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Open With Care

There has been a lot of activity over the past few months about things getting more open:

These were and are all big things.  And, there are probably many others I missed.  But, these are particularly interesting to me.

Facebook really started the latest wave by opening up their API.  This allows developers to leverage the Facebook user base and, to some extent, user data, in producing applications.  This seems to be most interesting for existing applications that extend themselves into the Facebook world to attract additional users and provide more value for their users.  In this case, Facebook is a kind of channel partner.  And, the access to Facebook data makes the application more useful for users, leveraging their preferences and social connections.

The recent Google announcements show Google flexing their muscles to move into new areas.  Open Social is Google's response to Facebook's success (and Microsoft's investment in Facebook).  Google is the only company that has the financial strength and market position to really take on Microsoft in big new areas.  I don't know if Open Social will really wrestle the social networking momentum away from Facebook.  Instead, I think that it will forece Facebook to find a way to work with Open Social, which is probably good for developers and users.

Android is an even bigger deal.  Google is trying to turn the cell phone business on its ear, taking control away from the closed carriers, like Verizon Wireless and AT&T, and from the phone OS providers, including RIM (Blackberry), Apple (iPhone), and Microsoft.  This is more focused on smart phones, which I think will become more and more common.  These smart phones can become full featured, with lots of data access and innovative applications that take advantage of the almost-always-on connected nature of wireless devices.

There are plenty of places where you can read more about all these announcements.  One thing I have been thinking about is what all this means for new start-ups.

Opening up these big platforms is a good thing for consumers and makes it easy for developers to create new applications.  But, it also means that a developer has to build more and add more value to create a business with a long-term sustainable advantage.  I have met entrepreneurs who are building a Facebook app and think that can be a company.  No way!  You can't build something in a week or a month and have that be enough to give you any long-term advantage.  Advantage comes from a combination of:

  • Technology (but less and less so).  You need some significant new invention or a unique combination of technologies to have real value
  • Unique partnerships (supplier, customers, distribution, etc.)
  • Unique mixture of skills on the team
  • Customer base that isn't likely to move (but getting this is hard)
  • A target market that is significant and growing (and/or changing)

A strong opportunity needs a portion of all of these, or at least the potential to end up with all of these.  That doesn't come about without a lot of time and effort.  A compelling team can build confidence that you can end up with this.  A bootstrapped company with a fast-growing user base may be able to continue to grow.  And, existing partnerships are pretty hard to beat.  Short of that, you need to keep working before an investor is likely to think that you can build something big.

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