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 agenciesproductized servicesmicro-SaaSdigital productsonline coursesmicro private equity and more. 

🔍 Problem

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

💡 Solution

We can build servicesSaaS apps and digital products to extend and improve platforms.

🏁 Players

Twitter

Shopify

WordPress

🔮 Predictions

☁️ Opportunities

🔑 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

📁 Related Reports

🙏 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…