Upstream 2.0 Platform Marketing
Part 1: Why “Disrupt or Be Disrupted” is a False Choice for Startups
Joseph Bentzel, Platformula1
“It is (the) creative cooptation of the market power of incumbent market leaders . . . that should be the goal of every asymmetric marketer at every stage of the evolution of your business strategy.” Asymmetric Marketing: Tossing the ‘Chasm’ in the Age of the Software Superpowers, Joseph E. Bentzel
Monoculture-Advantaged Partnering (MAP): Some Platform Marketing History
Anyone who has been around the industry for more than five minutes knows that tech platform markets are not flat, laissez-faire landscapes.
They are asymmetric in nature. They have well-established centers of market gravity.
They tip in the direction of winner-take-all.
Simply put, tech platform landscapes are consistently defined by dominant vendor ‘monocultures’ — Monocultures that present to customers as highly integrated, cross-category product or services incumbents with a large installed base of customers.
And the management teams of tech monocultures always and forever have 2 primary goals:
Goal 1-Hold and defend the market real estate they have already won;
Goal 2- Annex emerging growth categories as new ‘features’ of the monoculture.
Recognizing the inherent need of tech monocultures to “land and expand” —-some startups choose to capitalize on the strategic agendas of these incumbent centers of market gravity and not embrace today’s ‘disrupt or be disrupted’ dualism.
Instead they forge a third path—-a path of ‘monoculture-advantaged partnering’ or MAP.
Simply put, they ‘market hack’ and monetize a given center of market gravity by embedding themselves as upstream ingredients inside a new or established initiative of the monoculture.
Here are a few examples of companies that capitalized on monoculture-advantaged partnering and upstream relationships in their startup phase. They are all well known and dominant brands today.
Microsoft: As a startup the ‘Redmondistas’ cut an OEM deal with IBM to provide the OS for the original IBM PC. That deal laid the foundation for Microsoft’s future dominance in an IBM compatible world that IBM itself exited.
Adobe: When Apple introduced the Mac and needed a printer to showcase their WYSIWYG desktop publishing vision, Adobe provided the firmware for the Apple LaserWriter. It became the basis for their future franchise.
Google: As the dotcom bubble burst and banner ad revenue declined across the Yahoo multi-service portal, Yahoo turned to a search startup called Google—-and an emerging text advertising model now called SEM (first pioneered by Idealabs Overture) went mainstream as an ingredient of the Yahoo portal.
VMware & RedHat: As startups, both VMware & RedHat forged strong upstream partner relationships with popular server vendors including Dell, IBM, Compaq & HP to drive broader adoption of the virtualization and enterprise Linux categories respectively.
Monoculture-Advantaged Partnering (MAP) is Not Just for Startups
Monoculture-advantaged partnering (MAP) is not just a growth strategy used by startups. Even companies with big marketing machines, global brand equity and well-established downstream retail presence practice MAP in their new product launch efforts.
For example, when it came time to launch the iPhone in the United States, Apple did so via a 5 year exclusive distribution relationship with AT&T.
Would anyone argue that the Apple brand was not universally recognized, and that Apple did not have massive distribution reach and downstream marketing muscle of its own to drive adoption of the iPhone. Nevertheless, recognizing the powerful role of Telco monoculture in driving market penetration of new innovative devices, Apple opted to cut an exclusive multi-year carrier relationship to ensure the success of its new line of business.
So what are the high level takeaways from this quick intro to monoculture-advantaged partnering or MAP. Here’s three.
1. Platform marketers are wise to detox from the ‘Disrupt or be disrupted’ koolaid.
As described above, history shows there is a ‘third way’—-a way based on building a symbiotic presence within established monocultures.
In my book I described this third way as ‘asymmetric marketing’.
Relative to today’s cloud/mobile platforms and crowd catalyst hubs, a new generation of high growth XaaS platform superpowers are leveraging the pre-existing online and offline networks and commercial open source alliances (COSA) of their incumbent vendor partners as an important component of strategy in establishing a platform business.
2. Learn how to see monoculture as a partnering opportunity.
In every tech monoculture on every tech landscape—-feature/function/innovation gaps consistently emerge. Some would argue that these gaps are the primary reason why these monocultures are ripe for ‘disruption’.
I would suggest that entrepreneurs can also choose to see it another way, and sharpen their bizdev skills in the direction of upstream partnering.
3. Platform businesses often begin life as “ingredient” services businesses.
At the end of the day, the strategic choice of startups to ‘bundle or unbundle’ can be reduced to one practical product marketing question.
How can you provide your XaaS platform as a new critical success ‘ingredient’ inside the app, cloud, network, system, solution or experience of an alpha tech partner with an established cross-category monoculture?
When you successfully execute on that ingredient-centric approach you are laying the foundation for follow-on partner adoption that can drive the emergence of your own alpha tech franchise.
I go into this MAP-driven adoption model in Part 2, the ‘Superpower Pattern’.
Joe Bentzel is the founder and senior consultant at Platformula1. Email him at firstname.lastname@example.org.