The Three Kinds of Interoperability Every Startup Needs to Know

  • Post author:
  • Post category:
    guide

“Interoperability” is a long word to write and say. Yet it’s at the heart of any David vs. Goliath tech story. The success of any new endeavor depends on its ability to identify and thrive on the kind of interoperability it requires.

There are three kinds of interoperability: indifferent, cooperative, and adversarial. I discussed this at length when covering Twilio’s Zipwhip acquisition (see sidebar). Conceptually, it’s best to view each type of interoperability as an invitation to the party the platform owner is hosting. Your success depends on how well you understand the invitation.

The Indifferent Invite

Invitation type: You are on the guest list, which guarantees you entry but nothing more. How you become the life of the party, create connections, and build your business is entirely up to you. 

Examples: Every non first-party app in the app store; every HubSpot/Salesforce/Shopify integration; all A2P shortcode platforms.

What to watch for: Integrations require a solid product marketing plan, and app store apps need a robust App Store Optimization (ASO) strategy. Without these components, such plays are worth little more than the press release that announces them.

The Cooperative Invite

Invitation type: You are the special guest, the chosen one, the favorite child. The host is invested in ensuring you have a good time, meet the right people, and make the right connections. Your success is their success.  

Examples: Klaviyo on Shopify (and every other most-favored-nation integration), Zipwhip and toll-free text message aggregation.

What to watch for: It’s easy for the invitee to become comfortable and neglect innovation or to seek other growth opportunities both within and outside of the platform; however, there is always a way for others to thrive. For example, while Klaviyo is the top integration, it doesn’t mean other messaging providers aren’t doing well.

The Adversarial Invite

Invitation type: You managed to slip into this party, found your way to the wine cellar, and uncorked a rare vintage. Not stopping there, you’ve also begun coaxing their guests to leave for a party you’re hosting. It’s all in good fun until the host catches on.

Examples: Facebook, Salesforce, Twilio, WhatsApp, and every long-code texter before 10 DLC. Also, Aero and now Beeper. 

What to watch for: This is a high-risk, high-reward play with rare but big success stories. The key is to have a plan for when you get found out. Aero, for example, didn’t have one.

Sidebar: Explaining the Zipwhip Acquisition

In early 2021, rumors of the Twilio/Zipwhip deal were commonplace. Many outsiders were convinced that Twilio was entering the SMB market. Industry veterans, of course, knew the real story, but in the dizzying, heady heat of pandemic-driven M&A activity, few seemed to listen.

We humans are snap-judgment automatons with a need to simplify, which can sometimes lead to oversimplification. Although complex, I found Cory Doctorow’s framework helpful in explaining the acquisition and the valuation multiple. Today, of course, everyone understands why Twilio acquired Zipwhip, but the paper still receives positive feedback for explaining how messaging works. You can read the entire 6,000 words here or jump to any section:

  1. Know Whose Party You’re Crashing
  2. How Interoperability Made Texting a Big Deal
  3. How Twilio Leveraged Indifferent Interoperability
  4. The Twilio Effect
  5. How Zipwhip Leveraged Cooperative Interoperability
  6. Why We Need Interoperability and How to Protect It 

Finally

The key for understanding the types of interoperability isn’t, as Cory recommends, to take down big tech. It is to understand that interoperability is at the center of marketplace innovation and the role of the marketplace to protect it. Of the incumbent, the upstart, the consumer, and the regulator, it is the regulator whose first job it is to protect interoperability. Like I said in the final part in the series:

“If interoperability is about starting on the ground floor, the regulator ensures that the ground floor exists. The regulator’s job is to ensure the playing field is equitable and benefits the user. While the marketplace participants try to outsmart each other and win at all costs, the regulator watches out for everyone. This includes the kid in the garage disrupting the old ways of doing things.”