Platform or Algorithm ?

Yesterday, I spoke with a founder in the wine business.

Interesting guy, interesting company.

And as we talked we started musing on Spotify, and how it had grown quickly here in the U.S.

This led us to the question of whether you want to be a platform or an algorithm.

do you want to be Spotify or Pandora?

The latest version of spotify is most decidedly a platform. They provide all you can eat music, but the curation is provided either by spotify through its deal with Echonest, by self generated playlists, or by apps that attach to the platform. (check out We Are Hunted)

Pandora is more of an algorithm. It has a ton of data suggesting which songs should be played next in any given situation but you can't tell it which song to play. No one plugs in an app to the Pandora engine to make it better - they optimize themselves.

Back to wine.

Do you want to be the recommendation engine for social sharing - enabling your consumers to make great decisions in the face of overwhelming choice? Or do you want to try and be the distribution platform - enabling the sale of wine to the consumers?

Two different directions, two different sets of challenges, and two different business models.

They key is making sure you understand the distinction between the two.

So which do you want to be?