I call it piggy-backing, and it was a first-party lesson learned when my company, Mainline, started out: Be careful building out your business model on the back of another business.
Two examples:
Chris Dixon is currently a general partner at Andreesen Horowitz. But, before he was the poster child for $3 billion in Web3 investments, he was a programmer in the 2000s-era Internet where the iPhone, Google, and all modern social media was born then refined then perfected. Specifically, Twitter.
When Twitter changed their API in 2011 or so, there was a big wave of startups — including a lot of my friends — who built Twitter startups. That was a thing in 2009 and 2010, with Tweety, TweetDeck, and all sorts of API services. There was a VC firm that started that was literally only doing Twitter apps. People thought of it as the new web and a new platform, but then there was this very harsh lesson learned. For a long time Twitter did not have a client software, and at some point they decided, “Hey, we need to control. We are going to have client software, have an ad-based model, and change the API,” and that whole industry died. Same thing happened with the Facebook platform.
Chris Dixon
Decoder Podcast
PUBG
The second thing Mainline set out to do was generate revenue by running professional esports leagues for the game title publishers. It’s not a particularly easy thing to do; for the most part, a developer’s core competencies are not in governance, broadcasting, tournament organization technology, and the things necessary to create and sustain competitive league balance. It’s in making the game the best it can possibly be for the players.
Perfect. We could step in. We were already running the largest competitive PUBG leagues in North America, so we reached out to work with the publisher (then called Bluehole) and set about to do exactly that.
The good news for PUBG is that it became an international leviathan, by nearly every metric, holding the title of most popular mobile game in the world and the desktop version has been one of the most-played games on Steam since its release in 2017.
The bad news for us meant that it was able to take its competitive league in-house.