Every Product Is A Platform

At Gnomedex, there was a well publicized spat between Jason Calacanis and Dave Winer. I followed the whole thing and felt badly for both of them as neither was being understood by the other very well. But there was one point in the middle of the mess that was very important and got kind of glossed over.

Winer said in his original post:

Bottom-line, he needs to figure out a way to build the company so that
many others can profit from it. Otherwise I don’t think it has a prayer
against Google, which we like less and less as a company, but who
basically offers an equitable proposition to the users of the Internet,
who the Gnomedex crowd represent in a loose kind of way. Permalink to this paragraph

Jason responded in his retort:

I’ve never looked at Mahalo as a platform, but rather a product. I
understand Dave’s interest is in things he can manipulate and play with
it. He does fun things with Flickr and Twitter all the time, and I feel
him on that. However, who said Mahalo was closed? So far we’ve had
people create Facebook applications, widgets, and Firefox extensions
for Mahalo, and Dave is certainly welcome to do that. We publish a
bunch of RSS feeds already, and more are on the way. ….

I’ll take the blame. We have not published an official API yet,
although it’s in the works, and also we haven’t released a friendly
copyright policy–although we’re figuring it out.

I do not believe you can build a product in this day and age without focusing on the platform requirements. All the best products are platforms in their own right; Google, YouTube, Facebook, etc, etc

I wrote a couple days ago:

The [twitter] API has >10x the traffic of twitter.com. That’s a great stat and
I’d like to find other companies that have that metric working for them.

I don’t think you can build a very good business just trying to build a platform. Look at YouTube vs Bright Cove. Bright Cove has built an amazing video publishing system for the web. But if you use them to publish your video, you don’t get an instant audience. YouTube has a so-so video publishing system, nothing near as robust as Bright Cove. But you get millions of potential viewers instantly when you publish via YouTube.

And I don’t think you can build a great product without being a platform. Facebook wouldn’t have Scrabulous, Texas Holdem, iLike, Top Friends, and many other good apps without being a platform. You cannot build everything even if you want to. And when you let others build cool stuff on top of your product/platform, you give back to the Internet.

Which is the point that Dave was trying to make. Google is such an amazing business because as much as it takes from the Internet (close to $15bn/year at current run rate), it gives more back. Every single business that operates on the Internet gets value out of Google. Now I think Google could be a lot more generous with its API and if anyone is going to "beat" Google, they are going to do it with a more open platform, one that gives even more back than Google.

When we look at web businesses to invest in, we think hard about the API. What could it be used for? What new services could it open up? When the API is even more exciting than the .com, that’s a big deal to me.

#VC & Technology

Comments (Archived):

  1. Robert

    This is why I’m interested in autonomously building a social graph within the enterprise. On top of the obvious analytical factors, you have a platform that can be leveraged by other developers. If the developers have an incentive and they are able to make a useful product on your platform, I believe you can succeed.I’m sure it works the same way for other platforms such as Salesforce. They rolled out with their initial offering focused on CRM and financial information, and then opened the platform to other developers. I think the social graph is probably just as horizontal as CRM and financial information, as it powers most (if not all) communication and collaboration tools.

  2. Dave Winer

    This really was the focus of my comments both at Gnomedex and after. As I said, all the personal stuff Jason threw at me was a smokescreen, he didn’t have an attractive proposition for the people at Gnomedex, that’s why the people there didn’t receive his presentation very well. He made me the scapegoat for his own failure, and you’re supporting that theory here. I wish people who weren’t there would stop tying to settle this, because you got it wrong. Lots of other people were talking back to him at the conference, in person and on the back channel, including Chris Pirillo, the host of the show.Anyway — it’s not all about APIs. Google has pulled back support for their experimental Google API, even so, much of the flow of the web is still centered around them because:1. Their ads pay us money.2. Their search engine brings us readers.We may not like Google as a company, but this is a fair deal, so they’ve got a good business. In neither case does it have anything to do with APIs.It’s just common sense that when you try to sell an idea to a group of people there should be some way for them to profit, or else your pitch is going to fall flat.Imagine a company that came in to pitch Union Square Ventures on a product, and you loved it, and you said great, how can I participate, and they said, oh sorry you can’t participate. You might think they were wasting their time and yours.It seems that for some people this is complex math. And a cause to smear the messenger. I was acting as a friend at that point, my purpose was to help him find a way for the people at Gnomedex to win alongside him. Now I would never recommend someone writing for his company, not as long as Calacanis is the CEO there.Any CEO that changes the subject when people want to talk about his product has a pretty basic problem, imho.

    1. fredwilson

      davei am not trying to “settle” anythingjust trying to engage in a conversationfred

    2. Edwin Procet

      As abrasive as you put your ideas forth, I have to say that I heartily agree.

  3. jasoncalacanis

    Thanks for the post Fred. I’ve decided to not engage the spat, but instead focus all my energy on the core issue you bring up here.We’ve always planned an API and we have always considered syndication of our content to be important. At the time of my demo at Gnomedex were 90 days old and didn’t have it ready–that simple. My point in the statement above is that I *think* you have to have a product that people love in order to have the subsequent platform.For example:1. Would YouTube be a powerful platform if not for their very powerful product (a simple clean interface, free Flash hosting, and easy to use syndication tools) first?2. Would Twitter be a powerful platform if not for creating their very powerful product (the first simple to use SMS group messaging system… UPOC might have been first, but it certainly wasn’t as simple and was head of its time) first?In other words, from what I can tell you build a core product with a base audience and then open up your platform. If you don’t get the core product and audience correct I’m not certain your API is going to help you (or help you that much). People would not be developing for the Twitter and YouTube APIs if they didn’t have the traffic–would they? (I’m not sure, that is a real question).Also, Pownce has launched with 10x BETTER features than Twitter. So, the truth might be that TWITTER is waiting for developers while POWNCE is eating their lunch. POWNCE is a MUCH, MUCH better product than TWITTER right now. Like, it’s not even competition. Pownce has like file transfer, real link handling, it’s faster, it has threaded messages, and it handles videos inline. Now, I love the TWITTER team and i use both equally today. However, I’m finding that POWNCE’s pace of development is so much faster than TWITTERs that the race is starting to look like its already over. As an investor in Twitter I would tell them to stop waiting for the community to build the features POWNCE has native and hire five more developers and catch up!An API and developer community is great unless your competitor is lapping you…. perhaps then it’s time to spend some money and hire some more developers? Of course, maybe if BIZ and EV focus on the developer community they will rocket past POWNCE as their free-developer pool springs into action…. right? I really don’t know, but I do know as a user I like POWNCE much better right now…. and I love TWITTER, so that says something.For Mahalo we wanted to have a product built out first (i.e. 25,000 search terms) and then bring out the API. The correct point from Gnomedex was that we need to build a win-win between developers and our company, but I believe there is another WIN missing there: the win for the users. So, it’s really a WIN-WIN-WIN you need to build: a win for audience, developer, and your company.Our API is well underway with amazing companies (some which you know) using it. The API group is here:http://groups.google.com/gr…And some folks are playing here:http://www.codingrobots.comhttp://www.socialham.com/20http://www.slakinski.com/http://www.slakinski.com/20…Mahalo has gotten way too much attention for such a young company frankly. I wanted to build this one a little slower and under the radar , but I guess that was folly on my part. The concept is too big and I’m to bombastic to fly under the radar any more….so, all I can do is be transparent at this point: we’re working on the API as fast as we can, we’re working to get to 25,000 pages as fast as we can, and we don’t know EXACTLY what this product will look like in years two, three, four and five. However, I can tell you we’ve shown about 10% of the plan to date…. so, there is a lot more in the lab right now so please look at us as a very public beta (we dropped the alpha when we passed 10,000 pages last month! :-).all the best and thanks for the post,Jason

    1. fredwilson

      jasonthanks for the comment1 – my post was not about nor was it a criticism of Mahalo. it was about why I think the product and the platform have to be one and the same to build a really big company.2 – pownce may be “killing” twitter in your eyes, but not in mine. I use both every day and I find pownce too complicated. the only thing i really use pownce for is sending big files to my friends and i use pando for that even more. all the measurement services have twitter.com well ahead of pownce.com and only about 10% of all twitter traffic happens on twitter.com. so that says to me that twitter is still very much ahead of pownce. the real leader in the status/microblogging world is facebook however. that’s a different discussion.I agree that twitter.com, which is really just one of many twitter API clients, can and should get better and more feature rich. But I also feel that given the variety of twitter clients out there, you may find one that you like even better than Pownce. that’s why a product that’s also a platform is better than just a product.Fred

      1. jasoncalacanis

        Yes, I understand you were not dissing Mahalo (I would hope not since you’re an investor in our two rounds!), and I agree 100% that having both great standalone product with an API is the Holy Grail today.RE: Pownce vs. Twitter:a) you’re kidding right? you find pownce hard to use?!!??!?! It’s got to be one of the cleanest interfaces on the web… b) you sound like MySpace talking about Facebook when quoting Twitter’s numbers vs. Pownce. Pownce is closed beta and very young…. comparing the traffic isn’t the point right now.My core point with Twitter is that I think one could make the argument that they have relied TOO MUCH on the outside developers and not enough on the inhouse folks. It sounds really groovy to have all these free developers out their making cool things for your platform, sure. However, when you get a serious competitor like Kevin Rose into the mix who a) knows how to execute and b) isn’t waiting on outside developers for his product development that whole “groovy API” model goes right out the window.Competition changes everything and I think Twitter has a six month window right now…. if they don’t lock down feature development and catch up to Pownce they might get caught in Friendster-ville.That being said, I think Ev and Biz are two hard-core entrepreneurs wit mad skillz. I’m sure they are going to step up and drop some serious hotness over the next six months. Especially now that they have you as their PR person having open discussions about their product and production process on your blog! :-)Some interesting board meetings coming up I’m sure…. :-)best j

        1. Bill Chert

          pownce isn’t difficult to use, but it isn’t nearly as straightforward to get into as twitter is — that’s all i’m saying.

          1. Jimmy S

            I agree. I use Pownce and Twitter, and imho Twitter is still the winner. At first I thought that Pownce was really cool and all that, but after some time…. no, back to Twitter. Pownce is not “difficult”, but Twitter is just super elegant in its simplicity. More features is not better!

    2. Brian

      Among my Twitter friends, there was almost ubiquitous adoption of Pownce, and then they nearly all dumped it in about 2 to 3 weeks. Nobody I know stayed on the product

  4. Edwin Khodabakchian

    I think that there are two distinct points being made:Point #1: It is good for a product to be open and expose APIs because it enables other people to experiment. Some of those experiments will increase the value you offer to your user and some of those experiments can help you take the company in directions you were not focusing on initially. Both these aspects are very important for an early stage company which is trying to find its market fit and therefore reduce the risk for the investor. (which I think is the point you are making).Point #2: I think that Dave’s point is more around creating a value chain/an ecosystem which will increase the level of engagement the users have. An API is one way to get there, but it is not enough and not the only way: how does the fact that Mahalo offers an OPML view into their pages benefits to me as a user? How does it make it a more engaging experience? Does it increase the probability that I am going to tell a friend of mine that he or she should use Mahalo? I think that the Mahalo Greenhouse initiative is a shorter path to turning Mahalo into an ecosystem than simply exposing their content through RSS and OPML.But you have to give credit to Jason to taking an organic approach, trying a lot of things and seeing which ones stick (see point #1). Before having a shot at becoming an ecosystem, Mahalo has to deliver on “user desirability” and convert it into user adoption.-Edwin

  5. Don Jones

    It makes sense that venture capital guys would focus on the API, since a successful implementation of an API combined with a significant audience on the host site would tend to mulitply the value of the site to a great degree, and do so in the shortest possible time.

    1. Aaron Gumer

      yes, yes, and yes!

  6. Dave Winer

    Fred, I didn’t know that you were an investor in Mahalo. Seems to me that’s something you should disclose here.Makes Jason look like even more of an idiot, taking cheap shots at me, when I’m one of the key influencers in the area he hopes to be taken seriously. I’d have a good firm talk with him about the difference between being the editor of Silicon Alley Insider and the CEO of a tech company. Taking a little criticism isn’t cause for a scorched earth campaign. I don’t blame Jason for not wanting to take it up again, he screwed up and didn’t even have the CEO sense to apologize for the screwup.

    1. Patrick Wence

      I wasn’t at Gnomedex or anything, but from here it doesn’t seem like much of a scorched earth campaign. It seems all sides are participating here.

    2. fredwilson

      my wife and i do have a small personal investment in Mahalo. we both have known Jason for years (my wife worked with him at Silicon Alley Reporter). We often disagree (privately and publcily) with him. But we have a longstanding relationship and our investment in Mahalo is representative of that.

  7. terrycojones

    Hi FredI tend to agree with Jason that you need a great product to pull people to the API. I think there can be exceptions with a different strategy – and yes, I claim to (perhaps) be in that category.My question to you and others is where you see value in having others build on the API. I can see some arguments – visibilty and branding, pushing maturity of the API, giving you an under-the-radar tap with which you can experiment with increasing traffic, maybe giving you ideas for products (if you’re the kind to take that route), finding (and then hiring) good hackers who love your product. These are all indirect benefits. I’m curious about why, from an investor’s POV, there’s value in having others build on the API. There are 250+ things built on the del.icio.us API. Were they of value? Did they increase revenue in any direct way? If you argue that there’s great direct value, can I therefore walk into your office, claim that thousands of people will write apps using my API and argue for a massive valuation? :-)Do any of the companies offering an API have a strategy for monetizing it, or simply recouping costs for bandwidth, servers, etc.? Sure, the exposure is great. But, as I was once taught, you can die from over-exposure.I’d really love to hear comments on this! Jason – does Mahalo intend to profit in any direct way from having an API? Marc Hedlund… any comment? Others?Not an idle question….Terry

    1. jasoncalacanis

      Terry: I think to date the profit in having an API has come in the form of:a) distribution/marketing (i.e. every syndicated YouTube video was an advertisement for YouTube as well)b) traffic to the mothership (i.e. everyone who uses a delicious or Twitter tool must, at the very least, have a Twitter account).c) free developer resources and product testing (i.e. if 100 features are created for Twitter over the next year and five of them “pop” Twitter will obviously add them to their product. For example, people created Twitter search services because Twitter didn’t have them).d) revenue (i.e. I understand, but don’t have confirmation or details of the fact, that Answers.com pays Wikipedia a fee to have a dedicated resource to serve them Wikipedia pages for syndication).e) publicity (i.e. Google Maps probably got half their press from people doing mashups of Google Maps + INSERT DATASET here).Of course, what do I know… I’m not a developer, I’m a journalist/media/blogger/community guy. :-)best j

      1. terrycojones

        Hi JasonI think c) isn’t a great strategy. If a company offers an API and then turns around and itself implements the best ideas of its API-using community, it feels very wrong and discouraging. So that’s got to be a sensitive issue. Reminds me of Microsoft.Here’s another way of looking at my question: if API traffic is 10x bigger than interactive web traffic, then just 1/11th of Twitter’s computing resources are being used to support their (arguably) most important customers. Maybe the site could have been many times faster if they had opened up API usage slower. I found the Twitter web interface unusably slow in the first 6 months after I heard about it – a feeling that many shared. Is that because they were actually using 90% of their resources supporting apps they didn’t write and didn’t benefit (directly, financially) from? That’s a very delicate line to choose to walk. At that level of diverting resources from normal users, there’s a huge risk blowing it. Hence my question about value. Sure, the 3rd party apps are cool and exciting – but are they so important that it makes sense to give you front-line customers a miserable time, making your service extremely slow. Would you take that tradeoff for Mahalo?To go to another extreme, imagine releasing an API that was so powerful that thousands of people wrote to it, but which had no user-facing component. How is that going to make you money unless you charge for it? E.g., Amazon’s S3. If you charge, like Amazon, I understand the model. If you don’t charge and the API is eating 90% of your resources, you may be shooting yourself in the foot rather severely.It’s an interesting problem. As I said earlier, I agree with you that if you can do it, product should drive platform. Twitter could have followed that route, but apparently went the other way round. Or maybe things were just totally out of control and they unexpectedly found themselves in this 10:1 situation.One thing’s for sure, if you’re using 10/11ths of your resources on your (non-paying) API customers, you should definitely make sure the rest of the world knows about it :-)Regards.

  8. Charlie Crystle

    Platform is effective if you 1) have a solid product with a significant user base, 2) have a simple, powerful API for the average developer to play with and 3) invest in the platform, documentation, and developer community.I agree with Dave; Jason is out of line and off base in the “spat”. And Jason, “bombastic” isn’t the word. You’ve made people’s (users’ ) interest in Mahalo go from being about the product to being about the asshole CEO. I don’t even know you and that’s my take away. This shouldn’t be about personalities, it should be about the business, the ideas, the tech, the customers. And you’ve made it about you.Microsoft is still the greatest platform company, btw. (I’m no MSFT fan, either)

    1. Peter Quantz

      Number 3 is key. It seems some decide to just push an API out and call it a platform. It’s not a platform until people build in it and, as you put it, you need to invest in the platform.Documentation and commuitnity is just so absolutely vital… I wish more caught on.

    2. jasoncalacanis

      CC: I agree… it shouldn’t be about me. It should be about the product, and the product is doing extremely well so far and I do feel bad that the whole “spat” occurred. That is why I’ve said nothing since the event about it. I’m letting it go and focusing on the product. For the record, it’s working. I’ve had my head down for a month and we’re getting a lot done and traffic and production are picking up.all the best,J

  9. David Litsky

    Fred, what about content? With everyone trying to build platforms right now, nobody is focusing on the content. I understand the premise that “if you build it, they will come” but how many youtube / facebook / flicker / twitter copycats need to be financed before we see the trend? Right now I am bored by the general landscape because frankly, I see a lack of innovation.

    1. jasoncalacanis

      That’s a very good point David. The platform companies get built off free–and willing–labor pools and those are becoming very limited. For every Facebook, Flickr, or Twitter there are dozens of ghost towns.At some point the top 5% of each of these markets emerge and that’s the opportunity I see… skim the cream of the most talented members of the public and get them paid for their amazing work.

  10. Mike Doeff

    That statistic (The [twitter] API has >10x the traffic of twitter.com) really blows me away and makes me think that companies like Twitter that rely so heavily on other companies building services on top of their platform need to consider including developers in their business model – i.e. compensating the developers who are bringing them the lion’s share of this traffic. Is the infrastructure in place to track all of this API activity and compensate the developers who are playing such a large role in the success of these services?

  11. Jeff Barson

    Certainly not all platforms are created equal. Its going to take broad market adoption for real businesses to desire to build on top of anything other than a platform with wide adoption. If I have to hear one more pitch with ‘user generated content’…