A Developer's Guide to Finding Whitespace - Apple Targets Instapaper, Dropbox and Others

The photo to the left is founder Marco Arment’s four letter tweet after seeing Apple launch a competitor to his popular startup, Instapaper.

There’s been a lot of coverage as of late about platforms taking over the business of successful developers on their platform. Twitter has been the seen as the worst offender lately, but after today’s WWDC, expect to see more complaints about Apple as well.

Apple announced several updates today that compete with companies that have iOS applications – if interested in who’s affected, the NYT has already published a list.

If you’re a developer building on top of a platform, I think there are some ways to guard against disruption from the platform owner – here’s my attempt at a partial list which I’ve built from essentially two sources: (1) Our experience at Involver building on top of Facebook and (2) Chris Dixon’s blog.

Understand what’s strategic: Know that the platform you’re building on will have elements of their business that are strategically valuable – these things will be seen as far too risky to trust to an ecosystem partner and moved in house. This could be good (they buy you) or bad (they compete with you). It will generally be bad more than it’s good.

Don’t compete with the platform: If you’re building a business that takes profit from the platform’s businesses, you will be viewed as a leech. Platforms will move most strongly against leeches. Make your business model complementary to the platforms core business.

Be net-additive to the platform: If your revenue channels drive profit to the platform, the motivation to move against you drops strongly. Platforms want you to pay taxes, but they tend to care less about you paying optimal tax. If you’re collecting far more profit than the taxes you’re paying, the platform’s incentive to move towards optimal taxes increases (e.g. Zynga + Facebook)

Diversify your channels: Wherever possible, being able to diversify so that your revenue comes from multiple platforms can be a fantastic guard against the risk of falling out on one platform.

Beware building on profit-less platforms: A big reason Twitter has been moving so aggressively against some of their larger developers is because they don’t have a clear business model. If 3rd party developers make more off a platform extension then the parent company does in total, there will always be a natural incentive to compete.

Further Reading

Joel Spolsky – Strategy Letter V

Chris Dixon – Incumbents

Chris Dixon – Buyer/Supplier Hold Up

Chris Dixon – Thoughts on Incumbents from a Startups Perspective

Chris Dixon – What’s Strategic for Google

[this is still a draft, please suggest additions or edits]