Building the Ecosystem, or Being the Host

I’ve given some more thought to the subject of a previous post about starting companies inside ecosystems. Turns out there’s another side to this, and it’s pretty obvious: Building the ecosystem that can support others.

Let’s say you start a site that’s a currency converter (to continue the example from the previous post). You have no choice but to go up against XE.com. But if you do it inside the iPhone App engine, you only have to compete with others who are in the space (I chose this one). You won’t make a billion dollars, but you might make a million if you get enough good reviews and marketshare.

But let’s say you’re the opposite. You have a massive budget and you’re going to start a huge site. Instead of going it alone, you decide to become a host (ie, allow yourself to have “parasites” like iPhone or Facebook does), and you’ll have tons of little apps making sure they’re the best. But also, they’re all doing their best to keep you alive.

Look at it another way. Dude with the currency converter app has all his marbles inside iTunes; he’s going to do everything possible to make sure iTunes stays the top person in the space… or he loses marketshare and dollars.

So iTunes has built an ecosystem in which THOUSANDS of companies are invested. If the host dies, the parasite dies too. So the parasites do their best to keep it alive at all cost, protecting the host.

I realized this while looking at the Stanza app on my iPhone, realizing that I could never go back to a device that wouldn’t let me read books. By making the app great, Stanza has invested in the iPhone, helping both of them survive.

Isn’t that better than going into the wilderness all by yourself?