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Thoughts on Remora’s Curse

Remora’s curse takes place when startup attaches itself to a large platform in the attempt to solve the chicken-and-egg problem of getting users. The large platform then exercises its greater power to void the investments made by the startup into the platform, essentially causing more or less deadly delays and needs for re-design. The idea originates from Don Dodge who wrote about the Remora Business Model.

Examples:

  • Facebook stopping “friends of friends” access
  • Twitter killing ecosystem players (cf. Meerkat)
  • LinkedIn killing Developer program
  • Google’s Panda update dropping sites

The popular platform is not your friend. If their interests collide with yours, they will walk over you. Period.

Solutions:

  • diversify – don’t be dependent on only one platform
  • limit the overall dependence on platforms; i.e. do not make integration your secret sauce (aka “never build your house on rented land”)
  • capture the users (envelopment): when you get them to visit for the first time, make them yours; e.g. email subscription, registration

Purposefully limit the role of platform to user acquisition as opposed to being core value prop. Platforms, seen this way, are just like other marketing channels – if they work, scale. if not, kill. The benefit of platform integration is that it may partially solve the cold-start problem: get faster traction and accelerate user growth.

Read more about Remora’s curse in my dissertation: Startup dilemmas – Strategic problems of early-stage platforms on the internet

Published inenglish