so on. The community has become a constant and sustainable source of innovation for Wordpress.
“When looking to build a sustainable open source, SaaS, or other type of business, the trick is to spend as much time building one’s community as one spends on the product itself. Because that community — that ecosystem — is ultimately the thing that makes a product so valuable to prospective customers and makes them willing to pay a premium” - Matt Asay, Adobe
Winning Big
Atlassian, maker of popular tools Jira and Hipchat, generates $450M in annual revenue. The Atlassian Marketplace, a central place for developers to sell Atlassian add ons, has already paid out more than $120M to thousands of the developers in their ecosystem, and they’re just getting started.
“This is just the beginning. It will get much bigger and we are targeting $500 million and beyond in terms of [marketplace] revenue.” - Paul Friesen, Atlassian
The monetary value is obvious, but the business value is even greater. By crowdsourcing innovation from thousands of outside developers, Atlassian is always ahead of their competition.
Trending Towards Platform
Becoming a platform today means having an API, and the number of companies with an API is exploding. Look through the over 16,000 APIs cataloged on ProgrammableWeb and you’ll see everything from healthcare and banking to retail and professional sports.
Industry collaboration, like the the Open API Initiative, is making it easier for companies to release their API. An open governance structure under the Linux Foundation, the OAI is creating, evolving and promoting a vendor neutral description format for API services. With leading members like IBM, Google and Microsoft, more companies are releasing APIs and becoming a platform
Those APIs need developers, and services like Codecademy are making it easier and more accessible for anyone to learn how to code. Codecademy has over 25M registered users, more than the 20.5M students attending all colleges and universities across the entire United States. From a recent grad to someone looking for new career later in life, more people are building on top of platforms for themselves, or from within their existing company.
Playing to Win
Companies need to understand “how” to attract developers and build a successful platform. It isn’t easy, and “build it and they will come” isn’t a strategy. It starts with a developer portal as a central place for developers to sign up, check out documentation and ask questions. From there it’s about improving the developer experience, and decreasing their “time to first hello world”. Providing code samples for the most popular languages will remove work for developers and get them up and running faster. Offering developer guides that clearly explain how to get started and use the API will make their life easier. Too many companies make the mistake of assuming developers already understand their business and know what’s possible using the API.
There are many more questions to building a platform. How does a company assure quality control, handle payments and tax worldwide, and make sure any product extensions are easily accessible? At OpenChannel we support the world’s most innovative companies in understanding these questions and becoming a platform.
A winning product is critical, but it’s the gateway to something larger and more lasting. By becoming a platform, companies benefit from the value of crowdsourced innovation, making them more enduring for years and decades to come.
