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Digital Ecosystems, Agile Apps, and the Experience Platform

Sam Ramji
May 12, 2014

Metcalfe’s Law, which was popularized by Ethernet pioneer Robert Metcalfe, states that the total value of a network to its users grows as the square of the total number of its users. Thus the ratio of value to the cost of adding one more network user grows disproportionately as the network grows larger.

This concept has had immense appeal in business design, social networks, and venture capital; now it’s time to apply it to apps.

The average app has a half-life of six months. A first app might be built as a disposable product; but planned obsolescence, regardless of how well this concept works for selling consumer goods, is a terrible way to build software value over time.  Developing subsequent mobile apps from scratch forces the recapture of the user base and user data.

When users lose their data or have to reset their devices, they generally aren’t happy about it. A developer might circumvent this by adding storage for all users’ data. This doesn’t eliminate waste, however, because the next app won’t build upon the first’s success.  

The right solution is to build the first app with the expectation of a second, which will support or complement the first app and benefit from access to data that was gathered by the first app. The second app will benefit from access to the first app’s users, too.

Taking this a step further, storage should be built for more than just the first apps’ user data, but for all the apps that might ever be needed. That way, apps can be continually added, and the common user base can continually grow; this all adds up to a compelling, unified user experience.

That’s how you start to develop an ecosystem, which is attractive because it starts doing work for you. The key characteristic of an ecosystem is “external subsidy” or investment of time and money by people and companies other than you.  This is not only free money, but sustainable free money.

This requires building the foundation of your apps with the expectation that there will not only be more than one app, but multiple providers of those apps.

This, in turn, makes your apps’ ecosystem look a bit more like a platform. This enables a second and third developer to build new apps that benefit from sharing data and users with the first developer’s apps. Users, developers, and the enterprise all benefit from sharing of data.

We can see this entire system growing based on Metcalfe’s Law, constantly gaining adoption with the affinity of the superset of all users of all the apps that share a common foundation. The business model we’re describing here is an experience platform; great examples of experience platforms are Nike (with the Nike+ experience across devices, apps, and partners), Netflix (running on over 800 partner devices with a common experience, user history, and recommendations), and Facebook.

In an upcoming post, we'll explore market platforms, the most challenging type of platform to build but the one that presents the opportunity to create the greatest business value.

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