Piggybacking, Acquisition Arbitrage, and Platform Risk
At its 2020 Partner Summit, Snap confirmed what many had been witnessing over the last two years. Its developer tools (“Snap Kit”) have allowed a number of startups to skyrocket through the charts. As of May 2020, over 20 of the top 100 iOS and Google Play Stores apps use Snap Kit.

This reminded me of a good number of startups that have scaled by piggybacking existing platforms or using other forms of user acquisition arbitrage. These strategies clearly involve a potentially fatal risk — what happens if someone turns off the tap?

However, I ask myself if early-stage venture-backed startups should embrace that if it means building and scaling faster and more efficiently than the competition, at least initially.

Let’s start with definitions.

Piggybacking and Acquisition Arbitrage 📈

Piggybacking describes the situation where a startup leverages the infrastructure or network of an existing platform to either: (a.) build components of its own offering; or (b.) acquire users, customers or viewers. In simple terms, it’s the entrepreneurial equivalent of climbing a mountain on someone’s back:

For example, Snap Kit allows entrepreneurs to both access Snap’s technology to build product features (e.g., with LoginKit, BitmojiKit or CameraKit) and also share their products via Snap’s userbase (e.g., with stickers through CreativeKit).

Piggybacking is also possible when a platform doesn’t release developer tools. Remember how Airbnb hacked its way into piggybacking CraigsList?

Importantly, using another platform’s tools to build some core aspects of the product (vs. specifically acquisition tools) may have significant effects on acquisitions too. For example, using Snap’s LoginKit simplifies building the onboarding flows of your app, but it also lowers friction with Snap users and therefore facilitates acquisitions of these users.
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['Technology', 'Marketing', 'Growth Hacking', 'Startup', 'Venture Capital']