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As a business, it will always be a bad idea to completely rely on another entity outside your control, whose interests are very likely to be misaligned to yours

As a business, it will always be a bad idea to completely rely on another entity outside your control, whose interests are very likely to be misaligned to yours. By all means leverage, Facebook (and Twitter and others) sign on and APIs, but if you are building a business on a single one of those, you are completely at the mercy of their whims, any incompetency, and changes in business practices.

aaronmarks 15y ago
This seems like a really valid and important point. Yet companies who do build their entire business on other companies' info / APIS (Think Greplin, Trendrr, Tweetdeck, etc.) still get tons of interest from investors. While it is easy to realize the importance of developing an independent business when commenting on HN, I think the startup community as a whole needs to start displaying this in its actions. Once more large internet companies realize that their users (both of their services and API) are not necessarily their customers (Think Twitter's denial of new 3rd party clients), the API free-for-all which we're experiencing right now will dry up, and we'll see at least one of the companies-who-are-built-on-other-companies fail. This might be the kick in the pants that the startup community needs to realize the importance of building unique, independent businesses.
- neutronicus 15y ago
  Greplin et al always have the exit scenario where their product is so much better than whatever (say) Facebook has in-house that Facebook buys them as a social-search talent-acquisition play. This sort of scenario might be easier to identify and invest in than "the next Facebook".
  - joe_the_user 15y ago
    Wouldn't it be a bit worrisome for a company to bargain to be purchased by Facebook when that company is in the position that Facebook could put them out of business at any point by cloning their stuff? Creating an app as a "talent-acquisition play" seems reasonable but wouldn't you want to position yourself for multiple offers? If Facebook buying for talent, it doesn't have to restrict itself to the creators of Facebook apps.
- dansingerman 15y ago
  While not the perfect situation, I think companies like Greplin, that use multiple APIs across multiple third parties, are at least able to offer a service should one (or a few) of those APIs become inaccessible for any reason. Much better than your business relying on a single third Party (as in the featured article), where should you cease to have access you are completely screwed.
- deleted 15y ago
  [deleted]
ignifero 15y ago
You do not rely on other companies only when you rely on open standards. Web development is an example (although you indirectly rely on Google for example). All kinds of apps usually rely on an underlying commercial technology ( windows development, osx development, ios development) whose actions are outside your control.
- quanticle 15y ago
  The Facebook app and Windows app scenarios are not comparable. Microsoft knows that the only reason Windows has succeeded as much as it has is because of its vast and deep pool of applications. As such, there is an incentive for Microsoft to allow a relative amount of freedom when developing Windows applications. Indeed, a bare operating system is quite useless without applications to run on it. Facebook, on the other hand, became successful without any of the additional third party applications that use it as a platform today. A "bare" Facebook, without any third party apps, retains quite a lot in the way of functionality. This means that Facebook's interests are much less aligned with yours than Microsoft's.
  - ignifero 15y ago
    Facebook became popular without apps, true, but they have yet to prove how successful they are. Zynga is more profitable than facebook itself, that must mean something. It's just speculation, but i believe things will change as growth starts to plateau and everyone has caught up with their old schoolmates. As for microsoft, well, remember netscape.
    - joe_the_user 15y ago
      Zynga is more profitable than Facebook itself, that must mean something. Yes, it means something. The question is what. It might mean that Facebook has strong incentive to steal Zynga's business. Considering there are rumblings that Zynga is casting about for other platforms, Zynga might think so. If Facebook could be the home of many profitable apps that it had fair and transparent way of taking a cut from, then you could feel like Facebook was likely to keep its ecosystem working. Until then, it seems like anyone building on Facebook is subject to continuous risk of, as you imply, a sea-change in Facebook's operations.
clammer 15y ago
>As a business, it will always be a bad idea to completely rely on another entity outside your control, whose interests are very likely to be misaligned to yours. I don't think truer words were ever spoken. I just shut down http://NotifyWire.com http://NotifyWire.com because I built it against Craigslist (albeit an unwilling entity), but still as Twitter has proven a partner can go from willing to unwilling very quickly.
GavinB 15y ago
There are always risks in business. Are all the people who have built successful companies that rely on facebook, apple, twitter, google, or other platforms wrong? The important thing is to understand the risks and account for them. Don't overreact just because having your app suddenly pulled seems more traumatic or less under your control than other failure modes.
- joe_the_user 15y ago
  A business built on a platform involves risks. And a game of three-card-Monte involves risks(http://en.wikipedia.org/wiki/Three-card_Monte http://en.wikipedia.org/wiki/Three-card_Monte). How do you distinguish the risks involved in one from the risks involved in the other? I'd say one important question is whether the "house" has more incentive to take your stuff or more incentive to benefit along with your success. Considering that Facebook's business model is essentially still up in the air, the question of what Facebook in particular cares most about is also up in the air.

aaronmarks 15y ago

This seems like a really valid and important point. Yet companies who do build their entire business on other companies' info / APIS (Think Greplin, Trendrr, Tweetdeck, etc.) still get tons of interest from investors. While it is easy to realize the importance of developing an independent business when commenting on HN, I think the startup community as a whole needs to start displaying this in its actions. Once more large internet companies realize that their users (both of their services and API) are not necessarily their customers (Think Twitter's denial of new 3rd party clients), the API free-for-all which we're experiencing right now will dry up, and we'll see at least one of the companies-who-are-built-on-other-companies fail. This might be the kick in the pants that the startup community needs to realize the importance of building unique, independent businesses.

neutronicus 15y ago
Greplin et al always have the exit scenario where their product is so much better than whatever (say) Facebook has in-house that Facebook buys them as a social-search talent-acquisition play. This sort of scenario might be easier to identify and invest in than "the next Facebook".
- joe_the_user 15y ago
  Wouldn't it be a bit worrisome for a company to bargain to be purchased by Facebook when that company is in the position that Facebook could put them out of business at any point by cloning their stuff? Creating an app as a "talent-acquisition play" seems reasonable but wouldn't you want to position yourself for multiple offers? If Facebook buying for talent, it doesn't have to restrict itself to the creators of Facebook apps.
dansingerman 15y ago
While not the perfect situation, I think companies like Greplin, that use multiple APIs across multiple third parties, are at least able to offer a service should one (or a few) of those APIs become inaccessible for any reason. Much better than your business relying on a single third Party (as in the featured article), where should you cease to have access you are completely screwed.
deleted 15y ago
[deleted]

ignifero 15y ago

You do not rely on other companies only when you rely on open standards. Web development is an example (although you indirectly rely on Google for example). All kinds of apps usually rely on an underlying commercial technology ( windows development, osx development, ios development) whose actions are outside your control.

quanticle 15y ago
The Facebook app and Windows app scenarios are not comparable. Microsoft knows that the only reason Windows has succeeded as much as it has is because of its vast and deep pool of applications. As such, there is an incentive for Microsoft to allow a relative amount of freedom when developing Windows applications. Indeed, a bare operating system is quite useless without applications to run on it. Facebook, on the other hand, became successful without any of the additional third party applications that use it as a platform today. A "bare" Facebook, without any third party apps, retains quite a lot in the way of functionality. This means that Facebook's interests are much less aligned with yours than Microsoft's.
- ignifero 15y ago
  Facebook became popular without apps, true, but they have yet to prove how successful they are. Zynga is more profitable than facebook itself, that must mean something. It's just speculation, but i believe things will change as growth starts to plateau and everyone has caught up with their old schoolmates. As for microsoft, well, remember netscape.
  - joe_the_user 15y ago
    Zynga is more profitable than Facebook itself, that must mean something. Yes, it means something. The question is what. It might mean that Facebook has strong incentive to steal Zynga's business. Considering there are rumblings that Zynga is casting about for other platforms, Zynga might think so. If Facebook could be the home of many profitable apps that it had fair and transparent way of taking a cut from, then you could feel like Facebook was likely to keep its ecosystem working. Until then, it seems like anyone building on Facebook is subject to continuous risk of, as you imply, a sea-change in Facebook's operations.

clammer 15y ago

>As a business, it will always be a bad idea to completely rely on another entity outside your control, whose interests are very likely to be misaligned to yours. I don't think truer words were ever spoken. I just shut down http://NotifyWire.com http://NotifyWire.com because I built it against Craigslist (albeit an unwilling entity), but still as Twitter has proven a partner can go from willing to unwilling very quickly.

GavinB 15y ago

There are always risks in business. Are all the people who have built successful companies that rely on facebook, apple, twitter, google, or other platforms wrong? The important thing is to understand the risks and account for them. Don't overreact just because having your app suddenly pulled seems more traumatic or less under your control than other failure modes.

joe_the_user 15y ago
A business built on a platform involves risks. And a game of three-card-Monte involves risks(http://en.wikipedia.org/wiki/Three-card_Monte http://en.wikipedia.org/wiki/Three-card_Monte). How do you distinguish the risks involved in one from the risks involved in the other? I'd say one important question is whether the "house" has more incentive to take your stuff or more incentive to benefit along with your success. Considering that Facebook's business model is essentially still up in the air, the question of what Facebook in particular cares most about is also up in the air.