I played a good bit of soccer as a kid and even more in college. I mostly played defensive positions. One of the things I most appreciate about the game is that the smallest of errors can have game-changing impact. As a defensive player, an errant pass in the mid-field or a moment out of position in your defensive zone can result in a goal. To borrow a term I don’t really like, solid defensive soccer requires “constant vigilance”. As a defensive player, you have to have your radar up all the time; scanning, marking, closing gaps, nothing can get through. It is as much a mental exercise as a physical one. There is no room for downtime.
I like analogies. This week, Brad Burnham of Union Square Ventures wrote a thoughtful post based on an analogy between software powered platforms and governments. Bob Warfield of the SmoothSpan Blog did a follow-up post claiming that application developers should seek platforms that act like Switzerland; something Warfield has apparently been saying since 2007. The government-platform analogy is good, albeit imperfect. The most salient aspects of the analogy are in the area of governance.
Twitter no longer deserves the label “platform”. There, I said it.
Its recent decision to lock out third-party ad networks, combined with its clear move in to the edge application space fundamentally alter what Twitter is. It is no longer a platform for application developers to productize around core stream functionality and monetize the edge of the Twitter network. No, if Twitter wanted to be a platform, it would keep its business focused on inspiring innovation on the edge of its network, managing the infrastructure and monetizing the stream.
Truth is, Twitter never was a platform.
A few weeks ago, I wrote a post that covered my areas of investment interest for 2010. Three of the areas I find most interesting are the mobile ecosystem and the payments sector and the theme of “platform” business models. You can find that post here. The natural question I’ve since been asked is:
“What about mobile payments?”
My friends at PYMNTS.com asked me to join in the discussion in their Briefing Room on Mobile Payments. My answers are here.
The last couple of days have seen a flurry of activity in mobile. Apple announced its response to Google’s acquisition of AdMob by acquiring mobile ad network, Quattro. Google announced the much awaited Google phone, the Nexus One. The bulk of the discussion has been around the mobile application battle between Apple and Google. Henry Blodgett thinks Apple is poised to repeat mistakes of the past by remaining a largely closed (or at least tightly controlled platform). Bill Gurley thinks the battle between Apple and Google is largely a business model question and that there is room for both, serving different segments of the market with Apple in the high-end of the market and Google in the low-end.
I have always been fairly thematic in my investment approach. For me, the process starts with identifying big markets that are either 1) emerging (and will therefore be created over the next several years) or 2) undergoing some structural shift that will enable new entrants to grab market share from incumbents. I have seen Companies succeed in both types of markets and so I don’t have a preference for either approach. In 2010, there are a several big themes that I’m tracking which are likely to influence my investment selection during the year.
Everything is a service
For several years I’ve been spouting off about the notion that “everything is turning into a service”.
Everyone wants to be a platform these days. And they are popping up faster than I can keep track of them. Facebook became a platform, enabling application developers to develop on top of Facebook. Next came the iPhone. Salesforce.com offered Force.com as a platform. Twitter became a platform. A few weeks back PayPal became a platform. AmEx bought Revolution Money last week, based in part on the notion that Revolution Money would become a platform for application developers. Google Wave is a platform. This week, LinkedIn is a platform. To top it all off, today AlcaLu announced it wants to be a platform. I could go on; this is madness.
This trend is not the exclusive domain of established players. It seems two out of…