“Why did WePay wrap a train car?”
I’ve been getting that question a lot lately. Actually we wrapped two Caltrain cars that shuttle daily between San Francisco and San Jose. Maybe you’ve seen one of them –they’re big and blue and bearing the logos of WePay and our customers.
This is one element of a campaign to start a conversation about the rapidly emerging platform economy. Business platforms such as eBay, Uber, Etsy, Airbnb –sometimes also called multi-sided marketplaces–are transforming the economy. Many of our customers are part of this movement.
There’s a lot of talk in business academia right now about the economic benefits of platform companies, and how they differ from traditional companies. There is a lot of buzz about platforms among the technorati in Silicon Valley, but I still don’t think there’s a clear understanding of what platforms are, how businesses can make the shift from product or service to platform, and what sort of impact platforms are going to have on business overall.
So what is a platform? At a basic level, it’s a business that generates value from enabling interactions and transactions between two or more parties.
But there’s a little bit more to it than that. Successful platforms provide operational efficiency and improvements over a current process. It isn’t just matchmaking. There are also value added services that enrich the experience, and keep customers coming back.
Payments is one of those services, but it could be loans, or integrations with marketing automation or CRM solutions, or anything adjacent to the core offering that makes it easier for people do business together.
Why does WePay care about the platform economy? We specialize in providing integrated payment services for platforms.
This is still a new category of payments. The way payments have historically been handled online was ported over from the bricks-and-mortar world. It’s never worked great for e-commerce transactions between one buyer and one seller. It gets even clunkier when you have three parties involved in a payment transaction—the seller, the buyer and the matchmaking platform.
If you’re a platform, understanding who’s the merchant of record, who’s responsible for risk, how money gets moved around, and who has visibility into those transactions all come into play. Integrated payments help platforms handle all those things seamlessly in one package.
Do you platform?
The thing is, a lot of our potential customers don’t recognize that they’re a platform or on their way to becoming one. And even if they do, they’re new to taking payments and don’t understand why the payment solutions that work for two-party transactions don’t work well at all for platforms. And they don’t know about integrated payments, which are a much better alternative.
Selfishly, if we can help companies understand the benefits of being a platform and how to think like a platform, they’ll also understand that we offer one of the few solutions that can meet their needs. But it’s not entirely selfish.
One of the things I like about the payments business is that our success is so directly tied to our customers’ success. Our piece of the platform opportunity is just a small one. There’s a lot of opportunity out there for a lot of different types of companies.
Software products vs. platforms
One of the biggest opportunities is in software. Many of our existing customers, including Constant Contact, Freshbooks, Infusionsoft and BuilderTrend, are software companies that have successfully made the shift from product company to platform.
One of my favorite examples of platform vs. product is in the CRM (customer relationship management) space. Salesforce.com, the market leader, is a platform. It offers an API for people to build on, along with documentation and guidelines to help them. There’s an app exchange with solutions that can integrate everything from web analytics to order payment into Salesforce.com. It makes for a very sticky platform.
Competitor SugarCRM on the other hand, is focused on being a best-of-breed solution. There are a few third-party apps, but no platform vision. It might have some superior functionality, but the extensibility of Salesforce.com makes it more compelling.
As platforms rise to dominance, product vs. platform is something that ISVs (independent software vendors) and SaaS (software as a service) companies should be thinking about. During the six-month window that the trains run, there will be people from a lot of software companies coming to the Bay Area to attend events such as NetSuite’s SuiteWorld, Salesforce.com’s Dreamforce, and Oracle Open World, to name a few of the big ones. We hope the train car will get them thinking.
But this is also something that software buyers should be thinking about.
When you look at our customer logos on the train, such as Zoho, Infusionsoft and FreshBooks, you probably don’t immediately think ‘platform.’ People think of these as cloud CRM, marketing automation and accounting solutions respectively.
But not all solutions in these categories are created equal. Those that are embracing the platform mindset and methodology are continually adding more value for their customers by building or partnering to add adjacent capabilities or processes. If you pick a best-of-breed solution that does just one thing, you may end up having to manage five or ten different solutions to provide the same functionality that one platform may ultimately provide.
The train car wrap is just one part of our effort. Earlier this summer, we had an Influencer Summit bringing together economists doing research on the platform economy, tech influencers, and customer companies that have made the journey from product company to platform company. We also launched DoYouPlatform.com, where we’re going to have customers and thought leaders share lessons learned to help them figure out how to platform—and take payments—properly, and sooner rather than later.
The platform economy and understanding of it is still emerging. By most predictions it’s going to be big. We’re doing our part to make sure it’s not only big, but hard to miss. Kind of like a train car.