The platform trap: How companies avoid self-definition by expanding their targets

The platform trap: How companies avoid self-definition by expanding their targets
Photo by Annie Spratt / Unsplash

The fundamental question of what type of company you are is extremely important, because the answer has an impact on almost every aspect of execution, from the talent you hire, to your go-to market strategy, to your brand, business model, and much more.

Startups build their skill sets according to their identity. That’s why a cyber-security company will not have the same type of employees as a gaming company. From the talent you attract, to the customers you serve, everything is different.

Defining what you are is extremely hard, because it means you must define what you are not. We often see startup leadership teams who find creative workarounds to avoid making a clear decision on this very point.

One of the most common ways startups bypass this hard decision is what I call the “platform trap.”

If you managed to convince yourself that you were building a platform from the get-go, and that your go-to market depends on having a 360-degree solution, there’s a good possibility that you are neck-deep in a platform trap.

What’s the problem with defining yourself as a platform?

Calling yourself a “platform” is an easy way to lose focus on the true unfair advantage you have over your competition.

More often than not, startups will have a technological breakthrough and wrap a product or platform around it, in order to be able to sell it. The problem begins when a company neglects its real unfair advantage — the element that spurred you to create your company in the first place — and start investing resources in building all the other elements of a platform.

In so doing, it opens an “all you can eat” buffet of targets, markets and competitors. But as opposed to a lunch buffet, in the life of a disruptive startup, every course on the hot plate must be Michelin-star quality.

Whether you like it or not, your company is being positioned by your decisions. Every new feature you announce might add you to a new category.

For example, if you are a leading provider of an e-commerce platform, and you decide to add an in-house capability for detecting fraud, you are at risk of becoming a weak player in the anti-fraud market, instead of the strong player that you are in the e-commerce field.

Essentially, you are taking resources away from strengthening the area in which you are the best in your class, and investing them in areas in which you’ll never become a top player.

This is the reason companies eventually do a zoom-in pivot, focusing on their strongest component and throwing out the rest, after realizing that every additional component they add comes with a variety of competitors, who make beating them their top priority.

That being said, some companies actually do need to build a full-blown, in-house platform to even start getting traction. But most startups don’t, and they don’t have the capacity to tackle multiple problems from Day One.

If you still strongly believe that you haven’t fallen into the platform trap, and that building a platform is necessary, you should make sure your team constantly understands what type of company you are, and what your true unfair advantage is. Since a platform has many elements, clarity around importance and priority is critical. Lack of clarity on that score will confuse your team, and subsequently confuse your market.