Platform Risk – A potential startup killer

There’s a common understanding that building your startup on someone else’s platform can be a risky proposal. Whether Facebook, Linkedin, Twitter or some other service the threat to your startup remains the same – the platform provider generally has the power to turn off your access at any time, whether due to a change in policy, or because they want to create a competing product or simply because they don’t like what you’re doing.

But today’s acquisition of Face.com by Facebook  highlighted another reason why this can be risky for startups.

Face.com is one of the world’s leading facial recognition platforms. Many companies across the web use their API to access leading edge facial recognition technology.

It was acquired by Facebook today for a rumoured $60MM-$100MM. A great result for any startup let alone one from Israel.

Now the Face.com team may love developers. They may have had the best of intentions to keep their API available and free for ever for their amazing developer community. But Facebook’s motivations and goals may differ and that’s the curveball that a platform acquisition can throw at you.

The point here is that if the platform provider is providing something cool enough for you to want to use  there’s a good chance that there are companies out there who would love to buy them, and no matter how great the original company is, once it gets swallowed by the larger entity you may suddenly be dealing with a completely different set of rules – rules which can deadpool your startup faster than you can imagine.

There are many upsides to using another company’s platform – everything from access to great technology to ease and low cost of starting to becoming a potential acquisition target – but there are many risks too, some which you might never see coming.

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Image Source = Nate Riggs Social Business Strategies

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