Transforming from a Product to a Platform Company

For 20+ years I’ve dedicated a large part of my career to stewarding the evolution of organizations as they transition from a product focused company to a platform.

Recently I’ve been asked about my definition of a platform? Why is it an important step in the evolution of a company and what is the role Business Development plays in that transition?

I’ll do my best to answer those questions in this Blog.

I got hooked on the movement early on when the godfather of multi-tiered architectures,

Alfred Chuang said: “The strength of any platform is defined by the number of partners standing on it”.  At the time, Alfred was CEO of BEA Systems a young, scrappy Java App server company. Alfred knew that to outpace IBM in the JVM market, he had to assemble the best set of partners building on top of his platform.

As we look at the rise of a few notable platforms in the past decade, patterns begin to form.

Facebook – When Facebook broke away from challengers like:  MySpace, Friendster, AOL, etc. there was a few noteworthy differences.  Building your online profile in Facebook is a simple point, click and upload some pictures into a predefined template. The customization model in Facebook is a simple process. MySpace on the other hand, had limitless combinations of presentation options and was

customized via HTML Tags. Great for geeks.  Bad for grandma.  The second compelling feature of Facebook is the ability for third party apps to target the growing community of users with very specific messages based on massive amounts of personalization data. Personalization data, on not just where you were born, went to school, your major, where you work, where you’ve lived, visited and what you ‘Like”, but your entire network of fiends, their profiles and so on and so on.  The flywheel effect kicks in when you can invite partners to build an app on Facebook.  Apps like Spotify, Airbnb, LiveNation etc.  The fourth key attribute that Facebook also has the pole position on is the control point as they stand as the gatekeeper to all your news feeds, interactions with friends, life chronology etc.

iPhone – One of the greatest platforms on the planet.  The commonalities to Facebook are resounding.  Easy, standardized, custom development model.  Massive installed base of loyal customers.  A multitude of persona’s and usage models.  Now every company must have their own customized iPhone app to: 1) Access the throngs of iPhone enthusiasts who crave the standardized UI and User Experience( UX) that is uniquely iPhone. 2) take advantage of the personalization data that is captured by iPhone e.g. your location, places you visit, place you call home, who you communicate with, your browser history, who you transact with etc.

iPhone has a very rigid app development model that takes advantage of platform services like a camera, GPS, microphone, motion accelerometers.  Using the platform features in a structured, certified dev environment has enabled 1000’s of aps in gaming, travel, finance, music, sports, affinity groups and commerce.

To recap the key attributes of a platform:

• Community – Scores of happy users of an anchor tenant app.  You must have this first to entice developers.
• Customization Model – An app dev environment enabling developers to consume rich services served up by your platform.
• Third Party Apps – A wide range of apps built on the extensible customization model consuming platform services.  These apps are often certified by you to make sure they are addressing all of the platform features in a correct manner.
• Control Point – A controlling layer that serves as a centralized information bus for either data, experience or both. When developers use your control layer to access critical data or drive the UX, your platform becomes ultimately sticky.

Transform your Company

Most companies start with a great product idea.  This singular product takes them to being a successful product company with traditional engineering, marketing, and sales. The total addressable market (TAM) of that company is gated by the market size of that one product.  Case in Point – VisiCalc.  Before there was Excel there was VisiCalc from VisiCorp.  This early spreadsheet program, first released in 1979, was originally exclusively for the Apple II.  It was seen as a the “Killer App” for the Apple II. In effect the reason to be for this new compute platform.  People were known to buy the $2,000 Apple II to run a $100 VisiCalc Spreadsheet program. VisiCalc was originally marketed to financial professionals who were looking to use the Apple II. Sold through boutique computer stores, the small TAM, and narrow channel resulted in about 700,000 units sold in six years.

In 1988, Microsoft released Office.  It included Word, Excel and PowerPoint as a bundle. Really it was just marketing three separate disks, installs and apps as one suite.  It had a customization language in Visual Basic for Applications (VBA), enabling user-defined

functions (UDFs), automating processes and accessing Windows API and other low-level functionality through dynamic-link libraries (DLLs). It joined and replaced the abilities of earlier application-specific macro programming languages such as Word's WordBasic. It can be used to control many aspects of the host application, including manipulating user interface features, such as menus and toolbars, and working with custom user forms or dialog boxes.

Suddenly the TAM that Microsoft was addressing was much broader.  Not just financial pro’s, but writers, presenters, collaborators. This new set of knowledge workers demanded a suite of apps that were integrated and had dynamic data transfer for building graphs in Excel and having them auto appear in Word or PowerPoint presentations.  The ability to customize and control all of the apps via VBA brought in third party app developers eager to build apps on top of the Microsoft platform. Combine the power of the platform with multi-channel sales e.g. resellers, online, direct, Fast forward to today.  Microsoft has sold over one billion licenses of Office.  That’s 1 for every 7 people on the planet.

Business Development


An interesting organizational change happens when you decide to shift from being a product company to a platform company.  Business Development (BD) takes a center role in the org. As a single product company, BD was probably focused on providing leadership for Systems Integration partners (SI’s) to assist in successfully deploying your product for customers and maybe integrating your product with existing or third party apps.  An

important function but one that changes dramatically as you become a platform company.

To validate you as a platform company, BD takes on much broader functions:

App Developer Communities – This is a 1:Many function where platform API’s are exposed and supported by partner oriented engineers.  Engineers who are versed in your platform and the multitude of partner app use cases that can delivered by using your platform service.  Exposing your services into popular dev communities Integrated Development environments (IDE’s) like Visual Studio, Eclipse, and run-time execution environments e.g. EJB’s, Ruby, Google App Engine, AWS AMI’s and Lambda, Containers, etc. making sure your platform Software Development Toolkit (SDK) supports the permutations of IDE and run-time environment.

Co-innovation -  This is a 1:Few function where select ISV’s are identified as lighthouse apps to integrate to, build on top of and even OEM your platform because of its unique control point in the stack or UX. The key is to define and co-innovate on a joint solution that is unique to your and only your platform and then keep that integration fresh and ahead of the other platform competitors. The BD teams engage with these ISV’s for a more intimate discussion that probably includes some of the deeper engagements described below. Many times these ISV’s are singled out by the product or sales teams because of their prominence in a market space, geography or industry vertical.  E.g. Schlumberger in Oil and Gas, GE and Siemens in healthcare etc.

Co-Marketing – Once a joint solution is defined the 1:Few Go-to-Market (GTM) plan put in place, invariably contains Co-Marketing. Doesn’t matter if you’re a 10 person start-up or IBM, your contact lists and the numbers of times you can hit these before people opt-out is finite. Partners often have different installed bases than you. Partners leverage each other to market to those installed basses.  Leverage is garnered by leveraging each other’s brand equity.  People are much more likely to respond to a Call to Action (CTA) from a brand they recognize than one unknown to them. Exhibiting at each other’s users conferences and trade  shows brings in a whole new audience.  Even something as simple as a joint press release can be impactful in an over-saturated world.


Co-Selling – This is when things get interesting.  Now that the sales teams have something that is unique, compelling and differentiated to discuss with customers, it’s time to do the account mapping and joint selling.  This is generally done on a grass roots level region by region, rep by rep, account by account. Quota buckets,  accelerators, Sales Promotion Incentive Funds (SPIFS) all determine

how reps focus their energies. As the life blood of their W2, reps are extremely protective of their accounts, so letting another partner in for a pitch is often an exercise fraught with risk.  But as is often the case in many B2B relationships, knowledge displaces fear and replaces it with trust. Understanding how your counterparts are goaled and compensated is critical.

Co-Delivery – 3:few. This is the final mile of a true GTM partnership.  When two product companies come together, what’s often overlooked is actually the most important aspect and that’s customer success.  Solutions, especially joint solutions require specialized expertise and focused alignment with key SI’s that are well versed in the joint solution and have the same obsession towards customer success as the ISV’s.  The further they get away from your own core product, your own Proserv org's expertise will diminish. Partners aligned for your mutual success are key here.
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The rewards for making the difficult transition from a product company to a platform company are significant.  With all its interconnections and eco-systems supporting it, your platform becomes infinitely stickier, customers are far less likely to displace your platform for a whim of pricing or functionality.  Your long-term revenue and market cap will reflect the widened TAM.  Just ask Facebook, Amazon, Google, Microsoft, Apple and the host of other iconic brands that have successfully made the turn and have dominated.

Software is eating the World or What Happened to my Phone Company?

The story of CenturyLink is a common story in the evolution of the Telco industry.  You can substitute Verizon or AT&T and it’s pretty much the same story.

In 2000, then CenturyTel acquired 300,000+ residential service lines from GTE. In 2010, CenturyLink acquired Qwest Communications. This new combined entity became the third largest telco in the United States with 17M access lines 5M broadband customers and 1.4M video subscribers. Traditional voice and data services.

Right around the same time in 2011, CenturyLink acquired Savvis. Savvis sold managed hosting and collocation services with more than 50 data centers (over 2 million square feet) in North America, Europe, and Asia, automated management and provisioning systems, and information technology consulting. At the time, Savvis had approximately 2,500 unique business and government customers.  Not so traditional Telco stuff as this was pure B2B.

But faster than you can say, “Gotta Keep up the Jones'” the corporate development groups at Verizon snatched up Terremark and Time Warner Cable purchased NaviSite. 

Both were Colo/Managed hosting providers like Savvis. What does a managed hosting and Colo business have to do with selling phone lines, video and broadband?  Not a whole lot.  These services are sold B2B and are the IT version of parking your car in the neighbors garage.  He may wash it and change the oil sometimes, but it’s still pretty much your car sitting in your neighbors garage.  He pays for the roof overhead, but that’s pretty much it.

A Short primer on Colo vs Managed Services vs. Cloud.

Collocation You purchase and own both the hardware (servers) and software that will host your web presence.  You are responsible for buying, setting up and configuring both. This is the easiest market with the lowest barriers to entry.  Read, Even the Telco’s could do it. 

Managed Hosting The hosting provider ‘managed’ everything that was required to give you an online presence for your website.  I’ll wash, wax and change the oil on your car regularly.

Shared hosting account – Multi-tenancy.  Which just means that many customers such as yourself shared space and resources on a single server, which has been designed to host multiple accounts simultaneously.  I’m renting you a zip car.

Dedicated hosting account, often referred to as a dedicated server.   These are your servers.  Kind of like Colo.  Customers concerned about security love this.

Public Cloud, Everything from Compute to Storage to database is virtualized and multi-tenant, spread across every region of the globe for disaster recovery with multiple zonal fail-over in each region to accommodate data sovereignty rules. I’m renting you a car that I can rent many times.  You never have to buy a car again.  Oh and I also make the car.  

More on that in a minute...

AWS Envy

You see five years ago CenturyLink and other Telco’s saw the rise of Amazon WebServices and believed they could compete head-on against AWS in the public cloud market. As noted above, that ambition inspired CenturyLink to buy Savvis for $2.5 billion in 2011. Around the same time, Verizon acquired Terremark and Time Warner Cable purchased NaviSite.

Why did this seem like such a good idea in 2011?  Back then, all these phone companies thought that they needed to compete with AWS was the physical presence of massive data centers.

But they grossly underestimated one key fact in AWS’s success.  Yes while they do own their own data centers for the most part, the reason why AWS is successful is because they are complete stack of truly virtualized, multi-tenant services based on commodity infrastructure and in the case of AWS, as opposed to Amazon.com, AWS writes the books. In other words, Just like GCP and Azure, AWS makes what they sell.  They are the manufacturer of: Aurora DB, Dynamo DB, Redshift, S3, Glacier and the swarms of other AWS products.  Their hardware COGS e.g. servers, storage and networking is on the cheapest commodity gear with smart software for fail-over and high availability.

The Telco’s are not software providers. And as Marc Andreessen so eloquently pointed out “Software is eating the World”.

Amazon’s AWS revenues continue to grow rapidly, surging 42 percent to $3.66 billion in the company’s Q1 2017.

Fast forward to present day to close on the current state of the Telco's. 

Verizon has essentially abandoned its public cloud and will instead focus heavily on private clouds as well as secure network connections to Azure and AWS just like Equinix.

From the Verizon CEO in August 2016.  “CenturyLink’s Colo revenue is not growing, and the telecommunications giant is looking for ways to avoid investing more capital in the segment. CenturyLink is looking for “alternatives” to owning its nearly 60 data centers around the world that support colocation, managed hosting, and cloud services”.

On Nov 04, 2016 CenturyLink sells Savvis to Private Equity for $2B.

Even the once mighty Rackspace (Never a Telco but an arch enemy of AWS) waved the white flag on March 8th 2017 when they announced a strategic relationship with Google Cloud to become its first managed services support partner for Google Cloud Platform (GCP). Google Cloud and Rackspace are collaborating on some new managed services offering for Google Cloud Platform customers that will launch later this year.

The managed support services will offer GCP customers added cloud architecture support, on-boarding, data migration expertise, as well as ongoing operational support for customers, to help ensure optimal cloud application performance. 

They’ve offered the same services for AWS for some time now.

That’s akin to Ford getting out of the car manufacturing and selling business and instead doing specialized services for Tesla. 

The cloud world has changed dramatically in the last 7 years.  Colo, Hosting, Managed Hosting business have all but dried up and most of these orgs are divested or reinvented themselves as services companies for the big three GCP, AWS and Azure.  You see, cloud computing takes enormous scale and tremendous software DNA up and down the stack. Without both assets, time to reinvent.

Machine Learning and Why my Wife does not need to find a New Hobby

In my last Blog, The coming of the Fourth Industrial Revolution and Why Google was Getting it Right, I wrote about why prior technical breakthroughs in industrialization e.g. steam to electricity, vacuum tubes to integrated circuits, process efficiency to Machine Learning and Artificial Intelligence had been sea changes not because of their technical breakthroughs but because of the societal changes that were made possible because of these giants steps in tech.

I got a lot of questions coming off this last blog, primarily “What is machine learning and why is it all the rage?”


Let me start by saying human to human interactions in the modern world are ambiguous and messy, Human brains have been conditioned throughout time to make sense of this messiness and come to in most cases, sensible conclusions.  Take the very human ability to detect sarcasm in a conversation. We can do this because we pick up on the subtle clues like: prior knowledge of the speaker, inflections, situation or subtle body cues like: eye rolling and smirking.

One would think that the ability to detect sarcasm is a learned behavior that machines would never be able to perceive.  Think again.  By the way, the above image of Gene Wilder was found by searching for facial sarcasm.

Blame your grandparents, but even when people age, your facial bone geometry remains the same.  The angles and distances between key bone structures on all us homo sapiens can be broken down into math.  Wait, math? Billions of images, subtle mathematical facial changes, when combined with speech patterns? That spells sarcasm? Sounds like a job that super-fast computational algorithms accessing billions of data points spread over a virtually unlimited farm of servers would be good at.

So I can auto-tag my selfies.  Who cares?  Well, how about an algorithm that can provide early warning detection to parents and mental health professionals that subtle changes in a person’s facial expressions combined with sentiment in their postings, on-line behavior and inflections in their speech from billions of data points derived a propensity for suicide.   What if we could detect that propensity years in advance of an event?

School counselors are hopelessly outnumbered and overwhelmed and parents are simply not mental health professionals. The saddest thing I’ve heard from a parent whose child has taken their own life was “We never saw it coming”.

Technology has always elevated mankind.  Masses of people were once relegated to manual labor.  From building the pyramids to coal mining and factory work.  A modest technical insertion from something as simple as a fulcrum to a steam engine to manufacturing automation was introduced and mankind is elevated.

One of my favorite examples is from right around the turn of the century when elevators had an attendant who pushed the buttons for you when you entered the elevator.  Well along came automatic elevators which did not require an attendant. People would enter the elevator and quickly exit because they thought it was not safe. 

According to the US Department of Labor Statistics, 22,360 people work in the US fruit canning and preserving industry. Many of these workers are hand sorting fruit based on size, color and quality.  Human kind is better than that.

Which brings me to my wife. She loves to do jigsaw puzzles.  She can sit for hours doing these things.  Being the student of behavioral and computer science I am, although I could never have the patience to do one myself, I can spend hours watching her do these puzzles. Like all good jigsaw puzzle solvers, she sorts them by color, geometry and then proceeds with edges and common colors.  She then works her way to the middle and eventually solves the puzzle, sans the illusive peace that the cat may have made off with.

But when she’s done, she lovingly admires her finished masterpiece for a short while before breaking it apart and putting it back into the box.  That’s generally when I sit in amazement thinking that a machine learning, image and pattern recognition algorithm could have done that puzzle as quickly as you could read this sentence.


But then I realize I’m totally missing the point.  That some experiences are better left for the human condition. The mental rush and warm feeling of accomplishment is what makes us human.   Technology frees us to from having to perform menial rote tasks as acts of survival.  How we choose to spend this gift of freedom is up to us.