Upstream 2.0 Platform Marketing

Part 2, “Hack & Clone Fire”: The Superpower Pattern & Adoption Lifecycle of Ingredient Innovator Dominance

Joseph Bentzel, Platformula1


“As you develop plans for your products and services, are you prepared to effectively capitalize on the asymmetry and built in momentum already at work on the battlefield on which your products must compete?” Asymmetric Marketing: Tossing the ‘Chasm’ in the Age of the Software Superpowers, by Joseph E. Bentzel

Hack & Clone Fire: The Superpower Adoption Pattern

Throughout tech industry history, the downstream user-focused TALC or ‘technology adoption lifecycle’ has consistently NOT determined which player rises to dominance in a given market or category.

In many cases it is a different—i.e. upstream partner-focused adoption lifecyclethat drives winner-take-all market outcomes. I call this lifecycle of market dominance the ‘Superpower Pattern’.

The Superpower Pattern is a partner-advantaged market development model I have abstracted from the evolution of leading tech platform vendors across multiple categories and successive generations of industry innovation.

The Superpower Pattern clearly illustrates that if you want to get big fast at the lowest possible cost of sales & marketing—— upstream sell-through consistently trumps downstream sell-to.

Microsoft’s OS became the critical ingredient inside the IBM PC that fueled the rise of the PC clone industry including Dell, Compaq and others. Thus Microsoft became the primary beneficiary of a market IBM created.

The Superpower Pattern shows how small startups evolve into dominant winner-take-all players and cross-category natural monopolies through upstream ‘sticky partnering’ and agile outbound business development.

The sticky partnering takes the form of startup’s product or service being utilized as an ‘ingredient’ distributed ‘@ the core’ of the alpha partner’s app, cloud, network, system, solution or experience.

The Superpower Pattern breaks down into 4 distinct phases as seen below.

Hack: You may be familiar with the modern ‘growth hacking’ movement—an open community of digital marketers focused on multiple inbound best practices designed to drive ‘market of 1’ end customer adoption. Relative to this discussion of the Superpower Pattern, I’m NOT referring to this particular form of ‘hacking’.

What I’m focused on here is full spectrum ‘market hacking’ in that a startup—through its role as a symbiotic upstream ingredient of an alpha partner’s app, cloud, network, system, solution or experience—gains permissioned access to a pre-existing customer base and channel ecosystem, i.e. an established market.

History often illustrates that one deal with the right alpha partner or established monoculture host is enough to activate the superpower pattern.

Harness: In the harness phase, the upstream platform marketer creatively games the ongoing competition between and among alpha tech rivals and markets their ‘critical ingredient’ to alpha partners 2-N. This enables the startup to literally ‘clone’ market fire across multiple competing alpha partners. It is this Harness phase that sets up a startup ‘market hacker’ for the next phase of the pattern.

Hijack: In the Hijack phase, the startup’s ‘ingredient’ is now perceived as a ‘platform’.

The accumulated market power from upstream partnerships established in the Hack & Harness phases enables the flipping of the power equation relative to one’s alpha partners.

It is in this phase that the startup is able to rapidly expand via product tie-ins and add-ons (bundling) to their core ingredient.

Hold: In the Hold phase, the platform provider has now matured into an emerging monoculture in its own right, and expands via more product tie-ins, aggressive installed base defense, and M&A.

In terms of a well-known example, the process by which Microsoft—-an ingredient provider to IBM and those ‘halt and catch fire’ IBM cloners—evolved into a PC software superpower while IBM ultimately exited the PC market it created is a classic case study in the Superpower Pattern.

I go into Microsoft and other ‘ingredient-to-platform’ players in detail in my Upstream/Focus bootcamp for partner bizdev professionals and their ‘bizdevops’ integrated product/partner marketing support teams.

The Superpower Pattern: Google

For the purposes of this blog post, let’s look at how the Superpower Pattern played out in the market evolution of a web services or cloud/XaaS ingredient startup like Google. See the illustration below.

Hack: Google’s startup go-to-market model was highly upstream partner-advantaged. In the Hack phase Google focused on embedding their search box as a web services ingredient within the popular portal monocultures of the day.

This distribution approach resulted in Google founders cutting a high-profile deal with Yahoo in 2000 to provide Google search (and text ad monetization) to complement Yahoo’s home-grown approach of human-powered ‘directory classification’ and banner advertising.

Google’s upstream market hacking success, i.e. their search agreement with Yahoo in 2000, followed by similar agreements with other portals and broadband ISPs, was critical to their growth and emergence as a web superpower.

Harness: In the Harness phase, Google clones this web services ingredient deal model and leverages the market power acquired via the Yahoo deal to provide ‘Powered by Google’ search and paid search ad revenue to other portals of the day that competed with Yahoo, as well as to ISPs and major content destinations for which search was a must-have feature and critical success ingredient.

Hijack: Now a de-facto standard powering search and search monetization on many portals, ISPs and web destinations—in the Hijack phase Google rapidly emerges a direct search provider and start page destination in its own right—adding new ingredient services even after it is unplugged by Yahoo.

Hold: In the Hold phase, Google diversifies its family of services and software to include mobile platforms, cloud services, Google apps, and a host of other new capabilities gained through both organic and M&A activity.

So what are the high level takeaways from this quick intro to the Superpower Pattern. Here’s three.

1. The Superpower Pattern is a Universal Growth Model

Any platform marketing strategist studying the Superpower Pattern will see that it is not ‘wave-specific’—It manifests across categories and successive generations of tech innovation.

The Superpower Pattern provides tangible and actionable evidence that upstream partner sell through can trump downstream customer sell to and drive winner-take-all outcomes.

New breed cloud/mobile software leaders like New Relic embed themselves as critical ingredients in their partners’ offerings, triggering the Superpower Pattern.

In addition to Google and Microsoft, this pattern can be seen in the growth of VMware, RedHat, Adobe, Akamai, Apple’s iPhone, Amazon Web Services and many other platform winners, e.g. New Relic in the age of cloud/mobile distributed architectures.

2. The Superpower Pattern is Not Dependent on a TALC Adoption Model

In the XaaS (anything as a service) economy, there are multiple modalities of “Partner @ the Core” distribution that can help a startup unleash the Superpower Pattern in their business and target market.

Startups that align themselves with the Superpower Pattern’s market hacking model leapfrog adoption chasms by co-opting and harnessing the asymmetric market power of their partners and their partners’ pre-existing customer base and networks.

Google did this with Yahoo and Microsoft did this with IBM—-and others have done the same in their startup phase through sticky partnering, outbound business development and XaaS distribution best practices.

3. “Non-Strategic” Partnerships Often Trigger the Pattern

The Superpower Pattern is often activated and unfolds when a startup cuts a ‘non-strategic’ or perceived gap-filling deal with an alpha partner or monoculture, e.g. adding a new feature to a product via an OEM or embedded partnership.

Tableau Software embeds business intelligence functionality in scores of partner apps and services. They have built a powerful, market leading position based on closing a feature/function gap in their partners’ products.

If an alpha partner sees your ingredient as ‘strategic’ they tend to want to buy you outright—-i.e. ‘hackquisition’—-as represented by many high valuation M&A events, e.g. Nicira by VMware, Meraki by Cisco, Nest by Google, Instagram & WhatsApp by Facebook, BrightRoll by Yahoo, etc.

In Part 3, I go into the concept of ‘Monoculture DNA Inheritance’ and look more deeply inside the specific benefits bestowed on a startup that closes one upstream deal via monoculture-advantaged partnering.

If you missed Part 1: Why Disrupt or Be Disrupted Is A False Choice, you can find it here.

Joseph Bentzel is the founder and senior consultant at Platformula1. He is the author of “Asymmetric Marketing: Tossing the Chasm in the Age of the Software Superpowers”, available on Amazon.com.

Email him at joe@platformulagroup.com.