3 ms·
Suppose I owned a shoe store and the only supplier I chose to work with was Nike. I built my store on top of Nike's product, became an expert at it, had lots of
by ssharp 14y ago
Suppose I owned a shoe store and the only supplier I chose to work with was Nike. I built my store on top of Nike's product, became an expert at it, had lots of customers and knew the market well. One day, Nike sees how many orders I've been making lately and decides to cut off my supply and open a Nike Store in my town. No contract with Nike, I'm SOL. I start wishing I had diversified my supply a little more.
In traditional business, there is a known threat to nearly all companies called "supplier power". If the power your suppliers have on you is strong, you're in a weak position and should try and increase your power over the supplier. I don't know if this is unavoidable or it's simply neglected within the tech community, but I'm never shocked when APIs get restricted or shut down by their parent company when others are monieizing it.
There have been enough high-profile examples over the past year or two that any business relying on a data pipe from another company needs to be on top of the relationship. The business itself should also be figuring out ways to protect itself should the pipe become clogged or shut off all the way.
- martinced 14y agoThis. And it doesn't necessarily have to be a "bad will" from the power supplier. I know a store who went down because they were relying on a unique supplier and, at one point, the supplier experienced an issue at their factory, outside of their control (a flood). The supplier was big and strong enough to deal with the momentarily slowdown (it lasted months) but the store I knew simply couldn't handle their customers' orders and couldn't accept new customers. It quickly degenerated: unable to pay the salaries, then unable to pay the bills, the tax, etc. And the store, after years of "faithful" services, went bankrupt after a few weeks/months. The sad thing is you could see them trying desperately to stay alive and they were nice people. So it's as you said: be careful to not depend on a power supplier because several things may go wrong.
- unreal37 14y agoI don't think this is a great analogy in this instance. Change the analogy to, you are opening a Nike store (not yet open), and your business relies on Nike having shoes with Nike+ built into them. And then Nike decides to discontinue Nike+. Nike didn't betray the not-yet-open store owner in that case.