Home Platform Power – “Show Me The Money!”

Platform Power – “Show Me The Money!”

As Dilbert knows, everything is a platform today. The trouble is, some very smart people are trying to figure out the definition of what makes a platform. Although a lot of the discussion has been technical, perhaps the best definition of a successful platform is that it makes real money for their ‚Äúcommunity‚Ä?.

According to a 2005 survey, close to sixty percent of Americans reported that they dreamed of starting their own business – both to increase their income and their independence. That is an awful lot of people that have no ambition to build the new, new thing; but who do want to put food on the table without having to work for “da man”. Call it a lifestyle business or a “Mom & Pop”, the difference is only about lifestage.

This is a critical social and economic issue today. Family farms still exist, but in the world of agribusiness this is definitely a hardscrabble life. Wall Mart is steamrolling all over the traditional Mom & Pop retail shop. This leaves a huge hunger for Franchises, but many have been exposed as rather cynical exploitation – with lots of money upfront and all the cream to the franchise owner. We need more real money-making opportunities for the small scale entrepreneur and self-employed free agent, particularly in smaller towns and rural communities.

Online Platform Franchises: Amazon, eBay, Google, Facebook

The new online Platform ‘franchises’ don‚Äôt require upfront money, but many of them are way too opaque about how revenue is split and about how much money can really be made. Most of the Affiliate schemes that promise lots of money for doing nothing (”work from home” spam) are worthless and scammy. Amazon is clearly in a different league, but even there it is hard to get good data on how much money is made by how many people. Anecdotal evidence suggests that even reasonably well-trafficked sites are getting peanuts.

There is a difference between a purely sideline revenue generator and something that is core to both parties. Affiliate revenue is not the primary income for many people and is not core to Amazon’s business. eBay is different. Around 750,000 people see eBay as their primary source of income and double that – 1.5 million – see it as a significant contribution. eBay does not have a business if these people don’t make money, which certainly makes them listen to their community.

In an earlier generation, Microsoft created a platform that enabled lots of smaller vendors to ride in their slipstream. These varied from very small to large partners. Whatever ill-feeling people may have about Microsoft, it created real income for thousands of people.

Today, lots of small-scale publishers/bloggers make money from Google Adsense. Athough many publishers think the revenue split is unfair, Adsense has enabled a lot of bootstrapping in the Web 2.0 world. On the other side of the transaction, Google has enabled many significant start-ups to get to market using search engine marketing. Done right and for the right type of venture, it is as close as you can get to a ‚Äúrevenue tap‚Ä?. So Google is definitely a platform.

You cannot write about platforms today without mentioning Facebook. The best way to put it is that the jury is still out. The jury in this case being the hundreds of entrepreneurs who plan to make a lot of money from their web apps on Facebook. At the moment there is a fair amount of money sloshing around the Facebook ecosystem, with lots of people paying for eyeballs – but without clarity on who is finally making money from those eyeballs and how.

The Key to Platform Success

The key to platform success is the size of the revenue opportunity within the community that you can tap into, through the platform. The size is growing with each generation of technology:

1st Generation: Minicomputer vendors such as DEC, Wang, Data General. As a partner you had access to the companies who had bought just that particular brand of computer with its proprietary operating system. That was a bit limiting.

2nd Generation: PC. If you built on top of Windows and you could gain access to everybody who had a PC. Now that’s a big market.

3rd Generation: Internet. Now through one platform, you get instant access to a couple of billion people. Is that big enough for you?

At this point it clearly is absorbing to talk about a platform (other than the open Internet) that will have that form of power. We have to be looking at niche opportunities. At the same time, the infrastructure created by Amazon S3/EC2 is really game-changing. You can really pay for your infrastructure on a credit card and the Adsense revenue probably pays the credit card bills! In addition, as Alex Iskold pointed out, when web sites become web services there is tremendous capability to rapidly create new “higher level” services.

Abstraction: the Goal of Platforms

What we are seeing today is a level of abstraction that is beyond what we traditionally think of as programming. Abstraction has always been the goal of platforms, from Assembler to Fortran to Visual Basic to Ruby or whatever. Today we are finally getting what has been talked about for decades, development without the need for a traditionally trained programmer.

In the past we used terms such as “4th Generation Language”. This betrayed a bias that it was still a “language” that was controlled by technical people. It was probably inevitable that just when the dream of “programming for the masses” emerged, that it would look nothing like programmming and might even seem a bit threatening to traditionally trained programmers. A Computer Science degree is no longer needed to create meaningful applications. Its all about a) the idea and b) access to the people formerly known as audience and c) the nerve and hard work to make it happen.


The opportunities may be niche, but they are global and the number of people online is so mind-bogglingly large that even niches that were considered ridiculously small, now become viable.

It is possible that the real money-makers will be the platforms that enable people to make money based on things that they do offline (that’s what eBay does). These platforms will enable self-organizing business networks to grow, providing a secure and trusted environent for this to happen.

Tell us what you think about how businesses and individuals alike can earn money via online platforms. What have been your experiences?

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