Difference between partnerships and ecosystems:
Partnerships - 2 parties enter into a relationship that benefits both sides
Ecosystem - 1 party (aka platform or aggregator) enters into a relationship with many parties (aka developers or partners) that benefits 3 parties: platform owner, developer and end users (aka shared customers).
Partnerships require aligned incentives to be durable. Everyone must create and receive value, and the value exchange must be relatively equal.
2-party agreements are common and simple to manage, as long as the contract is clear and incentives remain aligned over time.
Ecosystems are complicated and harder to manage. Aligning incentives between 3 parties requires finesse and active management. All 3 parties must create and receive value, and value exchange must remain stable over time.
Partnerships can advance business interests: 1+1=3. Every company should look for these.
Ecosystems can create massive value: 1+many+many=infinite upside. Only platform-minded companies can pull this off.

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More from @drose_999

17 Oct
In 2004 I had an offer to join the new Kindle team at Amzn and I jumped at the oppty. I was on our retail team at the time -> Kindle was new/sexy. But a week before I was scheduled to start my new job, I was told to stay put and I learned an important lesson. Here’s the story:
2 years earlier I had been given P&L responsibility for Amzn’s cell phone store. We sold phones + plans (like Car Warehouse and Best Buy). This was Amzn’s highest margin biz, but it was tiny and not growing and I was told it could get shut down. I had 6 mos to turn it around.
The industry model at that time was give phones for free w/ service plan attach. I reinvested the service plan margin to make phones less than free, and rev growth exploded. GM % plummeted, but profit $ went way up. My little biz was our fastest growing segment at Amzn!
Read 10 tweets
3 Oct
In 2008 Facebook’s user growth hit a wall at 80M and we were having serious debates about whether any social network could ever reach 100M users. 2 years later we had doubled our user base and not long after that we reached 1B users. Here’s how we did it:
I joined FB in summer ‘06 when we had 7M users and were adding 5k/day. Over the next 18 months, Zuck shipped News Feed, Open Registration, Platform and community-led translation. By end of ‘07 we had 70M users and it seemed like we couldn’t be stopped.
Towards end of ‘07 I helped raise our Series C at $15B valuation. We had <400 employees and only $250M revenue, but we had explosive user growth and powerful network effects. Our entire valuation was based on how fast people were signing up for FB all over the world.
Read 13 tweets
19 Sep
May 18, 2012 - there was a crisp blue sky at FB’s campus as we rang the opening bell. Emotions ran high as we took a brief moment to celebrate our hard work. The stock traded up for the first few hours. Then it traded down for the next 12 months...
Facebook’s IPO coincided with a paradigm shift in technology. The majority of our usage and revenue transitioned from desktop to mobile practically overnight. Facebook’s journey to a mobile-first company started with a strategic error and ended with a pivot. Here’s the story:
Mobile initially presented us with a number of challenges, and our instinct was to innovate our way around them. The heart of our strategy was HTML5, which turned out to be a flawed approach. We spent 2 years sprinting down the wrong path before reversing course. Why?
Read 16 tweets
12 Sep
Amazon launched in July 1995, and every Xmas was a near death experience for the first 7 years. I joined in ‘99 and got to experience this first hand. Starting in late Nov, all corporate employees were shipped to fulfillment centers to pack boxes for 6 weeks. Here’s what I saw:
Despite efforts to plan ahead, the company literally couldn’t keep up with holiday demand. 40% of all annual orders would come through in 6 weeks from Thxgiving through New Years. Ops teams would start planning in Jan, but by Sept they were always massively behind.
As “earth’s most customer centric company,” failing to deliver presents for Xmas would have been like Santa missing his deadline. But when demand exceeds even your most aggressive forecasts, it’s a physical world problem that requires physical world solutions - ie human bodies.
Read 11 tweets
4 Sep
I dropped out of b-school to join Amazon July ‘99. By Dec Amzn’s stock had doubled, Jeff was Time Man of the Year. Then March ‘00 internet bubble popped -> my stock options were underwater and Amzn faced bankruptcy. Yet dropping out was the best decision I ever made. Here’s why:
I needed a pattern interrupt. My life had been conformist up to that point - straight A’s, awards, Harvard, b-school. But business is messy, life is messy. I knew deep down I needed to mess stuff up, get outside the box. I’ve tried to maintain that mentality ever since then.
Shortly after I started my internship at Amzn, I asked CFO Joy Covey if she thought I should drop out of b-school to stay on full time. She said I would learn more on the job than in school (she had dropped out of high school). She was right, you can’t learn biz in a classroom.
Read 8 tweets
21 Aug
In 2002 I was working in Amazon’s retail division. We were organized by department - books, CDs, electronics, etc - and a separate dept for products sold by 3rd parties. Then Bezos decided 3rd party should appear next to 1st party on the same product page. Here’s what happened:
Amzn launched 3rd party biz right after I joined summer 1999. Started w auctions, competing directly w eBay. Added fixed price when eBay acquired Half. Despite a ton of cross-promo, nobody visited the 3rd party store. eBay had buyer/seller network effects. Amzn couldn’t compete.
By 2002 most people thought we should shut down 3rd party biz. It wasn’t working, consumed a lot of resources, good people were on it, big distraction. At the same time, core retail biz had decelerated to single digit growth after we raised prices to stop bleeding cash.
Read 12 tweets

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