Loic Le Meur writes over on LinkedIn about his mistakes betting on Twitter with his company Seesmic. Seesmic was a company that produced a series of great Twitter clients for multiple platforms (Mobile, Web, Desktop etc). When Twitter started shutting down developers and releasing their own official clients Seesmic’s business was undermined and ultimately shuttered.
I’m not blaming Twitter for this strategic change – they did not know they would take that decision at the time when they were fully supporting their ecosystem. I blame myself entirely. I should have never dedicated all my team resources to build on one platform. That is a lesson learned the hard way along with many other developers. I was too excited and became blind.
Here are my two cents for entrepreneurs betting on someone else’s success: be careful that everything can change from one day to another and all the rules will change. I will never be that dependent on anyone anymore.
Loic is a wicked smart and very successful entrepreneur. He’s always smiling, generous and well liked by his peers. It’s a real shame that Twitter pivoted in the way that it did to undermine his business.
I’d like to refine Loic’s lessons learned a little here, though. In my opinion the problem was not betting on someone else’s platform but rather…
- Twitter is not a platform, it’s a media company
- Betting on one media company rather than multiple
Whenever a company makes money from Ads, it’s not a platform/technology company – it’s a media company. As a media company It needs to control the eyeballs so that it can control the ad impressions.
To be fair, though, Twitter’s ad revenue model wasn’t in place when Loic started betting on them. It was clear, however, that their revenue model was still in flux and that ads would play a role in order to keep the service free for end-users.
The reality is companies successfully rely on other platforms all the time. Amazon Web Services is a great example of this. There’s never a risk that AWS is going to start turning off or competing with its developers because it is a true platform.
Facebook, Twitter etc were never true technology platforms. They are distribution channels. They are data sources. They are social services. But they are not platforms.
Ironically this is still happening today. Major media companies and developers still spend enormous sums of money encouraging their users to participate on Twitter and Facebook as ‘outsourced engagement platforms’. Ironically Media companies who should understand the value of owning the audience and the ad impressions are happily outsourcing them to competing media companies (Facebook and Twitter). I write more about this over on the Echo blog.
The key, then, is not avoiding 3rd party platforms, but rather to understand the difference between platforms, products, services and media companies. It’s key to understand the incentives, revenue flows and business models so you can understand how to align your company and product with the value chain.