This week, I wrote notes to investors on platforms vs. products a couple of times. Thought I should share my thoughts more broadly.

Me as an employee: I spent my formative years in predominantly platform companies - @microsoft, a PaaS / SaaS startup, @awscloud. Platforms became such a natural way for me to see the world that I even tried to build a platform as head of product at @taxiforsure.

Me as a founder: We started @rocketium as a B2C product but saw it as a product built on our API platform. We pivoted to B2B after realizing the platform's value for other products. Life came full circle in 2020 as we launched our enterprise product built on our platform.

A SaaS mental model: SaaS companies have two broad ways to build and sell - Platform, Product. Overlaps are certainly possible (and encouraged!) but companies are usually one of these at their core. This is based on my experiences as an employee and a founder so caveat emptor.

What are Platform companies: These are typically APIs or narrow products built on such APIs. They are sold to engineering, product, or other horizontal teams. Their moat is deep technical expertise and breakthrough innovation. Examples: @getpostman, @stripe, @twilio, @Vue_ai

What are Product companies: They solve problems for a specific persona and an existing business process. This could have underlying innovation but the real value is streamlining operations. Their moat is high NPS and strong go-to-market. Examples: @clevertap, @whatfix, @zoom_us

Ensuring success as a Platform:-
1. Spot use-cases that can solve real problems (vs. experiments) for many businesses
2. Pick <3 use-cases and specialize in those in early years
3. Make your platform more robust and create independent revenue streams by building your own products

Ensuring success as a Product:-
1. Co-create product with pilot customers to avoid just copy-pasting from competition
2. Focus on a narrow {industry, persona, business process} tuple
3. Build with a platform mindset so you can generalize beyond early customers and use-cases

Parting thoughts on Platform - They are effectively a "tax". Revenue grows if customers 1. add you to critical workflows, 2. survive, 3. grow. You are hard to replace but you risk being commoditized over time. Customers can (and should!) make 10x+ more than what they pay you.

Parting thoughts on Product - Most tech can be replicated pretty easily. Focus on building a strong tech layer to deter or at least slow down competitors. You will be harder to replace as you add capabilities for other personas or business processes for your customers.

Parting thoughts on Platform + Product - Regardless of where they started, most large SaaS companies operate both platforms and products. They reinforce each other to create strong networks and revenue streams. A platform mindset plus product sensibilities is a dream combo.