If there is one argument that continues forever, it has to be the debate on product vs. platform! What should an entrepreneur build? What will impact the market? Which will bring the returns?
Most big tech companies have succeeded because they have built platforms out of their initial products. Apple created an iPhone first. Then, it attracted a crowd by building an ecosystem around it in the form of the App Store, iTunes and other products.
Whether you are building a product or a platform, if it is good, it creates dependency and captures your loyalty. Products are efficient, platforms are engaging and hard to escape. When I was building Tribe Theory, I spent many sleepless nights pondering on whether to stay traditional and build a product-driven business, or be novel and create a platform. But the journey was not simple. It was rife with doubt, uphill battles of building the right team, getting funding and impacting the market.
But in the end, I decided to go ahead and create a platform. There were many reasons and experiences that helped take this stand and here they are...
My experience of traveling and staying in hostels helped me realize that these spaces forged invaluable human connections making friends out of strangers. Most hostels also acted as distribution points for the travel ecosystems offering discount coupons for a museum, bike-rental or massage. That got me thinking — what if we looked beyond the travel ecosystem? What if hostels could be places where people could stay, share stories and be heard, find talent for their businesses, or get funded to upscale their startups? The impact that this promised tipped the scales in favour of building a platform. I realized that this business could not be static anymore. And Tribe Theory was born.
Depending on data
Big companies spend millions of dollars doing research to figure if their platform would work. Unfortunately, we entrepreneurs simply have our own data to bank on. Tribe Theory became a platform only thanks to our customers. When we launched, we collected feedback regularly. Our data revealed that 25% of our guests were looking to raise capital for their businesses, ideas and projects, and 32% of them were active in the job market. Theodore Levitt said that “People don’t want to buy a quarter-inch drill. They want a quarter-inch hole.” We took inspiration from the quarter inch hole and decided that people came to our space looking for a community, a fund, or a way to hire like-minded individuals.
Time did tell
People build products very quickly to capitalize in a fast-paced competitive market. But platforms, even if slow, can have the right kind of impact. In our operation-heavy business, it is tough to scale up quickly. But we took it up as a challenge and focused on giving the best and holistic experience for our guests. A different model may have got us far, but what we have built today at Tribe Theory echoes with everything we believe in. And sometimes, that makes all the difference!
An ignited team
Building an ecosystem takes a lot of participants. While conventional wisdom advises you to start lean, it is impossible to do that when building a platform. Most of the people who are involved in building Tribe Theory around the world have been our customers at first. For instance, our Chief Community Officer George, CTO Thomas, startup consultant Giulianna and Head of Concierge Jennifer (who is also launching in Los Angeles) were all our guests first. The people that we needed to build Tribe Theory are coming through Tribe Theory, validating our ecosystem and helping build it.
One Vs. Many Benefits
Ultimately the product vs. platform debate boils down to how effective a solution you offer to a customer’s problem. Large department stores exist because you can go into one place and buy all you need. You’re not running around town to pick five things. So, if you can offer a lot of value by saving people’s time, you have a winner. That is simply what we are trying to build at Tribe Theory — creating an efficient platform that offers multiple services to the traveler under one roof. And that has been our game-changer.
Bring home the bacon
It’s not rocket science that investors are always looking for platforms or products with potential to become platforms because the value is much greater in the long run. But, platforms take a very long time to build and many investors prefer to fund a single product that can grow very fast and get acquired. Despite valuing platforms, they are looking for an earlier return on their investment. So, in theory platforms are more valuable but practically, are very hard to find investments for. We have had our struggles pitching Tribe Theory to VCs. But in the end, despite the long journey, we found the right kind of partners to back our dream. Sometimes, building a product or a platform makes no difference. You simply need to find the right people who will support your idea.
Embrace your fear
Platforms are not easy to build and take a very long time and strategic thinking. Sometimes — even today — I fear that I might be stuck in an echo chamber that assures me that Tribe Theory is a crazy but great idea. There is always the question of what if this is not the right idea? What if we’re too early?
But I have realized that irrespective of whether I’d built Tribe Theory as a platform or product, I could not have escaped that fear. The grass always seems greener on the other side and eventually, I’d have questioned it either way. I have learnt that fear is simply part of building anything from scratch. And so, I embrace it!