The role of developer communities in value creation

I’m Melodi Kaya, and I’m the Head of Developer Marketing and Community at Chainlink Labs.

This is going to be kind of nerdy and not so technical. But the reason why I'm excited about this topic is the same reason I'm also doing my doctorate in it.

The shift to continuous value creation

We now live in a platform economy. Shift happens and you're going to see that shift.

When I say shift happens, what I mean is a shift from products to relationships and platforms. In the 1970s, companies focused so much more on products, and moving into the 90s, there was a combination of products and services.

In the early 2000s, it became the thing to be customer-obsessed, which is a really nice thing. However, I feel like it's a little late to actually discover that you need to be customer-obsessed. But that’s just my humble opinion.

And moving to the recent days, which is what we're going to talk about, we’re more relationship-centric. It sounds like a romantic term, but it’s not. It’s mostly about relationships and interactions and engagement that’s actually happening in the ecosystem.

I'm super happy to talk about this with people who are actually interested in the topic, because that's usually not the case whenever we're pitching to the developer community on the value of community.

But what does it mean when I say a shift happens from products to platforms, to product centricity, to relationships and engagement?

In the 1970s and the more product-focused way of doing things, communication and value creation was way more linear. The company would produce something and it was more static and not really continuous.

So, you’d actually ship it out and then care about it later on. It wasn’t about getting all the feedback you could from individuals and users.

Now, we’ve moved to a platform economy where there’s always feedback, there’s always continuous value creation, and communication is a lot more two-way. There’s actually feedback coming from the ecosystem and the community to the company, as well as the other way around.

But does that really matter? Am I going to be able to give you some examples? You might be thinking, What is she even talking about? Maybe she just likes it because she's doing her doctorate in it and wants to use this as a research area.

Well, I put Nokia phones to you as an example. Not to date myself, but these were a big thing when I was a kid. We wanted to have that phone and we wanted to play with it. I mean, it had Snake on it.

So, I wanted to talk about Nokia a little, and it's also my previous company. I worked in the maps section of Nokia, which was called HERE Maps. So we dealt with all the maps that were powering Facebook, etc., back in the day.

But, back in the day, Nokia was actually very successful, and it’s just one example that we're going to talk about.

Major transformations in the mobile market

Based on Harvard Business Review, in the last 15 years, 52% of Fortune 500 companies have disappeared. And those are the really, really big guys so, for them, to be disappearing at this rate is a little scary. I could understand that if I was managing billions and billions in a company.

So, I wanted to double down on my Nokia example and talk about the mobile phone market share. In 2007, Nokia, Samsung, Sony, Ericsson, and Motorola, the big players, actually owned 99% of the profits in the market.

Something we're going to be familiar with as marketers are economies of scale. They’re well-known brands. You’d know who Nokia was.

Nokia had actually achieved logistical excellence. And that means if you’re shipping out products globally, you need to know your stuff and be very well connected. They were really excellent at that.

And, if we were to think about it, if you’ve worked in an enterprise company, we're always asking, “Did you invest in research? Are they following up on what's happening?” Nokia had actually invested $40 billion in R&D.

Six years later, moving from 2007 to 2013, there was a new player in the mobile phone market that hadn’t been doing mobile phones before. That player was Apple.

Apple was actually getting 92% of the profit in the market. But remember the other major players? Only one of them actually stayed profitable that year. The others weren’t making any profits in 2013.

So, this new guy actually achieved great success in just over 6 years. But how does that even happen?

I want to discuss how that happens and which companies seem to be winning, and then tie this to the developers.

The digital marketplace generated $20 billion in collected revenue for all of its developers in 2015, which was actually up by 40% compared to the previous year.

Let's talk about who's actually going to win in this. Why am I giving examples from Apple? And how are they actually winning?

Products have features and platforms have communities. There’s a guy called Marshall Van Alstyne who’s written a book called Platform Revolution. He's a really cool guy. He provides a lot of online courses for free if you're interested in that stuff.

But what he's saying is that products have features and platforms have communities.

Thinking 40 years back, we just learned that if you reach economies of scale and you become the most cost-effective company, you're going to win it. There were things that you knew you could control.

But, now with the communities, when you talk to leaders from decades ago, they’re obviously going to have some trouble understanding that.

The platform economy means less control

Now I want to give you an actionable idea of what’s been changing and what to look at.

Based on several criteria in terms of market forces, the product used to be more focused and there were more distinct roles. If you were producing the product, you knew what the role was, and the buyer and seller personas were very different, so it was kind of clearer.

Right now, in the platform economy, these roles are a little bit more changeable. For example, if you're a rider on Uber today, you can actually become a driver for Uber tomorrow. Your role in the platform is changing a lot, and understanding that is super crucial.

In terms of product, the focus was more on competencies, versus now which is more on interactions, and economies of scale were actually more on the supply side.

For example, if you got super efficient in producing a printer, the ink was going to cost more. It was such a confusing time, as we were just buying new printers because it was cheaper. How does that even make sense?

But that was something achievable because you were becoming excellent in terms of scaling that and succeeding in the economies of scale.

Right now, it's more about the demand side of things. It’s something that you can control less, and that’s scary.

Tapping into value created in the developer ecosystem

Goals and metrics in the product environment are actually the most important things I want to highlight here.

Let's remember that, if you've studied marketing or attended any marketing presentation, you've heard, "What’s the Blue Ocean or Porter's Five Forces?" They’re very well revered and still valid, but right now, if you go with your cost efficiency and product differentiation, you're not really going to be successful in the platform economy.

So right now you're trying to see community as an asset and try to actually measure the engagement rate, the positive spillover, and also the fair governance.

We try to measure engagement a lot in everything, but positive spillover is kind of the thing if you're a developer. In Apple's case, if you brought a particular game to Apple's platform, you've actually brought your community with it.

Obviously, not all developers and apps are going to have the same impact and significance, but that’s the positive spillover where you bring your own community into it.

And fair governance is with the rise of the platforms and the value that we put into developers, and their contribution that’s exceeding billions and billions. As you've seen, it’s actually really important.

Remember back in the day when Meta was called Facebook and we were on it and it was okay to be on it? There were some games, I think it was Zynga, who started spamming a lot of people on Facebook.

They started spamming the platform so much that Facebook had to actually shut down some parts of it or limit their spamming so that they could protect and govern their own community, even though Zynga was bringing a lot of community members to it. But, there was still some balance to be had in terms of protecting and governing that.

With innovation, this is actually where the values are that I've been talking about for Nokia and the brands that I love. Innovation was easier to control as long as you were doing your R&D investment or hiring the best and brightest and most expensive people. So, they were doing something, and it was owned by the firm.

But, right now, it’s a combination of, yes, as a firm you're innovating, but the ecosystem is innovating so much more. If you've ever done a hackathon, the idea is to actually tap into what's happening in the community and in the ecosystem, because there's so much more value.

For example, take Amazon versus Walmart. You might say that it’s not really fair to compare the two, but then think about how Amazon started with books and it's kind of fair.

I have a little bit of data from 2015 which visualizes the API economy they both have. With Amazon, the data looks like a nebula or a galaxy. And Walmart is there just trying to exist, which is fine. And it has changed in the last seven years.

But, what does that mean? These are developers, interactions, and API calls that are being made. But, what does this actually mean in terms of the value?

Looking at data from 2005 to 2015, Walmart actually saw 12% growth. But, in that same time, Amazon experienced 1,516% growth, which shows you the value that’s created in the ecosystem.

The gist of it is that the external value created by developers and the community in the ecosystem is so much higher than what you can actually tap into as the organization.

Keep in mind that, when we’re trying to measure or set up our KPIs and do it the old way, we want to go back and see how this is going to help us improve the platform economy that we’re operating in, and how we're going to tap into the developer ecosystem's value.

So, it might not always be the number of registrations, but it might be something else that we need to capture.

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