Lesson 4. Platforms host the party

project-x party tropy

Some of the best parties, like the best platforms, are BYOB.

honda founder

The value of life can be measured by how many times your soul has been deeply stirred.
~ SOICHIRO HONDA

In my prior post, “Don’t Look Down” Soichiro Honda demonstrated the first three lessons of platform design by seeing the potential to demand “six Hondas in every garage“. He taught us to 1. Boost our ambition, 2. Issue a challenge, and 3. Play to strength.

Platforms reduce cost. More importantly they magnify impact — and multiply revenues — beyond their foundational product.

Lesson Four comes to us from a surprising meeting of the minds, that began as matching of wits, and escalated to a battle of wills, between an ideologue and a moneyman.

The money won. And, refreshingly, for the right reasons.

We all owe a debt of gratitude for what can be rightly called “smart money”.

Open the floodgates

&open-floodgates

Platforms produce wealth in direct proportion to the participants they attract. There’s no value in laying track if no one runs on your railroad.

&john doerr ifundIn 2008, John Doerr, renowned partner of Silicon Valley investors Kleiner Perkins, announced the iFund to co-invest in the apps, components and broader ecosystem of products to promote Apple’s iPlatform.

Seems obvious and invaluable now. It very nearly didn’t happen. Had Steve Jobs had his way, Apple may have lost yet another platform war that he didn’t see coming.

When Doerr originally approached Apple about the idea, Jobs rebuffed him. He believed the iFund would throw open the gates to the Apple citadel, inviting a Trojan Horse.

Why after so many years of scrupulously guarding the user experience would anyone invite strangers, hackers and god-only-knows-who-coders to wreak havoc on Apple’s meticulously seamless design.

Doerr persisted. Outsiders could be challenged to meet rigorous standards, and submit software “apps” to run on the iPod (and subsequent iPad and iPhone) only after careful vetting by Apple. Apple would retain control of the ultimate experience, but open itself to the innovations of a much wider world.

Jobs’ instinct remained closed. He wanted to control the end game. He would not risk compromising his vision.

So Doerr laid down his trump card. He told Jobs that he’d be forced to redirect the fund at Google’s new Android operating system.  Jobs relented. The iFund was announced to great fanfare, and admission to the club remains excruciating for the uninitiated.

To his credit, once Jobs got behind the idea, all of Apple charged ahead to make the App Store as powerful and seamless and mobile as the iTunes platform it supplemented.

App Store Revenue

App Store revenues forecast 40% annual growth in 2013 to $13 billion, to $22 billion in 2016

The willingness, however reluctantly, to open the front door and let partners roar in led to the windfall Apple enjoys to this day, and built barriers to competing platforms.

For now.

So, if you want to build the platform everyone wants, plan the party everyone wants to attend. Then throw the doors wide open.

Make better.

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