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The Standards Innovation Paradox

Standards, like RSS for podcasts, have enabled emerging technologies to spread far and wide in the information age by making it easy for them to plug into existing ecosystems. But the blessing of standardization eventually comes at a cost, and innovation suffers as a result. As an example, this is why the podcast format has remained mostly stagnant over its 20 year history.

But first…what exactly is a standard?

Simply put, a standard is a specification for how a technology (hardware or software) should talk to other technologies. Standards are generally developed by the community, but approved and maintained through consensus by committees which are typically open to anyone who wants to contribute. Some classic examples of standards in modern technology are HTTP (for web browsing), SMTP (for email transmission), RSS (for syndication of content, such as in blogs or podcasts), or SMS (for sending and receiving text messages).

Benefits of standardization

To understand the full scope of benefits that standards provide to product teams, it’s helpful to unpack an example, such as RSS (Really Simple Syndication) in podcasts. RSS has long been the backbone of podcasts, providing a powerful distribution mechanism that enables creators to publish their audio from a single endpoint and immediately syndicate their content to any consumption platform that wants to ingest it. RSS has enabled podcasts to flourish on the open internet over the past two decades by defining a language for how a vast network of podcasters and podcast listening apps communicate with each other. To publish audio via RSS, a creator (or podcasting platform, on the creator’s behalf) must publish the podcast in a specific format and include only the parameters defined within the standard, such as a URL pointing to the podcast’s cover art, a list of episodes, and so on.

Trade-offs

Since adopting RSS saves podcast listening apps an enormous amount of time and money by not forcing them to reinvent the way content flows through the podcasting ecosystem, it means the barriers to finding an audience for these apps is lower. As a result, many of these apps exist, and thus a tremendous amount of market fragmentation has emerged within the podcasting ecosystem since its inception roughly 20 years ago. If you’ve ever searched the App Store or the Google Play store for a podcast app, you’ve likely come across a tidal wave of search results. In some ways, this fragmentation is great for users, because it means they have a ton of choice and flexibility in what product to use for their podcast listening. But at the same time, this fragmentation is bad for innovation, and makes it nearly impossible to innovate on experiences that are based on RSS, meaning the podcast listening experience has remained stale and largely unchanged for almost the entirety of podcasting. Why? As mentioned above, standards are consensus driven, meaning changes to the underlying language powering these podcast apps don’t come easily. To better understand this dynamic, consider the following analogy to planning a vacation.

The family vacation

Imagine you and your significant other are alone together on a vacation for two weeks in a country you’ve never visited before. Because it’s just the two of you, you can do anything you want on that trip without putting much thought into it. Want to cancel tonight’s dinner reservation and go to a concert instead? You can. Want to skip tomorrow’s museum visit and instead rent a car to go to a different city? You can.

The Standards Innovation Paradox

The Standards Innovation Paradox is the trade-off teams face when building a new product based on standards; reaching product market fit can happen much faster because finding an audience for the product is easier, but the pace of innovation ultimately flatlines due to market inertia and consensus driven standards development. If and when a team decides to break the standard for the benefit of innovation without gaining buy-in from all other stakeholders, the benefits of the standard are lost. The more stakeholders in an ecosystem, the more people who need to agree (and thus, the harder it is to change).

A chart displaying the tradeoffs of The Standards Innovation Paradox — by Michael Mignano
The Standards Innovation Paradox

The Paradox in Podcasts

We faced this paradox with RSS when building Anchor in the early days, before we were acquired by Spotify. It was nearly impossible to make innovative changes to the podcasting format, because it was based on a virtually unchangeable RSS standard.

The Paradox in Messaging

Here’s another example that highlights the limitations of building with standards: SMS, the text messaging standard. The invention of the SMS standard took place in the 1980s. After almost a decade, after getting all of the necessary stakeholders on board, it finally launched to the first mobile phone and cellular carrier in 1992, and eventually, reached scale in 1999 (remember: getting standards adopted requires an enormous amount of consensus). Once it did, anyone anywhere in the world could send a text message to any other person with a mobile phone that supported SMS, regardless of which provider or device anyone used.

A timeline showing the history of messaging, both with and without standards, by Michael Mignano
A brief history of Messaging, with and without standards

The Paradox in Newsletters

Here’s another more recent example. You’ve likely heard of the amazing newsletter product, Substack. It’s a platform that enables creators to build, host, and scale their own newsletter businesses. The smart thing about Substack is that it uses an open standard — in this case, SMTP, the standard that powers email — to easily distribute newsletters to anyone who has an email inbox.

Breaking the Curse

While the curse of the Standards Innovation Paradox can doom any fast moving company that wants to reinvent their category, it can be broken. In fact, there is a way for teams to have their cake and eat it, too, whereby they can both get the benefits of the standard, while also innovating past its limitations.

Leverage distribution from proprietary systems

After enough time, all of the products that adopt standards at scale will end up offering roughly the same experience. This is because there is a ceiling of what they can offer because of the entrenched nature of the standard. The more products that adopt the standard, the more market inertia, and the harder it is to change. This means competition is fierce, and it is unlikely that any one product will break out because of some differentiated experience. So how does one of these products break through and find a critical mass of adoption? To find distribution, these products need to piggy-back off of some other product that is not competing in a standards-driven market.

Deliver backwards compatibility

It’s important to remember that customers like using products based on standards because doing so offers them choice and data portability. If a standards-based product happens to break through market fragmentation, it’s important to maintain the benefits users got from the standard in the first place, otherwise you risk alienating your users and losing product market fit. The best way to do this is to ensure backwards compatibility with the standard. Take Apple’s iMessage as an example. If you’ve ever used iMessage, you’ve almost certainly messaged someone on an Android device. Notice how the bubble turns green? That’s iMessage falling back to the standard of SMS to interact with the recipient. This is the best of both worlds. For you and your friends on Apple devices, you can get all the benefits of an innovative, proprietary platform. But these benefits don’t come at the expense of the core messaging functionality which is based on the open standard, because you’re still able to message people on Android devices through SMS.

To Standard or Not to Standard?

Despite the Standards Innovation Paradox, it’s impossible to ignore the massive benefits standardization has had on the success of technology over the past several decades. However, when building a new product that conforms to a standard, it’s always important to consider the trade-offs and weigh the future potential of being hindered by the paradox after a team finds product market fit.

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Michael Mignano

Partner, Lightspeed. Co-Founder, Anchor. Angel investor to 50+ startups. Former head of talk audio at Spotify.