Understanding the Risks of Platform Dependency

What Happens When Your Tech Dependency Becomes a Strategic Liability? In today’s interconnected business world, the technology that powers your competitive advantage may also be your greatest vulnerability. For years, technology has been the enabler of scale, speed, and innovation. But as businesses around the world become more deeply reliant on digital tools, platforms, and infrastructure, an uncomfortable question has emerged: What happens when the tech you depend on is no longer available—or no longer aligned with your values, strategy, or geopolitical reality? This isn’t a hypothetical for the future. It’s a present-day consideration. Disruptions—from trade restrictions to cloud outages, software and service licensing changes to supply chain bottlenecks—are already forcing organizations to rethink what resilience really means. Whether it’s cloud platforms, AI models, collaboration tools, or even personal computing hardware, over-dependence on any one provider or ecosystem can quietly turn from a strategic shortcut into a systemic risk. The efficiency gains from standardization must be weighed against the resilience benefits of diversification. It’s not about abandoning integration; it’s about making smarter, risk-aware choices when selecting your technology partners and platforms. And yet, in our drive for seamless integration and rapid delivery, many of us have built tech stacks that are deeply entwined with a single country’s innovation pipeline or a single company’s roadmap. I’m not suggesting we retreat from global collaboration or stop using excellent technology from wherever it comes. So here’s the real question: Are we paying enough attention to where our technology comes from—and what it would take to adapt if it were suddenly unavailable? I’ve spent much of my career focused on creating human-centered, resilient systems—ones that don’t just work, but keep working when conditions change. That requires more than good tech. It requires asking better questions: • Have we mapped our critical dependencies beyond first-tier suppliers? • What triggers would prompt us to activate alternative technology pathways? • How do we balance standardization efficiencies against diversification resilience? • Do we have meaningful alternatives—or just backups? • Are our dependencies conscious and intentional, or just convenient? • What role should leadership play in regularly revisiting these decisions—not just leaving them to procurement or IT? Ultimately, resilience isn’t just a technical attribute. It’s a leadership choice. I’d love to hear from others around the world: How are you thinking about your organization’s technology dependencies? How are you building optionality into your future? #TechnologyResilience #Leadership #DigitalStrategy #BusinessContinuity #GlobalLeadership #HumanCenteredTech #SupplyChainResilience #TechDiversification #StrategicRiskManagement #AI - Human-made, AI-assisted -

"Meta just made us a preferred API partner!" The founder was ecstatic. Six months later, their access was cut. They'd fallen into the oldest trap in tech: platform dependency. This is "platform risk" - one of the most deceptive startup killers I've seen in my career. Let me share what I've learned watching three startups get crushed by the platforms they thought would save them. The pattern is always the same: Platform helps you grow fast initially Your entire business becomes dependent on their APIs Then, if you are successful, they either compete with you, cut you off, or change the rules entirely I've watched this movie play out with Microsoft (twice), Twitter, and LinkedIn. The cruel part? The platforms don't even need bad intentions. They'll do whatever it takes to win their battles against other platforms - and your startup is just collateral damage. Here's what makes platform risk so deadly: - Lock-in: Once you're deep in their ecosystem, switching costs become astronomical - Forced upgrades: They change, you must change - on their schedule, not yours - The partner dance: As a former Microsoft exec told me, "First you design your partners in, then you design your partners out" To founders building on platforms today: - OpenAI could restrict their API access tomorrow - Apple could reject your app update without warning - Shopify could change their revenue share model overnight - AWS could double their prices in your category Remember: The platform that's courting you today might be competing with you tomorrow. Because here's the brutal truth I learned watching these three companies fail: Platforms will do whatever it takes to win their battles. Your startup is just a piece on their chessboard. #StartupAdvice #VentureCapital #PlatformRisk

Platform partnerships in AI just got more complex. 🤔 Windsurf's recent challenge with Anthropic limiting their direct access to Claude models highlights a critical lesson for any B2B SaaS company building on third-party AI platforms: your strategic partnerships can make or break your competitive position. Here's what's particularly interesting from a business strategy perspective: 🎯 Market positioning matters: While Cursor, Devin, and GitHub Copilot received direct Claude 4 access at launch, Windsurf didn't - despite being a major player in the AI coding space. This wasn't just a technical decision; it's a strategic one. 💡 Platform risk is real: Windsurf built their business to $100M ARR, but now faces the classic platform dependency challenge. When your core product relies on external APIs, you're essentially building on someone else's foundation. 🔄 Competition drives innovation: Anthropic launching Claude Code and investing in their own coding applications shows how platform providers increasingly compete with their own ecosystem partners. Having scaled SaaS by carefully managing platform relationships, I've learned that diversification isn't just smart—it's survival. The companies that thrive are those who: ✅ Build multiple vendor relationships ✅ Invest in platform-agnostic architectures ✅ Maintain direct user value beyond platform dependencies For founders in the AI space: How are you preparing for platform risk? Are your strategic partnerships diversified enough to weather changes in access or pricing? The AI landscape moves fast, but strategic thinking about platform dependencies moves even faster. 🚀 Read more: https://lnkd.in/gQdHZ9HR

In 2018, I got kicked off Shopify with 2 months notice while doing 7-figures in revenue. That nightmare taught me 3 crucial lessons about platform risk that no one talks about: QUICK BACKSTORY: I was 19, running a 7-figure eComm brand from my garage when I got the email: "We're changing our Acceptable Use Policy. Your store doesn't fit. You have 2 months to leave." What followed was chaos: - Spent $20k+ building a custom site - Lost access to payment processing  - Inventory we couldn't sell piling up - Bills coming due that couldn't be paid - Customer data trapped in their system Here are 3 crucial lessons I learned: 1/ The platforms you rely on don't rely on you Shopify kicked us off without warning. Then, at the same time, Meta and Google updated their policies simultaneously. Products we'd advertised for years were suddenly banned. No appeal process. If you don’t own the sandbox, you’re always at risk. It’s not a problem until it is. Then it’s existential. 2/ The true cost isn't the platform switch It's the operational mess: - Months of reduced revenue - Customer service nightmare - Development costs spiraling - Team morale destroyed It took away focus from growing the business which set us back months. The effects were still felt years later. 3/ The biggest risk every brand has is payment processing Every business needs to process payments to survive. But here's the terrifying reality: Most brands only have 1 payment processor. Think about that... Your entire business - revenue, customers, growth - relies on a single point of failure that you don't control. When our payment processing went down, the entire business went dark. That’s a mistake I won’t make again. TAKEAWAY: While platforms can power your growth, never become completely dependent on any single one. At the end of the day, you need them more than they need you. Your business is one policy change away from disaster. I learned this the hard way at 19. But you don't have to. Understand the key failures points in your business. Have backups ready to go at a moments notice.

One of the important points reinforced in the latest DORA report is that internal platforms help accelerate software delivery... unless they don't. The report shares some great detail around benefits for enterprise teams using internal platforms when they are built with their customers in mind. However, when platforms are required to be used regardless of their effectiveness, the overall delivery performance is negatively impacted. From the report: 👇 "for respondents who reported, they are required to “exclusively use the platform to perform tasks for the entire app lifecycle, there was a 6% decrease in throughput” I think this is to be expected. When platforms are built without their teams' specific goals in mind they also fail to address their delivery needs. The focus on platform engineering has built momentum around the need to treat our platforms as compelling products and data like that found in the 2024 DORA Report help to reinforce this approach. The biggest takeaway here is platforms should not be built in isolation with an "if you build it, they will come" mindset. The challenge in many organizations is going to be advocating for change from the "DevOps team" building everything in a centralized "one size fits all" approach, to working along side development teams to build platforms that solve real delivery needs. I'd love to discuss these challenges with more folks who are on this journey! If you haven't already, in addition to the DORA Report (https://lnkd.in/gY5Nvyae), check out the CNCF Platforms White Paper (https://lnkd.in/gsp39uvs) for a ton of great info on building modern developer platforms. #PlatformEngineering #DORAReport #CNCF #Platforms #SoftwareDelivery #DevOps

What Expenses Are Buried in Your DevOps Line ✅ Hosting? Security? People? What about third-party platform costs? Platform costs are a unique expense to some SaaS companies. We must understand the IP tradeoffs and record this expense correctly on our SaaS P&L. Let's dive in... 📓Key Concepts to Learn💡 1. Platform Fees Explanation: Platform fees refer to costs recorded when a SaaS company uses third-party platforms or integrations to deliver its product's functionalities. Examples include building applications on platforms like ServiceNow or Salesforce. Importance: Understanding and categorizing these fees correctly is crucial as they are required to deliver your product! Don't bury them in R&D under OpEx. These costs impact your cost of goods sold (COGS) and your GP %! 2. COGS (Cost of Goods Sold) Explanation: Platform fees are coded to COGS because they are essential expenses in performing your contractual obligations and delivering your product  📊. Importance: Properly categorizing these expenses within COGS affects the calculation of gross margins and margins by revenue stream; an important financial metric for SaaS companies 📈. 3. Gross Margin Explanation: Gross margin is a financial metric showing the revenue amount that exceeds the COGS. We convert that profit or margin into a %. Best-in-class gross margins for SaaS companies are around 80% 🌟. But that can vary based on what "type" of SaaS you are. Importance: High platform fees can significantly reduce gross margins, making it difficult to reach the best-in-class benchmarks 📉. What’s your GP% with and without platform feeds? Stakeholders will want to know this. 4. Platform Risk Explanation: Using third-party platforms carries inherent risks, such as changes in pricing, terms, or the platform's strategic direction, which are often beyond the SaaS company's control ⚠️. You are at their whim. Importance: Being at the mercy of a third-party platform may add risk to your company's operational stability and financial health 🏦. It may influence how investors and acquirers assess the IP that you have built. 5. Strategic Trade-Offs Explanation: There's a trade-off between quick, accelerated development using established platforms and the ongoing costs and risks associated with platform dependence ⚖️. Importance: SaaS operators must weigh the advantages of faster product development against the downsides of lower gross margins and potential platform risk 🔄. 6. DevOps Categorization Explanation: Within COGS, it's recommended to code platform or integration fees to DevOps to capture where the expenditure belongs accurately 🛠️. Use a unique GL account for this. Importance: Correctly categorizing these costs ensures precise financial reporting and better financial analysis 📊. #SaaS