Ecosystems: Smiling Curve, Market Risk, Embedding Effects

“Work begins with the division of labor.”

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What You’ll Learn

• What’s the smiling curve?
• How to reduce market risk?
• What are embedding effects?
• Why are platforms extensible?
• How to extend and improve ecosystems?
• What’s the ‘attract and extract’ model?

Why It Matters

This is glue for topics we’ve discussed including agencies, productized services, micro-SaaS, digital products, online courses, micro private equity and more. 

Problem

Platforms can’t find or seize most opportunities to improve their ecosystems.

Solution

We can build services, SaaS apps and digital products to extend and improve platforms.

Players

Twitter

• ilo • Get Twitter analytics
• Typefully • Schedule tweets
• Shoutout • Embed social proof
• Tweet Hunter • Get inspiration for tweets
• Mailbrew • Get daily digests from Twitter
• The Twitter Thief • Learn to grow your audience
• Chime Social • Get Twitter analytics and schedule tweets
• Everyone Can Build a Twitter Audience • Learn to grow your audience
• Testimonial • Embed social proof from videos, Twitter, LinkedIn and YouTube

Shopify

• PageFly • Build pages
• Nudgify • Share social proof
• Avenue • Update your theme
• Woo Popups • Collect emails
• Tidio • Add live chat to your store
• Referral Candy • Manage affiliates
• Digital Cake • Drive traffic to your store
• Shopify Power • Learn to build Shopify stores
• Build a Shopify Theme From Scratch • Learn to build Shopify themes

WordPress

• WPForms • Build forms
• SeedProd • Build pages
• Elementor • Build pages
• Maxwell • Update your theme
• OptinMonster • Boost conversions
• MemberPress • Add memberships
• WP Buffs • Get WordPress support
• MonsterInsights • Get WordPress analytics
• WordPress for Beginners • Learn to build responsive WordPress sites
• Ultimate WordPress Plugin Course • Learn to build WordPress plugins

Predictions

• Platforms will do more to attract partners. Shopify dropped developer fees to 0% for the first $1 million of revenue. Each year.
• Plugins will build across platforms to hedge risk. Chirr works with Twitter. Mailbrew works with multiple platforms. Finsweet uses Webflow. 8020 uses several no-code tools. 
• Platforms will continue to clone integration partners. Twitter has scheduled tweets. Shopify now offers native abandoned cart recovery. 

Opportunities

• Index into growing markets to reduce market risk. See fast-growing markets like Notion-to-Site, Sheet-to-Site and AI-Generated Copy apps.
• Build a productized service or agency around a platform.
  • Gloat builds on Ghost
  • AirDev builds on Bubble
  • Bean Ninjas builds on Xero
  • WP Buffs builds on WordPress
  • HubSnacks builds on HubSpot
  • NurtureKit builds on ConvertKit
  • Lead Cookie builds on LinkedIn
• Build digital products for platforms.
  • Traf built icons for iOS
  • miniExtensions makes tools for Airtable
  • Martin Ryden makes templates for Carrd
• Build a course to teach others how to use platforms.
  • Chris Oliver teaches Rails with Go Rails
  • Marie Poulin teaches Notion with Notion Mastery
  • Nat Eliason teaches Roam with Effortless Output
• Build a SaaS around platforms.
  • Potion builds on Notion
  • Super.so builds on Notion
  • Shoutout builds on Twitter
  • Baremetrics builds on Stripe
  • Readwise builds on Kindle and Twitter
  • Spiffy builds on Stripe, Paypal and Apple Pay
• Build a Data as a Service company on a platform.
  • JungleScout pulls data from Amazon
  • Dune Analytics pulls data from Ethereum
  • CamelCamelCamel pulls data from Amazon
  • Explore Hacker News pulls data from Hacker News

Key Lessons 

• Platforms can’t solve all of their own problems. Extensibility helps fill niches without complicating the core product.
• Today’s SaaS apps can’t exist in isolation. Users expect integrations. Hence the rise of Zapier, Integromat and Automate.io.
• Platforms attract and extract. Low take rates and high affiliate commissions attract partners. Value is extracted once network effects are strong.

Haters

“You didn’t talk about how to build platforms.”
Most platforms are in winner-take-most markets. There are more opportunities to build on platforms than to build them. To learn more about building platforms, see micro-marketplaces and managed marketplaces.

Links

• The Smiling Curve • Applies the smiling curve concept to publishing. 
• Why Decentralization Matters • Chris Dixon on the “attract and extract” model.
• The Network Effects Bible • On embedding effects and other moats.

Related Reports

• Micro-SaaS • Most Micro-SaaS apps are built on one or more platforms.
• Agencies • Agencies tend to support platforms.
• Competitor Risk • On the differences between market risk and competitor risk.
• Online Courses • Includes courses aimed at platforms. 
• Productized Services • Scalable services that support platforms.
• Data as a Service • Data companies built on platforms.
• Micro Private Equity • Some funds invest in ecosystems. 
• Micro-Marketplaces •  A playbook for unbundling platforms.

Thanks

Thanks to Stewart Townsend (Channel as a Service), Vishal Srivastava (Trainedge), Shashank Yadav (Omdena) and Yarty Kim (Bourne Fighter). We had a great time jamming on this report.

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What else?

Trends #0066 — Ecosystems has more insights.

What you’ll get:

• 9 Twitter Players
• 9 Shopify Players
• 10 WordPress Players
• 9 Notion Players ( Trends Pro Exclusive)
• 9 Google Players ( Trends Pro Exclusive)
• 6 Airtable Players ( Trends Pro Exclusive)
• 3 Webflow Players ( Trends Pro Exclusive)
• 3 Heroku Players ( Trends Pro Exclusive)
• 3 Zoom Players ( Trends Pro Exclusive)
• 4 HubSpot Players ( Trends Pro Exclusive)
• 10 Slack Players ( Trends Pro Exclusive)
• 7 Predictions (133% More)
• 12 Opportunities (100% More)
• 6 Key Lessons (100% More)
• 11 Links (266% More)
• 12-minute audio episode with Ecosystem stories, insights and opportunities. 

With Trends Pro you’ll learn:

• ( Pro) Which creator earned $280,000 from an ecosystem in a month?
• ( Pro) What’s permissionless integration?
• ( Pro) What’s the smirking curve?
• ( Pro) How to port ideas between platforms?
• ( Pro) What’s multi-tenanting?
• ( Pro) Which micro private equity firms are built on platforms?
• ( Pro) Which SaaS apps became platforms?
• ( Pro) What are aggregators?
• ( Pro) What are lead ads?
• ( Pro) What are examples of hardware ecosystems?
• ( Pro) What are complementary goods?
• and a lot more…