How Microfinance and Platforms Go Hand in Hand

First published September 15, 2009 

This is probably going to be a very geeky business post that I won't have time to explain for those unfamiliar with the jargon. Sorry, but at least I warned you beforehand.  
 
Google Gadget Ventures and Facebook's FB Fund are noteworthy for one reason: they show the incentive for platform developers to fund applications built on top of their platform.  
 
This is something that remarkably reduces risk for entrepreneurs, and thus is very empowering to startups and underdogs. The reason it reduces startup risk is because Google and Facebook aren't just providing monetary investments; they're also providing an entire platform, an audience for that platform, as well as guidance/advice on how best to build for that platform.  
 
In many ways what Google and Facebook are doing with their respective funds is pushing software development outside of the firm. This is another important sign, because tomorrow's big companies will be focused more on pushing tasks outside rather than on owning everything. In fact, tomorrow's biggest company might just be a fund that provides the platform, but does not really do any day-to-day operations.  
 
Of course there is one big issue with microfinance, and actually with all of startup investing occurring in the United States today. The issue: how does anyone liquidate? I think platforms solve this problem as well, because I think many of them will fund application developers, and then will choose to buy the cool ones and integrate them as native to the platform. The acquired application developers than are entitled to the dividend stream of the platform, and that is where the real profits will be.