Prediction: Unstable Platforms Will Devour Startups

Status: Occurring

Prediction: Twitter and other platforms will jeopardize start-ups built on them

Consider the four stages of platform risk:

platform risk matrix

  1. Desperate: A young platform that still hasn’t made a profit is desperate to find revenue streams. Many Twitter app providers have had the rug pulled out from them when Twitter began delivering the same features. Some of the better ones got bought by Twitter. Others suffered or shuttered as investors ran for the hills.
  2. Dangerous: Facebook is very profitable, but still young.  It’s dangerous because it’s constantly reinventing itself, like when it got rid of tabs for applications or its forthcoming Timeline redesign. Or, it may even be subversively hurting third party clients to favor its own services.

The Risk That Ate the Digital Entrepreneur: Surviving Platform Risk, Oct 2011

What Happened?

Over and over, immature platforms have jeopardized the viability of those who’ve built on them. From Twitter developers being ousted a year after our article to Facebook constantly changing stories on publishers, killing some along the way (Upworthy).

Twitter’s API Update Cuts Off Oxygen to Third-Party Clients, Aug 2012

No Escape? Facebook is Reportedly in Talks to Host New York Times, BuzzFeed and Other Content, Mar 2015

“The move is supposedly in order to make the experience of consuming news much easier and the company has publicly said that it would like to improve it previously, however it seems like such a deal would only benefit Facebook more than the news organizations themselves.”

Facebook plans sweeping change to newsfeed, Jan 2018

Publishers have become increasingly reliant on Facebook as more and more news is consumed on the app. They may see traffic drop if they are moved to an area of the app which users end up not visiting. It is not known how Facebook will decide which publications are deemed trustworthy.

YouTube Now Requires Creators to Be Partners to Use External Links in Cards, Sep 2017


“The change does add an extra step for YouTubers hoping to use external links to their own websites and crowdfunding pages, especially if they have no interest in joining YouTube’s Partner Program otherwise. YouTube also removed ads from videos with less than 10,000 channel views earlier this year, meaning smaller YouTubers may have a harder time drawing followers to their Patreons.”

More on this: Making Money on YouTube Just Got Much Harder

Prediction 2: You’re only safe when you’re aligned with the platform

As a start-up built on someone else’s platform, your success depends on how well you align with the platform owner’s interests. The minute your interests diverge, your risk increases…or possibly opens a door to sell out and move out of mom’s basement.  Consider what it means to be aligned or not aligned with the interests of your platform.

The Risk That Ate the Digital Entrepreneur: Surviving Platform Risk, Oct 2011

What happened: Compare Buzzfeed to Upworthy

Buzzfeed CEO: Here’s Why Facebook Isn’t Crushing Us

What makes Buzzfeed so special?

Is it – as some in the industry will whisper over a drink – because Buzzfeed happens to be a close Facebook partner?  It’s true that Buzzfeed’s business model is to make ads for brands on Buzzfeed.com, and then spend some of the money it gets from those advertisers buying traffic to those ads from Facebook.

“BuzzFeed is very aligned with the interests of all the major social networks” -Buzzfeed CEO Jonah Peretti

Compared to Upworthy…

Upworthy Traffic Gets Crushed

Facebook announced a change to the algorithm it uses to determine what kinds of updates (“stories”) users see in the News Feeds. In a blog post, Facebook said it wanted to feature more “high quality” content and fewer “meme photos.”

 Multiple cases of censorship, bans & demonetization, across platforms: