Picking up on last week’s 3P insight, I want to share some insights I’ve learned about a common trap of working in two-sided markets. I call this trap the “productification trap”, and it appears in two different varieties.
The first variety is more common at companies and teams that have accumulated expertise of building consumer experiences, mastering the 1P-2P relationship and elevating consumer experience as the product. This expertise tends to create blindness toward the other side of the market. These organizations tend to underestimate the potential of nurturing a relationship with developers and treat them as annoying gnats, or at best tolerate them. A common sign of the 2P productification trap is an ecosystem whose developers endure high costs of participating. I once used the metaphor of “crawling over crushed glass to just ship something.” Many mobile developer ecosystems began their journeys from this trap.
Another variety occurs with companies who excel at 1P-3P side of the market. Their products offer amazing developer experiences, yet tend to not pay attention to the consumer outcomes. As long as developers are happy, we’re good, right? The developer experience becomes the product. A common sign of the 3P productification trap is an ecosystem where user experiences are bloated and unwieldy. When thinking of ecosystems in this trap, I am reminded of enterprise tools and at many points in its life, the Web.
In both varieties, the trap springs when we lose sight of the two-sidedness of the market — and it’s incredibly tempting. The two sides introduce a polarity, a dynamic tension that is only resolved through the death of the market. And polarities are challenging for us humans. We tend to want to collapse the tension and veer to one side. “Just tell me, are we about users or developers?” is a question that we pondered a lot when I was TL-ing the Web Platform team. Turns out, the question reveals a thinking error: this is not an either-or kind of problem. W3C tried to answer this question through layering, which is valiant, but is also an attempt to evade the dynamic tension.
In a two-sided market, the organization can be exceptionally effective if it has capacity to navigate this polarity, to understand the interconnectedness of the relationship between consumer and developers. More often than not though, it will find itself trying to escape one trap and swing wildly into another, unable to tolerate the tension.