If you want to build a multi-billion dollar business, you can’t just build a product: you need to build a platform.
That was my major takeaway from the news that Spotify is launching an app platform. It’s in its infancy (thus why journalists are rightfully bashing it), but it’s the start of a transformation for Spotify.
In my opinion, the major inflection point for Facebook — the moment it transformed from a million dollar business into a billion dollar one — was May 2007, when it launched the Facebook Platform. When it opened up its APIs to developers, it created an ecosystem that drove up Facebook’s value. The next year, Facebook hit 100 million users and the engagement skyrocketed from there.
That’s why Facebook is the king of identity, and that’s why it will IPO for north of $100 billion next year.
I make the same argument for mobile, specifically Apple and the iPhone. When Apple opened itself up as an app platform with the launch of the iPhone 3G, the mobile economy boomed and so did iPhone 3G sales. Twitter, Salesforce, Amazon Web Services and others have gained tremendous growth by positioning themselves as platforms.
The platform is king, and Spotify knows it. That’s why it’s launching a platform.
Image courtesy of Flickr, Andreas Blixt