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Matchmakers: The New Economics of Multisided Platforms
A different kind of matchmaker. Many of the most dynamic public companies, from Alibaba to Facebook to Visa, and the most valuable start-ups, such as Airbnb and Uber, are matchmakers that connect one group of customers with another group of customers. Economists call matchmakers multisided platforms because they provide physical or virtual platforms for multiple groups to get together. Dating sites connect people with potential matches, for example, and ride-sharing apps do the same for drivers and riders. Although matchmakers have been around for millennia, they’re becoming more and more popular—and profitable—due to dramatic advances in technology, and a lot of companies that have managed to crack the code of this business model have become today’s power brokers.
Don’t let the flashy successes fool you, though. Starting a matchmaker is one of the toughest business challenges, and almost everyone who tries to build one, fails.
In Matchmakers , David Evans and Richard Schmalensee, two economists who were among the first to analyze multisided platforms and discover their principles, and who’ve consulted for some of the most successful platform businesses in the world, explain how matchmakers work best in practice, why they do what they do, and how entrepreneurs can improve their chances for success.
Whether you’re an entrepreneur, an investor, a consumer, or an executive, your future will involve more and more multisided platforms, and Matchmakers —rich with stories from platform winners and losers—is the one book you’ll need in order to navigate this appealing but confusing world.
Don’t let the flashy successes fool you, though. Starting a matchmaker is one of the toughest business challenges, and almost everyone who tries to build one, fails.
In Matchmakers , David Evans and Richard Schmalensee, two economists who were among the first to analyze multisided platforms and discover their principles, and who’ve consulted for some of the most successful platform businesses in the world, explain how matchmakers work best in practice, why they do what they do, and how entrepreneurs can improve their chances for success.
Whether you’re an entrepreneur, an investor, a consumer, or an executive, your future will involve more and more multisided platforms, and Matchmakers —rich with stories from platform winners and losers—is the one book you’ll need in order to navigate this appealing but confusing world.
272 pages, Hardcover
Published May 24, 2016
About the author
David S. Evans
11 books1 followerEvans is an economist whose work on platform businesses, the digital economy, financial services, and antitrust economics is widely cited. He is the author of nine books and more than 150 articles on those and other economic topics. His most recent book, Matchmakers: The New Economics of Multisided Businesses, won the 2017 Axiom best economics book award, and was featured in the New York Times, Wall Street Journal, and Economist. Evans is frequently asked to speak to global audiences on the digital transformation, platforms business, and antitrust.
Evans uses his research to advise companies, from early-stage firms to the largest global digital businesses and has consulted for many of the prominent digital platform companies based in the US and China. Evans has also applied his expertise for testimony before courts, legislatures, and regulators in the US and abroad. The U.S. Supreme Court cited his work on platform economics and payment cards extensively in its American Express decision.
Evans has had a long career in academia. Between 2004 and 2022 he was a visiting professor at University College London (UCL) where he taught intensive courses on the digital economy and multisided platforms, and their application to competition policies, which were streamed to antitrust authorities globally. He was a Lecturer at the University of Chicago Law School between 2006 and 2016 where he taught an advanced seminar on antitrust economics. Previously he was a professor at the Fordham University Department of Economics and at Fordham Law School.
Evans uses his research to advise companies, from early-stage firms to the largest global digital businesses and has consulted for many of the prominent digital platform companies based in the US and China. Evans has also applied his expertise for testimony before courts, legislatures, and regulators in the US and abroad. The U.S. Supreme Court cited his work on platform economics and payment cards extensively in its American Express decision.
Evans has had a long career in academia. Between 2004 and 2022 he was a visiting professor at University College London (UCL) where he taught intensive courses on the digital economy and multisided platforms, and their application to competition policies, which were streamed to antitrust authorities globally. He was a Lecturer at the University of Chicago Law School between 2006 and 2016 where he taught an advanced seminar on antitrust economics. Previously he was a professor at the Fordham University Department of Economics and at Fordham Law School.
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January 17, 2019
Matchmakers Notes
I. Economics and Technologies
- Platforms in a broad view:
+ Physical/Tangible platforms (shops, bars, agencies, payment cards, ads, ...)
+ Human platforms (dating matchmakers, brokers,...)
+ Digital/Virtual platforms (telecom network, Internet, computer OS, websites, mobile apps, ...)
- Traditional model:
+ Single-sided.
+ Inputs/Material -> products -> sell to customers.
+ Price is always higher than cost.
+ Independence between customers.
- Platform model:
+ Multi-sided.
+ Need 2 or more types of customers -> interact with each other -> create value.
+ Most of the time, the price is low or maybe free (to some groups) -> Cross-subsidization
+ Inter-dependence between customers (demand/joining from one side affects other sides).
- Network effect:
+ Direct: the more people (in the same side) connect to the network,
the more value the network is to others.
+ Indirect: the more people (in one side) connect to the network,
the more value the network is to others (in other side).
+ Positive externality: good affect from a person joining the network on another.
+ Negative externality: bad affect from a person joining the network on another.
+ Grow or fail exponentially.
+ First mover advantages -> (postive) network effect -> big economic moats -> winner-take-all market
-> This is true in most cases (depends on many other factors)
- Some issues:
+ Critical mass
-> a point at which the cost to get a new user is way smaller than the value he/she brings.
-> a.k.a, the network (effect) can automatically attract users by itself and survive.
+ Chicken-and-egg problem
-> 2 or more different sides need to connect to the platforms at the same time.
-> only by then, the network has value.
+ Multi-homing
-> threats from similar platforms.
-> users can use many same platforms at the same time (potentially abandon unfavorite ones)
+ Multi-sided pricing balance
-> Favor some groups (which are price-sensitive) and charge other groups (which have lots of money)
+ Network participation balance from different sides.
-> a skewed network (some groups have way more users than other groups)
leads to unequally created value for all groups.
+ Timing: the platform has a definite time to take off (1-2 years)
after that, if it does not reach critical mass, it'll fail fast.
- Technologies have been accelerating platforms -> foundational platforms for platforms
+ Powerful chips.
+ The internet.
+ The world wide web.
+ Broadband communications.
+ Programming languages and OS.
+ The cloud.
-> Offline world and online world are becoming one.
-> Creative destruction -> economy and society disruption.
II. Platform problems
1. Frictions
Platforms must:
- Have solutions to decrease some kind of frictions.
-> cut transaction cost
- The value created must be significant enough for participants and itself.
-> able to keep them in the network and have profit itself.
-> the value created is also affected by external context/condition.
- Enhanced communication channels and information sources.
-> facilitate interaction between participants
- Guarantee trustworthiness among participants and itself.
2. Critical mass
Strategies for reaching critical mass:
- Zig-zag strategy: push participation by all sides simultaneously.
+ Eye-for-eye tactic: for example, upload one photo in exchange to see a photo.
+ Money tactic: give away money for joining or uploading, using,...
+ Self-supply tactic: create its own one side at first.
+ Marquee customer tactic: use big and popular mass influencers.
+ Make-believe tactic: sales job to convince one side that the other side already joined.
+ Free tactic: free to access or use.
- Two-step strategy: at first only need one side joining is enough.
-> suitable for platforms rely on advertising for profit.
- Commitment strategy: guarantee one side that the other side will join.
3. Pricing
- Traditional model:
+ how much cost to produce a product.
+ demand elasticity.
- Multi-sided platform model:
+ price sensitivity from all joining sides.
+ how to make profit from the platform.
- Problems:
+ How many sides to join?
+ How to charge: access fee, usage fee.
+ Price level: how much to charge
+ Price structure: how much to earn from each side relative to the other side
-> the money side and the subsidy side
+ Rebalance pricing frequently to adapt specific situations.
- Answer these questions:
+ how sensitive is each group to price? -> decide price level
+ who need whom, why and how much? -> decide price structure
+ does one group control whether an interaction takes place? -> decide how to charge to each group
-> some groups are more likely to initiate interactions first.
-> need to subsidize these groups.
4. Ecosystem integration
Problems:
- How many sides should be allowed to join the platform? One-sided or two-sided or both types of platforms.
- How those sides interact with each other?
- How to keep the network/those sides under control (and a good quality)?
- Do the platform needs to be integrated in a bigger system? And how?
- Does the platform need a new side to join?
5. Interior design
Design platforms to:
- Create a thick market (high liquidity -> for example, market makers of stock exchanges).
- Get the right participants to join (keep a good quality):
+ Screening device: focus on getting the participants that want to join.
+ Discourage the participants that make negative value to the platform.
- Pay attention to the direct/indirect network effect:
+ Avoid too much competition from one side.
+ Encourage participation that leads to more created value.
- Have an reasonable network size (avoid congestion):
+ Too many participants -> harder to find each other
+ Lead to physical/technical problems
- Facilitate searching and matching (keep transaction cost low and increase liquidity)
+ Use some standards, rules to shape interactions between participants.
+ Create algorithm to enhance the quality of searching and matching.
- Create more additional user experience/features:
+ Search diversion: give a great variety of relevant search results.
+ Recommendation for buyers.
-> encourage more potential valuable transactions.
6. Governance
- Multi-sided platforms are communities too.
-> need rules, regulations, laws,... to govern behavioral externalities from participants.
-> create a high quality network.
- Use curation mechanisms (comments, review, ratings, votes,...) to reward good behaviors
and punish bad behaviors.
- Some bad behaviors: fraud, misrepresentation, front-running, drip-pricing,...
7. Matchmakers start-up checklist manifesto:
- what the friction is, how big it is, who benefits if solve it?
- how the platform is designed to reduce this friction? balance interests from all sides? better than other platforms?
- what is the plan for reaching critical mass? how hard that plan is?
- how the pricing?
- how the platform works with others in a broader ecosystem? any risks? how to deal?
- the platform is ready to adapt quickly in response to market reaction?
III. Conclusion
- Matchmakers 've been around for millenia.
- Lots of new market business are old stuff with advanced technology.
- Modern information and communication technologies are the key to today matchmakers.
- Sharing-economy won't be the last to stand.
- Matchmakers will transform industries fast or gradually.
I. Economics and Technologies
- Platforms in a broad view:
+ Physical/Tangible platforms (shops, bars, agencies, payment cards, ads, ...)
+ Human platforms (dating matchmakers, brokers,...)
+ Digital/Virtual platforms (telecom network, Internet, computer OS, websites, mobile apps, ...)
- Traditional model:
+ Single-sided.
+ Inputs/Material -> products -> sell to customers.
+ Price is always higher than cost.
+ Independence between customers.
- Platform model:
+ Multi-sided.
+ Need 2 or more types of customers -> interact with each other -> create value.
+ Most of the time, the price is low or maybe free (to some groups) -> Cross-subsidization
+ Inter-dependence between customers (demand/joining from one side affects other sides).
- Network effect:
+ Direct: the more people (in the same side) connect to the network,
the more value the network is to others.
+ Indirect: the more people (in one side) connect to the network,
the more value the network is to others (in other side).
+ Positive externality: good affect from a person joining the network on another.
+ Negative externality: bad affect from a person joining the network on another.
+ Grow or fail exponentially.
+ First mover advantages -> (postive) network effect -> big economic moats -> winner-take-all market
-> This is true in most cases (depends on many other factors)
- Some issues:
+ Critical mass
-> a point at which the cost to get a new user is way smaller than the value he/she brings.
-> a.k.a, the network (effect) can automatically attract users by itself and survive.
+ Chicken-and-egg problem
-> 2 or more different sides need to connect to the platforms at the same time.
-> only by then, the network has value.
+ Multi-homing
-> threats from similar platforms.
-> users can use many same platforms at the same time (potentially abandon unfavorite ones)
+ Multi-sided pricing balance
-> Favor some groups (which are price-sensitive) and charge other groups (which have lots of money)
+ Network participation balance from different sides.
-> a skewed network (some groups have way more users than other groups)
leads to unequally created value for all groups.
+ Timing: the platform has a definite time to take off (1-2 years)
after that, if it does not reach critical mass, it'll fail fast.
- Technologies have been accelerating platforms -> foundational platforms for platforms
+ Powerful chips.
+ The internet.
+ The world wide web.
+ Broadband communications.
+ Programming languages and OS.
+ The cloud.
-> Offline world and online world are becoming one.
-> Creative destruction -> economy and society disruption.
II. Platform problems
1. Frictions
Platforms must:
- Have solutions to decrease some kind of frictions.
-> cut transaction cost
- The value created must be significant enough for participants and itself.
-> able to keep them in the network and have profit itself.
-> the value created is also affected by external context/condition.
- Enhanced communication channels and information sources.
-> facilitate interaction between participants
- Guarantee trustworthiness among participants and itself.
2. Critical mass
Strategies for reaching critical mass:
- Zig-zag strategy: push participation by all sides simultaneously.
+ Eye-for-eye tactic: for example, upload one photo in exchange to see a photo.
+ Money tactic: give away money for joining or uploading, using,...
+ Self-supply tactic: create its own one side at first.
+ Marquee customer tactic: use big and popular mass influencers.
+ Make-believe tactic: sales job to convince one side that the other side already joined.
+ Free tactic: free to access or use.
- Two-step strategy: at first only need one side joining is enough.
-> suitable for platforms rely on advertising for profit.
- Commitment strategy: guarantee one side that the other side will join.
3. Pricing
- Traditional model:
+ how much cost to produce a product.
+ demand elasticity.
- Multi-sided platform model:
+ price sensitivity from all joining sides.
+ how to make profit from the platform.
- Problems:
+ How many sides to join?
+ How to charge: access fee, usage fee.
+ Price level: how much to charge
+ Price structure: how much to earn from each side relative to the other side
-> the money side and the subsidy side
+ Rebalance pricing frequently to adapt specific situations.
- Answer these questions:
+ how sensitive is each group to price? -> decide price level
+ who need whom, why and how much? -> decide price structure
+ does one group control whether an interaction takes place? -> decide how to charge to each group
-> some groups are more likely to initiate interactions first.
-> need to subsidize these groups.
4. Ecosystem integration
Problems:
- How many sides should be allowed to join the platform? One-sided or two-sided or both types of platforms.
- How those sides interact with each other?
- How to keep the network/those sides under control (and a good quality)?
- Do the platform needs to be integrated in a bigger system? And how?
- Does the platform need a new side to join?
5. Interior design
Design platforms to:
- Create a thick market (high liquidity -> for example, market makers of stock exchanges).
- Get the right participants to join (keep a good quality):
+ Screening device: focus on getting the participants that want to join.
+ Discourage the participants that make negative value to the platform.
- Pay attention to the direct/indirect network effect:
+ Avoid too much competition from one side.
+ Encourage participation that leads to more created value.
- Have an reasonable network size (avoid congestion):
+ Too many participants -> harder to find each other
+ Lead to physical/technical problems
- Facilitate searching and matching (keep transaction cost low and increase liquidity)
+ Use some standards, rules to shape interactions between participants.
+ Create algorithm to enhance the quality of searching and matching.
- Create more additional user experience/features:
+ Search diversion: give a great variety of relevant search results.
+ Recommendation for buyers.
-> encourage more potential valuable transactions.
6. Governance
- Multi-sided platforms are communities too.
-> need rules, regulations, laws,... to govern behavioral externalities from participants.
-> create a high quality network.
- Use curation mechanisms (comments, review, ratings, votes,...) to reward good behaviors
and punish bad behaviors.
- Some bad behaviors: fraud, misrepresentation, front-running, drip-pricing,...
7. Matchmakers start-up checklist manifesto:
- what the friction is, how big it is, who benefits if solve it?
- how the platform is designed to reduce this friction? balance interests from all sides? better than other platforms?
- what is the plan for reaching critical mass? how hard that plan is?
- how the pricing?
- how the platform works with others in a broader ecosystem? any risks? how to deal?
- the platform is ready to adapt quickly in response to market reaction?
III. Conclusion
- Matchmakers 've been around for millenia.
- Lots of new market business are old stuff with advanced technology.
- Modern information and communication technologies are the key to today matchmakers.
- Sharing-economy won't be the last to stand.
- Matchmakers will transform industries fast or gradually.
July 14, 2016
I felt like this book bogged down in the middle, without a lot of new information. The beginning was great. The ending included a nice historical overview of multisided platforms which I found interesting. Good book but I wished it was shorter or dug deeper in the middle.
June 19, 2016
Ever since I started my entrepreneurial journey my focus has been on multi-sided platforms, only now I realize how challenging this choice has been…
Multisided platforms are extremely difficult as you have to please two or more, completely different types of people/businesses while facilitating a match between them. Such a match must bring a steady flow of value to all parties involved, while making sure that there are clear rules preventing people from abusing the platform. The book raises more questions than actually provides answers:
Where do you start, supply or demand? When do you know that the time has come to shift your focus from supply towards demand or vice versa? How do you make sure people are not going around the platform? Why would people go back to your platform and use your solution over and over?
Instead of answering some of my concerns the book made me realize how complex is running a multi-sided platform and that there are no easy answers.
Apparently multi sided platforms have been around much longer than most of us assume . However, with the help of technology, Sharing Economy types of platforms have boomed in recent years making it seem like it is not such a difficult field. As a result, many entrepreneurs have attempted to crack the chicken or egg dilemma in many sectors, but only few have succeeded.
In my opinion, the book is more suitable to academic context rather than to hands-on entrepreneurs. Because, it is a great source of study cases aiming to make people consider the complexity of each particular case and how a series of decisions led to success.
Having said that, my knowledge on the topic expanded considerably, allowing me to reflect more on what is a suitable size of the supply side, when is my startup actually reaching critical mass and the importance of igniting the platform in early stage.
Multisided platforms are extremely difficult as you have to please two or more, completely different types of people/businesses while facilitating a match between them. Such a match must bring a steady flow of value to all parties involved, while making sure that there are clear rules preventing people from abusing the platform. The book raises more questions than actually provides answers:
Where do you start, supply or demand? When do you know that the time has come to shift your focus from supply towards demand or vice versa? How do you make sure people are not going around the platform? Why would people go back to your platform and use your solution over and over?
Instead of answering some of my concerns the book made me realize how complex is running a multi-sided platform and that there are no easy answers.
Apparently multi sided platforms have been around much longer than most of us assume . However, with the help of technology, Sharing Economy types of platforms have boomed in recent years making it seem like it is not such a difficult field. As a result, many entrepreneurs have attempted to crack the chicken or egg dilemma in many sectors, but only few have succeeded.
In my opinion, the book is more suitable to academic context rather than to hands-on entrepreneurs. Because, it is a great source of study cases aiming to make people consider the complexity of each particular case and how a series of decisions led to success.
Having said that, my knowledge on the topic expanded considerably, allowing me to reflect more on what is a suitable size of the supply side, when is my startup actually reaching critical mass and the importance of igniting the platform in early stage.
July 24, 2022
This book is about what makes or breaks matchmaking platforms such as Facebook, airbnb, Tinder, Uber, YouTube, PayPal, Android, Windows, iOS, MacOS... Etc.
A matchmaking platform is a software service that allows different parties to connect/match with each other, with far less friction than they would usually have to go through with other more traditional or/and incumbent services.
Contrary to popular belief, you don't necessarily have to be a first-mover to dominate a particular space since you can differentiate your platform and since users may use different platforms at the same time. Winner-take-all scenarios can occur but they are far less common than we are led to believe. Facebook wasn't the first social network.
A typical mistake matchmaking platforms entrepreneurs make is to try to go broad and acquire as many users as possible. This sounds intuitive. But, if your users don't find what they need, i.e the right match, you're essentially pouring water into a leaky bucket. So initially you should focus on attracting users that would "resonate" with other users. It doesn't matter if airbnb has tens of millions of users, if there are no listings in the place I am traveling to.
The first hurdle these platforms face is the chicken and egg problem, or the ignition problem, or the cold start problem. Simply put, why would anyone sign-up, if there's no one there in the first place?
Platforms usually overcome this by providing monetary incentives to early users. In a multisided platform, the users who receive this 'subsidy' are the ones that are more sought after by the other side of users or the ones least likely to sign-up. For example, it would make sense for platform that matches restaurants and diners, to subsidize diners by giving away free meals.
The goal of these platforms in their first years of operation is to reach a self-sustaining critical mass of users. If the company runs out of cash before, it may cease to exist. Reaching this stage, means the chicken and egg problem has been solved, at least in a certain market and thus the strategy could possibly be replicated elsewhere. For example, it was solved in a city A, and should be easier to be solved in city B.
The friction that's canceled or reduced by these platform needs to create enough value for all participants to make the business sustainable. Direct to consumer, quick delivery, and ride hailing startups don't seem to check this criteria.
A matchmaking platform is a software service that allows different parties to connect/match with each other, with far less friction than they would usually have to go through with other more traditional or/and incumbent services.
Contrary to popular belief, you don't necessarily have to be a first-mover to dominate a particular space since you can differentiate your platform and since users may use different platforms at the same time. Winner-take-all scenarios can occur but they are far less common than we are led to believe. Facebook wasn't the first social network.
A typical mistake matchmaking platforms entrepreneurs make is to try to go broad and acquire as many users as possible. This sounds intuitive. But, if your users don't find what they need, i.e the right match, you're essentially pouring water into a leaky bucket. So initially you should focus on attracting users that would "resonate" with other users. It doesn't matter if airbnb has tens of millions of users, if there are no listings in the place I am traveling to.
The first hurdle these platforms face is the chicken and egg problem, or the ignition problem, or the cold start problem. Simply put, why would anyone sign-up, if there's no one there in the first place?
Platforms usually overcome this by providing monetary incentives to early users. In a multisided platform, the users who receive this 'subsidy' are the ones that are more sought after by the other side of users or the ones least likely to sign-up. For example, it would make sense for platform that matches restaurants and diners, to subsidize diners by giving away free meals.
The goal of these platforms in their first years of operation is to reach a self-sustaining critical mass of users. If the company runs out of cash before, it may cease to exist. Reaching this stage, means the chicken and egg problem has been solved, at least in a certain market and thus the strategy could possibly be replicated elsewhere. For example, it was solved in a city A, and should be easier to be solved in city B.
The friction that's canceled or reduced by these platform needs to create enough value for all participants to make the business sustainable. Direct to consumer, quick delivery, and ride hailing startups don't seem to check this criteria.
Read
July 9, 2016Not for everyone, but if you're a Product person or an Entrepreneur you'd find it interesting.
The authors are economists and this book is written with that lense. They talk about old matchmakers like Dance Clubs and many of the SaaS enabled platforms today such as OpenTable and Alibaba. They also talk a lot about the large software companies that nearly all have a matchmaker components - Apple, Facebook, MySpace, eBay and Google (YouTube).
I thought they overused OpenTable and Alibaba. I would have liked to seen more case studies on similar companies. There was also a bit of unnecessary repetition.
The authors are economists and this book is written with that lense. They talk about old matchmakers like Dance Clubs and many of the SaaS enabled platforms today such as OpenTable and Alibaba. They also talk a lot about the large software companies that nearly all have a matchmaker components - Apple, Facebook, MySpace, eBay and Google (YouTube).
I thought they overused OpenTable and Alibaba. I would have liked to seen more case studies on similar companies. There was also a bit of unnecessary repetition.
September 2, 2016
Sometimes even if a "business/management" book has repeated concepts, it can still be interesting for its particular case studies. Not in this case--even those were trite.
August 20, 2023
Offers insights into the mindset of certain matchmakers, yet falls short in delivering practical advice.
August 23, 2016
This book is a good introduction on how multi-sided platforms work and affect our lives. Authors give a lot of examples starting from internet companies like OpenTable and Alibaba to old-school matchmakers like dance clubs and banks. They also examine matchmaking aspects of products by companies like Apple, Facebook, MySpace, eBay, Amazon, Google etc. It's a quite light read without delving into too much detail. But i was enlightened by the history and analysis of how Symbian operating system came to be and why it failed against Google's Android and Apple's iOS.
Symbian began as joint venture by several handset makers. Handset makers were afraid that when they didn’t develop their own operating system, Microsoft would create it and dominate it like the PC operating system market and the handset makers would have to license it. But Symbian was owned by mobile carriers and each of them had restrictions what Symbian could do, so it wasn’t easy rolling out new updates globally. One carrier had over 10k requirements to accept Symbian products under it’s network. Symbian couldn’t make a release and roll it out for everyone, it had to engage in many individual negotiations with carriers make modifications to the operating system as a result. Also Symbian couldn’t help software developers in negotiations with mobile carriers to make their apps available on their phones because carriers needed to protect their decades old business models.
Whoever wants to start the journey of building a multi-sided platform should ask themselves these key questions:
1) What's the friction? How big is it? Who benefits from solving it?
2) Does the platform design reduce this friction, balance the interests of participants on all sides and do it better than other entrants?
3) How hard is the ignition problem and do you have a solid plan for achieving critical mass?
4) Do the prices necessary for ignition and growth enable the platform to make money?
5) How is the matchmaker going to work with others in the broader ecosystem? Does it face related risks and has it dealt with them?
6) Are you ready to modify your design and ignition strategy quickly in response to market reactions?
I would recommend this book because our future is shaped by multi-sided platforms. But if you want a better and more comprehensive take on the subject i suggest you read Platform Revolution by Geoffrey Parker.
Symbian began as joint venture by several handset makers. Handset makers were afraid that when they didn’t develop their own operating system, Microsoft would create it and dominate it like the PC operating system market and the handset makers would have to license it. But Symbian was owned by mobile carriers and each of them had restrictions what Symbian could do, so it wasn’t easy rolling out new updates globally. One carrier had over 10k requirements to accept Symbian products under it’s network. Symbian couldn’t make a release and roll it out for everyone, it had to engage in many individual negotiations with carriers make modifications to the operating system as a result. Also Symbian couldn’t help software developers in negotiations with mobile carriers to make their apps available on their phones because carriers needed to protect their decades old business models.
Whoever wants to start the journey of building a multi-sided platform should ask themselves these key questions:
1) What's the friction? How big is it? Who benefits from solving it?
2) Does the platform design reduce this friction, balance the interests of participants on all sides and do it better than other entrants?
3) How hard is the ignition problem and do you have a solid plan for achieving critical mass?
4) Do the prices necessary for ignition and growth enable the platform to make money?
5) How is the matchmaker going to work with others in the broader ecosystem? Does it face related risks and has it dealt with them?
6) Are you ready to modify your design and ignition strategy quickly in response to market reactions?
I would recommend this book because our future is shaped by multi-sided platforms. But if you want a better and more comprehensive take on the subject i suggest you read Platform Revolution by Geoffrey Parker.
February 21, 2017
Fair introduction of internet business model
This book will give an overview of current internet world and IT companies. However if you have ever worked in IT industry for a short while, you should know most of examples and theories that talked in this book already. It still bring up few interesting points from author's generalization: Reducing friction is the key of success. How matchmakers ignite their market. And not only IT companies like Airbnb Uber are matchmakers, but lots of old economy also share same traits. It's just the format of matchmaker is keep changing - from physical bars to online dating - but essentially they are all same.
This book will give an overview of current internet world and IT companies. However if you have ever worked in IT industry for a short while, you should know most of examples and theories that talked in this book already. It still bring up few interesting points from author's generalization: Reducing friction is the key of success. How matchmakers ignite their market. And not only IT companies like Airbnb Uber are matchmakers, but lots of old economy also share same traits. It's just the format of matchmaker is keep changing - from physical bars to online dating - but essentially they are all same.
February 12, 2018
The authors nicely explain the economic concepts of multisided platforms, reveal the differences between the platforms and the conventional single-sided businesses. Stressing on the fact that platforms are mainly to sell "access" to different groups of customers, they explain why many fundamental rules of the traditional business cannot be applied in the economics of multisided platforms, for example, while pricing the products below the production cost in never a sustainable strategy for traditional business, it is common to have this price structure in the platforms' economy. The problems of critical size and the non-linear price structure are analyzed in deep with the background of economic theories but still in an easy-to-read style. The authors also documented the "turbocharge" of IT innovation as the main engine for the rise of multisided platform in modern days. Last but not least, Evan and Schmalensee report in the book the results of their years in research about the industry with many theories and empirical example, covering from big Titans like Apple, Amazon to the mobile-money-transfer system M-Pesa in developing countries, providing a nicely-formed analysis of how platforms succeeded and failed. The authors not only report different businesses in the highest level of detail but also take out precious general lessons from theses specific business cases, emphasizing the importance of the friction in the market that the platform is to reduce and the speed to accumulate the mass required to have sustainable "ignition". I highly recommend this book to entrepreneurs, students and researchers interested in the topic, even though most of the knowledge and theories in the book are not new, the authors successfully create a logic flow to help consolidate our understanding about the problem.
May 20, 2018
Matchmakers lies somewhere between being a guide for entrepreneurs to start their own multisided platform and being an introductory, economics handbook on multisided platforms, although Evans and Schmalensee land closer to the former than the latter. As a person with a background in economics, I wish the authors would focus more on the economics and theoretical models behind multisided platforms, but the book features more anecdotal examples of rather than research papers on such platforms. Of course, the reason is that research papers on this topic tend to be rather dense. For more information, see Weyl (2010), White and Weyl (2010), Rochet and Tirole (2003, 2006), and Armstron (2006) just to start.
Still, the authors use examples of existing platforms, such as Open Table, Alibaba, YouTube, Apple, etc. quite nicely to illustrate the qualities that define multisided platforms and the challenges that companies have to overcome to create one. The beginning tends to be a bit repetitive with repeated explanations of "network effects" and "critical mass." However, the authors get the job done. I have a much clearer understanding of multisided platforms than I previously had. I especially like the chapter on Fleet Cards (chapter 6) and the chapter on Kenya's M-PESA (chapter 11).
Overall, a very easy-to-read introduction to multisided platforms.
Still, the authors use examples of existing platforms, such as Open Table, Alibaba, YouTube, Apple, etc. quite nicely to illustrate the qualities that define multisided platforms and the challenges that companies have to overcome to create one. The beginning tends to be a bit repetitive with repeated explanations of "network effects" and "critical mass." However, the authors get the job done. I have a much clearer understanding of multisided platforms than I previously had. I especially like the chapter on Fleet Cards (chapter 6) and the chapter on Kenya's M-PESA (chapter 11).
Overall, a very easy-to-read introduction to multisided platforms.
September 1, 2016
Great book for anyone who wants to learn about turbo charged multisided platforms. Most of the ideas and examples will be familiar to readers who follow the topic, but this book contains probably the clearest explanation of the economic concepts that drive platforms, and the examples are still useful for managers and entrepreneurs interested in platform strategy.
These are among the dozens of passages of greatest interest and value to me:
o Frictions (Pages 7-20)
o OpenTable (7-8 and 9-14)
o Critical Mass (9-14 and 69-83)
o Network Effects (21-31)
o Microsoft (26-27 and 106-110)
o Apple (126-127 and 142-143)
o Internet Service Providers (45-47)
o Creative Destruction (49-51)
o YouTube (73-76)
o eBay and Pay Pal (81-82)
o AT&T (113-114)
o Alibaba (158-161)
o Ecosystems (100-121)
o Amazon (105-106)
o Aventura Mall (121-122 and 129-133)
o Design and Value (121-133)
o Externalities (128-140)
o Governance Systems (135-148)
o Apple Pay (149-150 and 156-164)
o M-PESA Financial Services (167-181)
These are among the dozens of passages of greatest interest and value to me:
o Frictions (Pages 7-20)
o OpenTable (7-8 and 9-14)
o Critical Mass (9-14 and 69-83)
o Network Effects (21-31)
o Microsoft (26-27 and 106-110)
o Apple (126-127 and 142-143)
o Internet Service Providers (45-47)
o Creative Destruction (49-51)
o YouTube (73-76)
o eBay and Pay Pal (81-82)
o AT&T (113-114)
o Alibaba (158-161)
o Ecosystems (100-121)
o Amazon (105-106)
o Aventura Mall (121-122 and 129-133)
o Design and Value (121-133)
o Externalities (128-140)
o Governance Systems (135-148)
o Apple Pay (149-150 and 156-164)
o M-PESA Financial Services (167-181)
April 29, 2020
It was ok. Talked about the dynamics of why a multisided platform is or is not successful.
A few examples such as OpenTable and the telegraph machine.
Also made me think of how unfair it is that companies like YouTube and OpenTable have monopolies through this first mover advantage and how society encourages such monopolies. The end result is that users are taxes for their money or attention for something that should be open and accessible to all. We should work on open source data standards that allow for this.
A few examples such as OpenTable and the telegraph machine.
Also made me think of how unfair it is that companies like YouTube and OpenTable have monopolies through this first mover advantage and how society encourages such monopolies. The end result is that users are taxes for their money or attention for something that should be open and accessible to all. We should work on open source data standards that allow for this.
August 7, 2020
State the obvious. The analogies used in the books are very old fashioned, such as gas cards or nightclubs, to explain the new phenomenon of two-sided marketplace economy. I wish the author could've discussed in more depth about the nuances of different marketplace business models, but unfortunately nothing about that. It stops at the surface level. In the author's favorite analogy with nightclubs, girl is the subsidy side, boy is the money side, there you have it.
Disappointment period.
Disappointment period.
August 1, 2016
If you didn't know anything about the business of connecting two (or more) groups of people then this would be a great book. But if you've ever read about Amazon, Google, Apple, Airbnb, or Alibaba then you won't learn much from this book. It's a well-written beginner's primer. But that's all.
January 13, 2018
Uber, Airbnb, Tinder, Youtube... Platforms have been the talk of the town worldwide in the last few years. What all these firms have in common is that they have used new technologies (the Web, smartphones, big data) to match the demand side of a specific market (people needing a ride or a place to stay, people looking for a potential date, people who want to watch funny cat videos...) with its supply side (people offering a ride or a place to stay, other people looking for a potential date, people uploading funny cat videos). These firms have been tremendously successful in this, or are at least thought by their investors to have the potential to become tremendously successful in the future (after all, Uber hasn't made any profits so far).
So why aren't we all simply imitating them?
In this thoughtful book, Evans and Schmalensee explain that we are blinded by survivorship bias. We don't pay attention to all the platforms that have gone burst, and the failures are the majority. Why is that? Because matchmaking is hard, very hard. Anyone who wants to build a successful platform needs to solve a fundamental chicken-and-egg problem. After all, nobody wants to go on a video sharing site if there are no videos there to be seen. But then, nobody can be bothered to upload a video if nobody will watch this video.
It is the great merit of Evans and Schmalensee that they don't pretend there is a one-size-fits-all solution to this problem. Compared to the problem of matchmaking, the classical supply-and-demand scheme taught in Econ101 is extremely simple. Matchmakers, after all, do not face just a demand side: they match demand and supply, and also have to take into account that there are complex relationships internal to each side of the market. For instance, men (resp women) will only subscribe to a (heterosexual) dating site if there are enough attractive women who are registered. Knowing this, a man knows that attractive men are not just competitors for them: the more attractive men participate in the site, the more women will be interested in joining it, increasing the probability of a match for all men, not just the most attractive ones.
Another element of added complexity is the problem of reputation and trustworthiness. In a simple market, the supplier only needs to care about his own reputation. But a matchmakers need to be sure that all participants have a good reputation. This explains why all successful matchmakers have systems for reputation management.
Interestingly, a lot of these problems are not new. After all, stock markets (and the rules to which they subject participants) are an ancient tool for matching those who want to purchase and those who want to sell stocks. The problems facing Tinder are not fundamentally different from those facing nightclubs. Etcetera.
Evans and Schmalensee use case studies of both successful and failed matchmaking platforms to distil some general guiding principles for anyone who wishes to become a matchmaker. Most of the advice may seem obvious, but is only so in hindsight.
As far as I am concerned, the most important message is: a matchmaking platform can only succeed if it indeed solves a problem that is important enough. For instance, using phones for paying day-to-day purchases solves a real problem in countries like Kenya where the banking system is largely undeveloped outside large cities. It is less obvious that it solves a real problem in developed countries where almost all shops have paying terminals. Evans and Schmalensee argue convincingly that the main cause of the dotcom bust in the beginning of the 21st century was that most firms set up in the end of the 1990s didn't really solve a problem that was important enough to create a real value out of the on-line matchmaking.
All in all, this is an extremely interesting book for anyone who wants to understand how the modern economy works. It goes beyond the hype to understand in what sense modern matchmakers are different (or similar) to matchmakers before the era of the Internet. Although the authors eschew technical explanations, a real intellectual effort is required from the reader. But it is highly rewarding in the end.
So why aren't we all simply imitating them?
In this thoughtful book, Evans and Schmalensee explain that we are blinded by survivorship bias. We don't pay attention to all the platforms that have gone burst, and the failures are the majority. Why is that? Because matchmaking is hard, very hard. Anyone who wants to build a successful platform needs to solve a fundamental chicken-and-egg problem. After all, nobody wants to go on a video sharing site if there are no videos there to be seen. But then, nobody can be bothered to upload a video if nobody will watch this video.
It is the great merit of Evans and Schmalensee that they don't pretend there is a one-size-fits-all solution to this problem. Compared to the problem of matchmaking, the classical supply-and-demand scheme taught in Econ101 is extremely simple. Matchmakers, after all, do not face just a demand side: they match demand and supply, and also have to take into account that there are complex relationships internal to each side of the market. For instance, men (resp women) will only subscribe to a (heterosexual) dating site if there are enough attractive women who are registered. Knowing this, a man knows that attractive men are not just competitors for them: the more attractive men participate in the site, the more women will be interested in joining it, increasing the probability of a match for all men, not just the most attractive ones.
Another element of added complexity is the problem of reputation and trustworthiness. In a simple market, the supplier only needs to care about his own reputation. But a matchmakers need to be sure that all participants have a good reputation. This explains why all successful matchmakers have systems for reputation management.
Interestingly, a lot of these problems are not new. After all, stock markets (and the rules to which they subject participants) are an ancient tool for matching those who want to purchase and those who want to sell stocks. The problems facing Tinder are not fundamentally different from those facing nightclubs. Etcetera.
Evans and Schmalensee use case studies of both successful and failed matchmaking platforms to distil some general guiding principles for anyone who wishes to become a matchmaker. Most of the advice may seem obvious, but is only so in hindsight.
As far as I am concerned, the most important message is: a matchmaking platform can only succeed if it indeed solves a problem that is important enough. For instance, using phones for paying day-to-day purchases solves a real problem in countries like Kenya where the banking system is largely undeveloped outside large cities. It is less obvious that it solves a real problem in developed countries where almost all shops have paying terminals. Evans and Schmalensee argue convincingly that the main cause of the dotcom bust in the beginning of the 21st century was that most firms set up in the end of the 1990s didn't really solve a problem that was important enough to create a real value out of the on-line matchmaking.
All in all, this is an extremely interesting book for anyone who wants to understand how the modern economy works. It goes beyond the hype to understand in what sense modern matchmakers are different (or similar) to matchmakers before the era of the Internet. Although the authors eschew technical explanations, a real intellectual effort is required from the reader. But it is highly rewarding in the end.
October 9, 2021
I feel like this should have been 100 pages shorter. Or in one sentence: if you're not paying, you're the product.
Summary:
A multi-sided matchmaker is a company that brings different parties together, like a customer and restaurant by offering a service that provides efficiency (aka making a reservation without having to call someone).
1. Matchmakers have been around for millennia. Some of them were even part of the sharing economy of years past.
2. A lot of what the new market darlings do is old stuff. They just use technology to improve on things that other matchmakers have done for many years.
3. What is pioneering is that modern information and communications technologies have turbocharged the multisided platform business model.
4. The history of matchmakers suggests that today’s sharing-economy matchmakers won’t be the last to make waves.
5. Turbocharged matchmakers will transform industries. That will happen gradually over the space of decades, but in fast spurts, as innovative new matchmakers rapidly emerge and displace incumbents. Things will be both slower, and faster, than you might think.
Reasons why this is good to know:
If you’ve ever taken an economics course, you have heard a lecture on how traditional firms manage their production and set their prices to maximize profits. When it comes to matchmakers, that lecture was dead wrong, in critically important ways. That’s because the classic economic models don’t account for the fact that the demand by each group of customers served by a matchmaker depends on the demand by other groups of customers it also serves. For instance, the American Express card connects consumers and merchants; consumer demand for the card depends on how many merchants have decided to accept it, and merchants’ demand in turn depends on how many consumers have decided to use the card
Examples include Google, Alibaba, Tinder, etc. But old school examples include mall developers who provide a space for high end fashion stores and customers for high end fashion.
Participants can, and often do, use several platforms—a practice that the old network effects literature dismissed. The new economics of multisided platforms calls this multihoming. Think of people using Snapchat, Instagram, and TikTok.
We can’t think of many multisided platform industries where the first mover won it all. In fact, for most industries with indirect network effects, the first movers mostly died and few remember them. Blu-ray won because it cornered the market, not because it was 'better.'
Summary:
A multi-sided matchmaker is a company that brings different parties together, like a customer and restaurant by offering a service that provides efficiency (aka making a reservation without having to call someone).
1. Matchmakers have been around for millennia. Some of them were even part of the sharing economy of years past.
2. A lot of what the new market darlings do is old stuff. They just use technology to improve on things that other matchmakers have done for many years.
3. What is pioneering is that modern information and communications technologies have turbocharged the multisided platform business model.
4. The history of matchmakers suggests that today’s sharing-economy matchmakers won’t be the last to make waves.
5. Turbocharged matchmakers will transform industries. That will happen gradually over the space of decades, but in fast spurts, as innovative new matchmakers rapidly emerge and displace incumbents. Things will be both slower, and faster, than you might think.
Reasons why this is good to know:
If you’ve ever taken an economics course, you have heard a lecture on how traditional firms manage their production and set their prices to maximize profits. When it comes to matchmakers, that lecture was dead wrong, in critically important ways. That’s because the classic economic models don’t account for the fact that the demand by each group of customers served by a matchmaker depends on the demand by other groups of customers it also serves. For instance, the American Express card connects consumers and merchants; consumer demand for the card depends on how many merchants have decided to accept it, and merchants’ demand in turn depends on how many consumers have decided to use the card
Examples include Google, Alibaba, Tinder, etc. But old school examples include mall developers who provide a space for high end fashion stores and customers for high end fashion.
Participants can, and often do, use several platforms—a practice that the old network effects literature dismissed. The new economics of multisided platforms calls this multihoming. Think of people using Snapchat, Instagram, and TikTok.
We can’t think of many multisided platform industries where the first mover won it all. In fact, for most industries with indirect network effects, the first movers mostly died and few remember them. Blu-ray won because it cornered the market, not because it was 'better.'
This entire review has been hidden because of spoilers.
September 18, 2018
Interesting book. Like often, it could have been shorter. The structure is a bit confusing. Not too sure who it's aimed at, but I think it's best suited to those with little knowledge of the "business world". I learnt a few things from case studies. I recommend the book for the case studies and the list of questions to be asked to go through an analysis of a MSP (Multisided platform)
Top take-aways as far as I'm concerned.
- Interesting case studies such as M-Pesa in Kenya, Apple Pay, Open Tables, VHS vs the format that lost, Bluray vs the format that lost, Youtube vs the others that lost, Alibaba vs the B2B platforms that lost, and multiple examples around retail and malls.
- There is a fallacy in the "winner takes all" myth. eg, card payment systems coexist fine.
- There is a fallacy in the "first mover advantage" myth. FB was not the first social media platform.
- Multisided platforms ("MSP") are like ticking bombs. If they don't reach critical mass before time runs out, they fizzle. If you take too long acquiring the right mix of customers, you become perceived as a dud and your name is tainted maybe beyond repair, or you've run out of money.
- The bust of many dotcom companies was linked to unfocused acquisition of customers (the "grow now, find a business model later" fallacy). The right mix of groups interacting with one another and the right pricing strategy are critical (including examples of structural use of one sided subsidies).
Qs to ask to make smart bets on new matchmakers, for which there is a checklist, but not roadmap:
1. What's the friction meant to be solved? How big is it? Who benefits from solving it?
2. Does the platform design reduce this friction? Balance the interests of participants on all sides, and do it better than other players / entrants?
3. How hard is the ignition problem, and what's the plan to achieve critical mass?
4. Do the prices necessary for ignition and growth enable the platform to make money?
5. How is the company going to work in the broader ecosystem? Are there related risks, and have you dealt with them?
6. Are you ready to modify design and ignition strategy quickly in response to market reaction?
Top take-aways as far as I'm concerned.
- Interesting case studies such as M-Pesa in Kenya, Apple Pay, Open Tables, VHS vs the format that lost, Bluray vs the format that lost, Youtube vs the others that lost, Alibaba vs the B2B platforms that lost, and multiple examples around retail and malls.
- There is a fallacy in the "winner takes all" myth. eg, card payment systems coexist fine.
- There is a fallacy in the "first mover advantage" myth. FB was not the first social media platform.
- Multisided platforms ("MSP") are like ticking bombs. If they don't reach critical mass before time runs out, they fizzle. If you take too long acquiring the right mix of customers, you become perceived as a dud and your name is tainted maybe beyond repair, or you've run out of money.
- The bust of many dotcom companies was linked to unfocused acquisition of customers (the "grow now, find a business model later" fallacy). The right mix of groups interacting with one another and the right pricing strategy are critical (including examples of structural use of one sided subsidies).
Qs to ask to make smart bets on new matchmakers, for which there is a checklist, but not roadmap:
1. What's the friction meant to be solved? How big is it? Who benefits from solving it?
2. Does the platform design reduce this friction? Balance the interests of participants on all sides, and do it better than other players / entrants?
3. How hard is the ignition problem, and what's the plan to achieve critical mass?
4. Do the prices necessary for ignition and growth enable the platform to make money?
5. How is the company going to work in the broader ecosystem? Are there related risks, and have you dealt with them?
6. Are you ready to modify design and ignition strategy quickly in response to market reaction?
May 23, 2021
The word "marketplace" landed into our everyday vocabulary a couple of years ago - and since then, we've seen a lot of companies grow exponentially. The book Matchmakers targets to enlighten us about the mechanics of these businesses by approaching them holistically.
All in all, it does this pretty well. The book covers *literally* everything about the marketplaces and doesn't approach it basically; instead tries to dive into them and explain all the details.
Yet, I've found it very weak for people who might have some interest in the industry in the past. Simply put, it could have been a set of long blog posts with a more intense content structure. Instead, the author tried to target a more general audience; but the book is not good there because it tries to explain some topics with new terms they've coined within the book in a technical way.
The thing I liked the most is the examples it includes. The book conveys the main pillars of marketplaces very well, and with examples, it strengthens the information. From that point of view, for sure the book is helpful. But, again, it's very long and repeats itself a lot on many of the sections, which makes it a bit boring to read sometimes.
My expectation from the book was to have some technical approaches to the mechanics of the marketplaces and some interesting frameworks to understand them better. Yet, the book is weak from that angle and fails to provide enough advanced information to the readers.
A nice read for people who have no idea about the industry, but not a very fun read for people who have some experience. Stories are entertaining to learn from, but some sections are there because the author didn't want to miss the point.
All in all, it does this pretty well. The book covers *literally* everything about the marketplaces and doesn't approach it basically; instead tries to dive into them and explain all the details.
Yet, I've found it very weak for people who might have some interest in the industry in the past. Simply put, it could have been a set of long blog posts with a more intense content structure. Instead, the author tried to target a more general audience; but the book is not good there because it tries to explain some topics with new terms they've coined within the book in a technical way.
The thing I liked the most is the examples it includes. The book conveys the main pillars of marketplaces very well, and with examples, it strengthens the information. From that point of view, for sure the book is helpful. But, again, it's very long and repeats itself a lot on many of the sections, which makes it a bit boring to read sometimes.
My expectation from the book was to have some technical approaches to the mechanics of the marketplaces and some interesting frameworks to understand them better. Yet, the book is weak from that angle and fails to provide enough advanced information to the readers.
A nice read for people who have no idea about the industry, but not a very fun read for people who have some experience. Stories are entertaining to learn from, but some sections are there because the author didn't want to miss the point.
May 2, 2022
More rigorous than a standard business book, more readable than an economics textbook, Matchmakers is a truly useful and enjoyable read.
David S. Evans and Richard Schmalensee investigate the economics of platforms - the deceptively simple business of reducing friction and creating matches between two or more parties.
While I was familiar with sharing economy platform examples like Uber and Airbnb (matching riders and drivers and hosts and guests), Evans and Schmalensee demonstrate the many other platform businesses we interact with daily - and have known about for millennia - including telephones (matching callers and receivers), newspapers (readers and advertisers), and malls (stores and shoppers). They dive into the chicken-and-egg problem of starting a platform - how to create a "thick market" of the right people from every side of the business onboard - and provide a clear explanation of the devilish pricing questions that platforms need to solve.
I appreciate the simple economic models as well as the acknowledgment of history - too many business books treat present-day startups as wholly new phenomena, when in fact most are just accelerated versions of past ideas. Would definitely recommend for entrepreneurs, investors, and anyone interested in understanding this new area of economics.
David S. Evans and Richard Schmalensee investigate the economics of platforms - the deceptively simple business of reducing friction and creating matches between two or more parties.
While I was familiar with sharing economy platform examples like Uber and Airbnb (matching riders and drivers and hosts and guests), Evans and Schmalensee demonstrate the many other platform businesses we interact with daily - and have known about for millennia - including telephones (matching callers and receivers), newspapers (readers and advertisers), and malls (stores and shoppers). They dive into the chicken-and-egg problem of starting a platform - how to create a "thick market" of the right people from every side of the business onboard - and provide a clear explanation of the devilish pricing questions that platforms need to solve.
I appreciate the simple economic models as well as the acknowledgment of history - too many business books treat present-day startups as wholly new phenomena, when in fact most are just accelerated versions of past ideas. Would definitely recommend for entrepreneurs, investors, and anyone interested in understanding this new area of economics.
June 18, 2017
For anyone new to the marketplace business, or is thinking of how break the chicken-and-egg dilemma, this book is a great start. It provides a historical context to the multi-sided platform business as it is known today, and shares interesting nuggets of examples from businesses that had either successfully tackled the challenge or fell victim to the change.
Particularly, I love how the authors framed the idea that marketplace has been with us for as long as man has lived -- but we just didn't realize it! This thought is really enlightening and makes me rethink how I review business ideas and be cognizant of the potential pitfalls. And for folks looking for ideas to get around the thorny chicken-and-egg issue, there are some pretty cool ideas in the book as well.
It's a business book with lotsa business jargon. Pick up this book if business is your cup of tea.
Particularly, I love how the authors framed the idea that marketplace has been with us for as long as man has lived -- but we just didn't realize it! This thought is really enlightening and makes me rethink how I review business ideas and be cognizant of the potential pitfalls. And for folks looking for ideas to get around the thorny chicken-and-egg issue, there are some pretty cool ideas in the book as well.
It's a business book with lotsa business jargon. Pick up this book if business is your cup of tea.
June 2, 2021
The book does not really talk about any new ideas but formalizes common sense, which I have realized is very important. Common sense is well and good but to have it laid down in a few clear statements can be really helpful. Another value this book provides is the examples, which are not skewed towards success or failure, the authors have been objective in describing what succeeded and what failed but with the warning that these conclusions could only be made because of the privilege of hindsight and there are no absolute measures to gauge if a matchmaker will sizzle or fizzle.
One of the most valuable piece of text is a "matchmaker checklist" which can be a very good summary of ideas discussed in the book. It's just a series of blog posts really, but having it in a bounded paperback format makes them easy to continue.
One of the most valuable piece of text is a "matchmaker checklist" which can be a very good summary of ideas discussed in the book. It's just a series of blog posts really, but having it in a bounded paperback format makes them easy to continue.
March 15, 2022
Kinda underwhelmed, do not really feel like I know that much more than before listening to this book.
Matchmakers essentially remove frictions and thus are more valuable the larger the frictions they remove, having a strategy for building the different sides of a multi-sided platform is important, there can be strong interdependencies between different sides, being first is not everything ...
All good points, but nothing too surprising or insightful; more detailed examples and case studies might have been interesting.
Matchmakers essentially remove frictions and thus are more valuable the larger the frictions they remove, having a strategy for building the different sides of a multi-sided platform is important, there can be strong interdependencies between different sides, being first is not everything ...
All good points, but nothing too surprising or insightful; more detailed examples and case studies might have been interesting.
April 15, 2018
A good book for understanding the dynamics of building a platform. It starts and ends on a good note but has some redundant parts in the middle.
Nonetheless, it does a wonderful job in explaining the economics of multisided platforms and how they are different from traditional businesses with great case studies. In addition to that, it certainly helps one identify the fundamental questions that need to be accounted for when building a platform, if not answer them. Here's what I think are the fundamental questions based on my learnings from the book :
1) Identifying the friction that a platform is trying to reduce.
2) The stakeholders of the platform i.e. the sides of the platform - subsidy side and money side.
3) Figuring out a way to achieve the critical mass.
4) How to drive interactions between different sides of the platform.
5) Pricing strategy for the platform whether it be in the form of access fee or usage fee.
6) Then finally focusing on ignition - from critical mass to self sustained growth.
Nonetheless, it does a wonderful job in explaining the economics of multisided platforms and how they are different from traditional businesses with great case studies. In addition to that, it certainly helps one identify the fundamental questions that need to be accounted for when building a platform, if not answer them. Here's what I think are the fundamental questions based on my learnings from the book :
1) Identifying the friction that a platform is trying to reduce.
2) The stakeholders of the platform i.e. the sides of the platform - subsidy side and money side.
3) Figuring out a way to achieve the critical mass.
4) How to drive interactions between different sides of the platform.
5) Pricing strategy for the platform whether it be in the form of access fee or usage fee.
6) Then finally focusing on ignition - from critical mass to self sustained growth.
October 12, 2019
Good book to have a general understanding about matchmakers business models. It gives you overall perspective and ability to generalize to this model in real world. Authors put a solid research of different companies and their strategies to achieve success. At the same time it feels that the book can be a bit more detailed and deep. Maybe then it will be a different book though. Definitely recommend to anyone as a basic book to understand this type of business.
November 3, 2017
Pasable
Como introducción al mundo de las plataformas no está mal, pero dista de ser una obra completa al respecto.
Quitando los muchos ejemplos de relleno, daría para un muy buen post largo en medium.com, demasiado extenso para un libro.
Echo en falta también más ejemplos de plataformas fallidas y por qué.
Como introducción al mundo de las plataformas no está mal, pero dista de ser una obra completa al respecto.
Quitando los muchos ejemplos de relleno, daría para un muy buen post largo en medium.com, demasiado extenso para un libro.
Echo en falta también más ejemplos de plataformas fallidas y por qué.
September 7, 2018
A more rigorous analysis on platforms
This is a very useful book as it really thrives in bridging from old economy's microeconomics to the world of multi-sided platforms. Compared with other books about the current hype, the analysis performed in this book is carefully crafted and very compelling and interesting.
This is a very useful book as it really thrives in bridging from old economy's microeconomics to the world of multi-sided platforms. Compared with other books about the current hype, the analysis performed in this book is carefully crafted and very compelling and interesting.
October 25, 2020
Felt as if the essence could have been distilled within a 20 page essay. While the case studies where interesting they really were optional to understanding the main point of the book and as such I felt that I had to go through 278 pages of content for way less essence than I would appreciate given the limited time one has in his life.
December 5, 2021
A great introduction to how multisided platforms work and affect our lives. It also puts the best practices for business owners and entrepreneurs for starting a new multisided platform based on solid research with an economics lens of top companies who succeeded in this business model like Facebook, Uber, OpenTable, Amazon, Google, etc.—highly recommended!
January 2, 2024
I believe this is a really good book about a now more apparent emerging idea in our economy. But I believe that there were too many unnecessary examples, and it became redundant a lot. I believe this book had way to many fluff then it really needed to be, but the key concepts were important to know for the coming future.
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