4 ms·

How to rely on other businesses

33 points by sgrove 16y ago

sgrove 16y ago
It's a bit trite, but it's a message I want to get across to other startups. It's bit me hard at some of the companies I've worked for long ago - the biggest culprit was EC2. There are days that they'd simply stop launching instances for us (even though we were nowhere near capacity), or performance between two components would degrade to an unusable point. We were easily spending two full-time engineer's salary every month to AWS for this privilege, with no access to anyone at AWS to immediately figure out what was happening. We ended up redirecting that massive amount of money to hedging our bets and ultimately lowering our costs by minimizing AWS usage. Sad, wasn't what we wanted, but it was the only way that we could make our business work.
- ceejayoz 16y ago
  Were you paying for AWS support?
donofrip 16y ago
I couldn't agree more. I look at the multitude of apps that have been developed for facebook, and I can't help but think that the original facebook product that exploded like a virus was much different than what we see today. Remember the original facebook? Maybe you weren't in college and didn't have access. It was a much simpler model than what you see today. I look at facebook and am sometimes overwhelmed by how cluttered it can be. I always thought facebook was a response to myspace, which had become a mess (in my opinion). I think facebook is going down that road--at which point do apps have a negative return on the user experience? Too many bells and whistles can cause a tool, site, application to loose its functionality. If this begins to happen, facebook is likely going to cut off these unnecessary appendages, and I don't think they will face the same legal issues microsoft did. It may not be tomorrow or even in the next decade. But at some point, this is a very real threat. If you're building something that you want to last, avoid dependence and take a hard look at what life lines your business depends on. Final thought: remember why you used google over yahoo? It was the blank, white space. Simple. And it was better. Lead with a useful product and simple design, and the users will come.
bitsm 16y ago
The big difference IMO is that Microsoft and Apple have successful business models, where Facebook is still searching for one. There is less risk building on a platform that has a clearly defined and profitable business model. Remember the widget economy? Facebook widget funds? With one redesign, Facebook singlehandedly wiped out the market. You will always rely on third party products and services, it's unavoidable. Make sure you own the work that is core to your value prop, and only take on acceptable risks when outsourcing.
JacobAldridge 16y ago
There's an anology that can be made to businesses that have only one client (where 'only' is defined as more than about 70% of revenue). That's a dependence which is, ultimately, outside of your control - meaning your business's future is ultimately outside of your control. It's interesting that, offline, when I work with companies who have that dependence they know it's their biggest risk. For most owners, it's the stress ball in the pit of their stomach that keeps them up at night - what happens if that client cancels the contract / is late with their invoices / goes into Administration? I don't seem to get that feeling from business owners dependent on a platform like Facebook and Twitter. Maybe I don't know enough of them. Maybe they don't realise how fraught with danger their entire business model is.
- r00fus 16y ago
  There's a flaw in your analogy. In the first case, there is a more direct relationship to the monopsonist (ie, super-customer), but in the case of Facebook/Twitter, there is strength in numbers (your company relying on FB/Twitter is likely one of thousands). Relying on a platform is not new in business, and the standards and ethics are fairly understood... ask the eBay sellers in the 90s or folks who made parts for typewriters back in the 70s.

33 points by sgrove 16y ago

It's a bit trite, but it's a message I want to get across to other startups. It's bit me hard at some of the companies I've worked for long ago - the biggest culprit was EC2. There are days that they'd simply stop launching instances for us (even though we were nowhere near capacity), or performance between two components would degrade to an unusable point. We were easily spending two full-time engineer's salary every month to AWS for this privilege, with no access to anyone at AWS to immediately figure out what was happening. We ended up redirecting that massive amount of money to hedging our bets and ultimately lowering our costs by minimizing AWS usage. Sad, wasn't what we wanted, but it was the only way that we could make our business work.

ceejayoz 16y ago
Were you paying for AWS support?

donofrip 16y ago

I couldn't agree more. I look at the multitude of apps that have been developed for facebook, and I can't help but think that the original facebook product that exploded like a virus was much different than what we see today. Remember the original facebook? Maybe you weren't in college and didn't have access. It was a much simpler model than what you see today. I look at facebook and am sometimes overwhelmed by how cluttered it can be. I always thought facebook was a response to myspace, which had become a mess (in my opinion). I think facebook is going down that road--at which point do apps have a negative return on the user experience? Too many bells and whistles can cause a tool, site, application to loose its functionality. If this begins to happen, facebook is likely going to cut off these unnecessary appendages, and I don't think they will face the same legal issues microsoft did. It may not be tomorrow or even in the next decade. But at some point, this is a very real threat. If you're building something that you want to last, avoid dependence and take a hard look at what life lines your business depends on. Final thought: remember why you used google over yahoo? It was the blank, white space. Simple. And it was better. Lead with a useful product and simple design, and the users will come.

bitsm 16y ago

The big difference IMO is that Microsoft and Apple have successful business models, where Facebook is still searching for one. There is less risk building on a platform that has a clearly defined and profitable business model. Remember the widget economy? Facebook widget funds? With one redesign, Facebook singlehandedly wiped out the market. You will always rely on third party products and services, it's unavoidable. Make sure you own the work that is core to your value prop, and only take on acceptable risks when outsourcing.

JacobAldridge 16y ago

There's an anology that can be made to businesses that have only one client (where 'only' is defined as more than about 70% of revenue). That's a dependence which is, ultimately, outside of your control - meaning your business's future is ultimately outside of your control. It's interesting that, offline, when I work with companies who have that dependence they know it's their biggest risk. For most owners, it's the stress ball in the pit of their stomach that keeps them up at night - what happens if that client cancels the contract / is late with their invoices / goes into Administration? I don't seem to get that feeling from business owners dependent on a platform like Facebook and Twitter. Maybe I don't know enough of them. Maybe they don't realise how fraught with danger their entire business model is.

r00fus 16y ago
There's a flaw in your analogy. In the first case, there is a more direct relationship to the monopsonist (ie, super-customer), but in the case of Facebook/Twitter, there is strength in numbers (your company relying on FB/Twitter is likely one of thousands). Relying on a platform is not new in business, and the standards and ethics are fairly understood... ask the eBay sellers in the 90s or folks who made parts for typewriters back in the 70s.