The world is full of very successful businesses that have been built by tapping into a market created by a different business. What are the risks of building a business on the back of another company’s success?
Stepping outside technology for just a moment, consider that many baseball stadiums of lore were in urban neighborhoods. And many still are. Around those stadiums are bars, restaurants, parking lots, and other businesses that thrive largely because of the crowds (okay, some teams are too pathetic to draw large crowds but this is just an example) that attend 81 regular season home games. Now consider what happens when the team is moved to another city, or builds a new ballpark in another location. Ouch, there goes a micro-economy.
Now back to the tech sector. How many apps are being built to run on the iPhone? How many businesses are thriving because of Facebook? It seems to me there are few, if any, risk mitigation strategies open to companies totally reliant on either or both Facebook and the iPhone app store. (more…)