At #mtpcon San Francisco, Brandon Chu, VP of Product at Shopify, provides some insight into what he considers the most interesting challenge in his career: managing platforms. In this talk he shares what platforms can mean for our product strategies, and what his team learned as they discovered how to build a platform at Shopify.
What are Platforms?
“Platform” is one of the most ambiguous terms in tech, so Brandon begins with his definition of a platform, particularly in contrast to “products”. A product is building something to ship to customers, a platform is building a place where other builders or creators can build things to ship to customers. And while that seems like a small distinction, when you’re building platforms, you aren’t able to control what the end user sees – you’re only able to control who you let build on your system.
There are three main types of platform:
- Developer platforms – these are operating systems and tools that enable developers to build products faster. They are removed from the end users; customers never even know the products they use interact with these platforms.
- Marketplace and consumer platforms – these platforms are focused on enabling connections between creators and consumers. They are “trust platforms”: allowing two types of people to trust each other to transact. These are companies like Uber or Airbnb.
- Product extension platforms – these are platforms whose purpose is to enable third-party app developers to improve your product so it is more appealing to customers. A basic example is the iPhone – while it is a product itself, the apps that developers have for it are what really make it special. Brandon posits that looking for opportunities to create a product extension platform in your own product could have great impact.
Why Build Product Extension Platforms?
Brandon suggests you build a product extension platform because as your company grows and gains more users, the number of problems you need to solve for users will grow exponentially. At some point, your team will never have the capacity needed to solve all the problems in a timely manner. You can fill the gap between your customer problems and the capacity you have with a product extension platform. Third-party developers are able to meet niche needs your team doesn’t have time for, and can often do it better than you could have yourself.
Product extension platforms grow through a very simple flywheel. You have customers who are attractive to developers. The developers build great features on your platform to gain access to your customers. This in turn, makes your product better and attracts even more customers. It’s a cycle that propels itself into growth. But while this may be a simple concept, it’s not easy to achieve. Below is some of what Brandon’s team at Shopify has learned about product extension platforms.
Lesson 1: Accelerating the Flywheel is Your Job
It’s one thing to look at the flywheel conceptually, it’s another to make it operational. At Shopify, they structured teams around the flywheel, building teams focused on the tools developers need to build, teams focused on helping users discover and access apps, and teams focused on helping developers be successful with areas like payout and user data. That helps them intentionally improve all areas of the flywheel.
Trust is the Flywheel’s Grease
We all have companies we trust and those we don’t. This trust builds up in increments over time and has a very real impact on our willingness to interact with that company’s problems. If we don’t trust the company and don’t interact with its products, the platform is overall less attractive to developers and the flywheel is broken. But when we have trust, it can almost act as grease on every interaction, making the flywheel spin faster. This can be difficult, because while we know this conceptually, it can be hard to justify investing in trust-related features as they often don’t have a measurable ROI. But they are very important to a platform’s success.
Platform Product Managers Need Specific Skills
Platform product managers need specific skill sets in order to be excellent at their jobs:
- Software Engineering: With platforms, your product is code. Without having written code or being technically-minded, it can be hard to build really great platform products.
- Micro-economics: Platform product managers need to understand pricing and the concepts of supply and demand to really understand where the gaps are, and how to help correct them.
- Operations: This is important for product managers of any product, but it is doubly hard for platforms. In platforms you arbitrate between two users: your developers and your customers. You have to build a safe space for both constituents, and operations knowledge can help you manage it.
Lesson 2: Earn Trust With Developers
While tight restrictions and policies may help earn trust with consumers, it can have the opposite effect on developers. Keeping tight control on your platform can make you difficult to work with, and push developers away, regardless of your user base. So how do you earn trust with your developers?
- Your purpose, policy, and business model must be aligned. Your purpose is why you are there. Your business model is what you reward to move your purpose forward, and your policy is what you punish as it goes against it. They all need to be tied together and balanced.
- Invest in community. While your first developers may be individual sales efforts, to scale, you have to be able to have “one to many” type interactions. This can be done with meetups and conferences, and helps your developers to connect with each other and feel celebrated by you.
- Treat developers as business partners, not users. Developers are investing in you and taking a risk that you will be there for them. Give them the courtesy of keeping them updated on changes that will affect them, apply policy consistently, and work with them to make them successful.
Lesson 3: Be Patient
Platforms take a long time to come to fruition – Shopify took over five years to see its platform strategy show some real success. Your company must be willing to invest the time and energy to see it through long-term. In platforms, patience is key because creativity is unpredictable. It is impossible to predict what the next killer app or viral hit will be, but every now and then an app can emerge that changes the trajectory of your company. It is not something you can force, and you have to be patient and nurture the platform if you want success.
As you’re being patient, Brandon encourages us to keep a platform “open” as long as possible. When you build a platform, you have to make strategic decisions about how much control you will have over developers and what they can do on your platform. Giving up control can be scary, but staying open will allow you to gain traction. So while you likely will have to create tighter policies and control as you grow, the longer you can stay open, the more creative things will be built.
Platforms: An Integral Part of Strategy
Product extension platforms are a really important part of a product strategy that we don’t talk about enough, especially in a world where we can build and connect in ways that we have never thought of before. If you haven’t already, consider what it might look like if you opened up your product to developers, and created a platform.