Phil Simon: Business lessons from Amazon, Apple, Facebook and Google
11th Jan 2012
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Brent Leary interviews Phil Simon, author of The Age of the Platform, about lessons from The Gang of Four.
Brent Leary: Why don’t we go ahead and get your definition of platforms as it is today.
Phil Simon: To me quite simply a platform is an integrated set of planks which of course makes the question what are planks. A plank really is a feature, it can be a product or a service or an application or some kind of offering. So if you look at the platform of Amazon, Apple, Facebook and Google, they really do have these integrated planks. Google in 1998 was not a platform when Larry and Sergei founded the company; it was a very powerful search engine. Today it has become a platform because it has added Gmail, Android and YouTube and Reader and Blogger and news and all of these other different planks.
Brent Leary: Maybe you can give us your take on how these four companies got to be where they are in terms of becoming platforms, and the differences in the way they did it.
Phil Simon: The reason that the Gang of Four - Amazon, Apple, Facebook and Google - had done so much with their platform is that they have embraced this notion of ecosystems. They put out their APIs and they let people put apps in the apps store, or build services on top of it.
Let’s just take Facebook and Amazon for a second. You know when Jeff Bezos started the company as the online book store in 1995, his goal was not necessarily to sell Cloud computing power to small businesses; or to become a publisher; or to sell hardware; but that is exactly what happened.
Since Amazon had gone public fairly early in the existence during the “dot com boon” Bezos has had available hundreds of millions of dollars in funds, and he spent all of it and then some. The company actually went into debt because he realized the necessity of getting big fast, that was his mantra, get big fast.
Contrast that, for example with Facebook who initially started by putting college kids together. In fact, there were schools that were clamoring for Facebook but Mark Zuckerberg would not release it until he knew that he was not ready. He did not embrace this notion of getting big fast because he remembered Friendster and that it would take anywhere from 2 to 3 minutes for it to work. Zuckerberg took a very different approach towards building the Facebook platform.
These are just two very different examples of how these companies have achieved their leadership positions.
Brent Leary: It seems like it is the ecosystem around them, the developer community, and the folks who make the apps that go into the apps store that have a major role in who wins and who loses.
Phil Simon: I would see you and raise you that it’s just not about the developers – it’s about the creative types. It’s about the people on Amazon who submit their books, or the vendors or the partners. In fact, it is even more organic when you see someone using an IPhone, or an IPad, or Kindle Fire or one of these devices on the subway or on the plane, you are curious. You go into Apple store and there is just this energy about the place, so this is not necessarily about all of these people inside of the company wearing suits and ties and they are making these important decisions. It is about the consumerization of IT, in other words if you look at the platforms of the mid 1990’s you are talking about maybe Oracle, IBM, SAP or Microsoft they were business driven, they were people using the computers at work or now people using their mobile devices, laptops, and tablets everywhere. You are no longer cloning the use of the technology or accessing the platform when you are at your desk or on the clock, you are using is everywhere so it is a consumerization and the age IT has really been huge and that is no coincidence that the “Gang of Four” are basically all consumer oriented.
Brent Leary: Where does Google Plus compare to Facebook? Is it something that could rival it or is it something that is more complementary?
Phil Simon: I personally do not see Google Plus overtaking Facebook with regards to the social place. I don’t buy it any more than I see Apple becoming the leader in search. I think all of these platforms will continue to exist and adapt. There may be fewer searches in the traditional sense, index searches on Google because people are doing social search on Facebook. In fact, Google is so justifiability afraid of Facebook that actually it is tying all employee bonuses to success in the social arena.
The point is this, if I were using the Google platform and I did not like BUZZ or Wave or Orkut and Google really did not have a social plank then I would have to go to Twitter, LinkedIn or Facebook or another social network. To me Google Plus is an essential plank in the Google platform. Whether or not it ultimately defeats Facebook, I think it is kind of misplaced. Anymore than if you could not do a search on Facebook.
Brent Leary: Look at what Amazon has done, creating their own Android Marketplace; then they came out with their own Android tablet, the Kindle Fire. What do you think about Amazon and the way they are able to position themselves in play in all of these different areas?
Phil Simon: They are very smart for doing it. Again I don’t think that people will stop buying books, but if Amazon did not offer any eBooks at another company did, then Amazon is at this competitive disadvantage. Also because of the Kindle and now the Fire, Amazon does not want you to have to buy your books on the iPad and access it through the Kindle app, if so then you are kicking Apple’s potential at the percentage of the sale. I don’t think it is any kind of coincidence that with the exception of Facebook, these companies are all, from some extent dabbling in hardware.
Brent Leary: I think that one of the crown jewels Amazon has is Amazon Prime. It seems like maybe that is the way you are going to see some of these companies be able to connect these services to devices.
Phil Simon: It makes all the sense in the world. In fact I was reading that Google has launched, I think, a private beta of some sort of an equivalent of Amazon Prime. In the book I specifically focus on the Amazon Prime piece, because people love Amazon Prime because you say yourself, ‘well because the shipping if free so what else can I get?’ Then it incentivizes people to buy more stuff, again because of Fire I think it will even multiply because you are taking it with you. And let’s face it, it is easier to purchase something just because the screen is bigger, right, than it is on an iPhone or Blackberry.
The other asset for Amazon, because you are a big CRM guy, is that they have this incredible trove of active and comprehensive customer information. Amazon knows exactly what their customers are buying and it can make those gentle recommendations. There are not many companies out there who have such profound understanding of their customers that is an enormous asset.
Brent Leary: Perhaps you can speak a minute or two on some of the other potential big platform players that you mention in the book.
Phil Simon: Sure, Force.com is a tremendous platform. Marc Benioff understands the cloud, he understands planks and APIs, ecosystems and development kits. He wants people to take Force.com into different directions so companies have developed recruiting applications or business analytic applications. Salesforce.com has made a number of key acquisitions, like Radian6 and it has Chatter, so they are building out planks.
Another is certainly WordPress, which is my content management of choice. I think it is the better definition of applied form; you have robust communities out there that have different planks, WordPress sites can do so many things beyond supporting a blog or a video. You have got integrated ecommerce; you have the ability to do so many different things.
LinkedIn understands the importance of an applied form and makes the APIs open. You can develop things on top of it. You know Twitter is another important one.
There are so many ways to take these platforms and I don’t think by any stretch Amazon, Apple, Facebook or Google are the only ones to have gotten platform religion, I just think there are the best ones executing some of these strategies.
Brent Leary: There is a lot of meat to the book. What are some of the top things that you would like to walk away with after reading your book?
Phil Simon: First of all I want them to understand how Amazon, Apple, Facebook and Google have become so successful, but then I don’t want them to be intimidated because I actually have embraced a lot of these strategies back in 2008 and I am a single person, LLC. I am every bit of a definition of a small business. Over the course of three years I built my own platform.
It is a very competitive, very fast paced world right now and I would argue that if you don’t understand this notion of platform, then your time is ticking because there are plenty of companies that are growing by leaps and bounds because they doing some of things that Amazon, Apple, Facebook and Google do.
The platform may not be for everybody, but I think that some of the companies using platforms are just incredibly successful and if you want to learn about those companies I think this is the right book out there. In fact there is a free sample of the book on TheAgeOfThePlatform.com.
Brent Leary: Maybe you will take one last question? Could a traditional player, like Microsoft or AOL or any of the traditional technologies companies, can they become a platform in the new era, or is it going to be companies that we probably don’t know anything about that has more probability of doing that?
Phil Simon: Well I think that the AOL ship has sailed. With regard to Microsoft, that is a real challenge, because people still have this really strong brand association of Microsoft as an enterprise or a B2B type of company. People use Google because they want to; they use Facebook because that is where they want to go. I think it’s a challenge for Microsoft because they have been, not a victim of their own success, but when a company makes billions and billions of dollars off of Windows; Office; SQL Server; and Microsoft Exchange it can’t just turn on a dime.
I never want to say never because Microsoft is very powerful and a successful company, but it has a long way to go, I think, too replace the Gang of Four.
Brent Leary is a CRM industry analyst, advisor, author, speaker and award winning blogger. He is co-founder and partner of CRM Essentials LLC, an Atlanta based CRM advisory firm covering tools and strategies for improving business relationships. In 2009 he co-authored Barack 2.0: Social Media Lessons for Small Business. Recognised by InsideCRM as one of the 25 most influential industry leaders, Leary also is a past recipient of CRM Magazine's Most Influential Leader Award. He serves on the national board of the CRM Association, on the advisory board of the University of Toronto's CRM Center of Excellence, and on the editorial advisory board for The Atlanta Tribune. Leary writes a regular online column for Inc. magazine, and blogs at BrentLeary.com. He can be found on Twitter at http://twitter.com/BrentLeary.
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