Seeding a Sharing-economy or Platform Company
These days if you’re creating a company you likely hope to accomplish more with less people, two ways of doing this fall to: The sharing economy and creating a platform. It’s easy to see the case for this when you have such unicorns like AirBnB or Uber. The opportunity for each of those to compete against hotel chains or taxi services which each need to manage their own inventory is incredibly exciting and revolutionary. In a similar fashion platforms can offer much the same, Heroku’s platform and marketplace made it easier than ever for developers to click a button and get everything they needed years ago. It’s not just their code, it’s everything from Postgres to Mongo to Logging. Or take the app store as example. Smart phones weren’t a new thing when the iPhone came out, but it was only the saviest of users that had apps installed on their windows smartphone or blackberry. The app store made the iPhone different than any other phone by allowing others to build and improve it, turning the iPhone not into a phone but a platform.
Platforms and the sharing economy both let you get further than having to take on the costs of offering the equivilent all on your own. And while a great idea to venture into one of these two areas, starting them isn’t as trivial as simply deciding to. For both of these you have issues with having a two sided market, first you have to convince the providers to come along, then the customers or vice versa. As a result of this two sided market issue the easiest way to actually start is by bootstrapping it yourself – or faking it til you make it.
What are some good examples of faking this? I’m sure you can probably find some good stories going back about AirBnB or Uber, but let’s assume times were different then. Let’s take a look at a very recent example: Lugg which just launched in the latest batch of YC. Lugg is Uber for moving essentially, allowing you to on-demand request furniture moved from one place to another. Early on Lugg built their app, then waited for requests to come in, then the founders got in a truck and moved the furniture themselves. As a customer the founders are likely providing a great experience, without ever having to tip their hat at the ways their hacking the impression of being a large well oiled machine.
But what about a platform? Slack continues to grow like wildfire as the new medium for communication. These days there’s endless integrations for slack, and I expect they’ll continue to expand what a platform for communication looks like. But a year ago they were quite a ways from having people show up at their door to add an integration. Sure there were people using them, but to expect github/trello/asana to immediately build an integration for every new flavor of the week tool would be crazy. Yet, without these integrations slack wouldn’t be nearly as useful as it is today–and probably wouldn’t have seen the growth it’s seen. In the early days of a platform the easiest way to get these integrations and partners in place is to show up and build the work yourself. Slack carried the weight early of building these integrations, much as Heroku add-ons showed up at partners offices and help write the code to get them as a provider in the marketplace. And while both Slack and Heroku are larger companies now, it still holds true for smaller ones starting today. Blockspring, a company which aims to make web services available through spreadsheets, had to do very much the same thing building their initial integrations themselves. Now with their rapidly growing user base and already large collection of APIs they may be able to shift the model, but early on that wasn’t so much an option.
If you want to build a platform, start by creating the impression of one while still carrying the load yourself. Yes, move to a true platform as soon as you can, but don’t wait for others to show up before you go that route.