No matter what level of growth your business is in, knowing how to stay focused on your core business while growing is crucial to your business legacy. The concept of platforms has gained more attention as companies leverage new ways of acquiring customers without investing in a lot of upfront costs.
How do they do it and why are more companies jumping on the “We need a platform” bandwagon? The book, Matchmakers: The New Economics of Multisided Platforms, provides an explanation about how and why these platforms are changing everything you thought you knew about customer acquisition.
What Matchmakers is About
Matchmakers is a much more detailed look at the “platform” compared to “The Digital Transformation Playbook“, but it offers the same message. Platforms are a business model that is disrupting the traditional view of business. In particular, the book looks at “multi-sided platforms” or platforms that generate all or most of their income by providing a value-added service to two or more groups of customers. Examples of multi-sided platforms abound including Facebook, Uber, Airbnb, Alibaba, Google (specifically Google Play Store and YouTube), OpenTable, Amazon and PayPal. It is a two-sided instead of one-sided interaction.
Matchmakers is quick to point out that these businesses don’t follow the expected traditional business model. Unlike traditional businesses, multi-sided platforms (also called “matchmakers” in the book) often charge little or nothing to one group of customers on a permanent rather than temporary basis). Multi-sided platforms also depend heavily on leveraging networks to achieve a critical mass of two groups of customers (often advertisers on one side and consumers on the other). Think about Facebook, Google or even PayPal. In most cases, users aren’t charged a dime to access a lot of services, yet these users provide income for Facebook, Google and Paypal through advertising or transactions. Compare that to a grocery store where the only income comes from a sale.
Multisided platforms and the businesses that use them are growing faster because of technology. As pointed out in several other books, technology allows businesses to scale faster than ever before. Instead of having to physically build rental properties, all Airbnb has to do is build an app and the processes to keep it in place. Likewise, with Uber or PayPal or OpenTable, the customers are already there. All that is needed is a company ready to provide a value – added service to connect them.
Author David Evans (@David_Evans1) is the chairman of the Global Economics Group, Editor-in-Chief of the Competition Policy International, and an advisor who has led several global and private business conferences in the area of policy.
His co-author, Richard Schmalensee is the Professor and Dean Emeritus of Economics at the MIT Sloan School of Management and Howard W. Johnson Professor of Management and Economics. He is also a Director at the Global Economics Group. Schmalensee has also led several global and private business ventures in the areas of policy.
Both authors hold doctorates in economics.
What Was Best About This Book
The best part of Matchmakers is the comprehensive depth the authors provide on the subject. As detailed above, the authors hold a lot of experience in the area of business policy and strategy. They demonstrate that expertise by covering multi-sided platforms from almost every conceivable perspective you can think of (regulations, entry points, maintenance features, safety issues, etc.)
What Could Have Been Done Differently
If there is a downside to Matchmakers it is with the attitude that a reader might bring to the book. If you are seeking a book that provides tips to get your first 100 customers, for example, this book won’t be of much help to you.
Why Read This Book
If you are a business owner, a business student or just a casual business reader who wants an in-depth look at an increasing (and disruptive) trend in business, then Matchmakers may be the perfect thing for you. The authors draw on years of experience and research to create a book that studies the principles behind some of the most powerful and profitable platforms on the planet. Matchmakers dissects what makes these business models work in clear and digestible chunks of text.
In short, reading Matchmakers will forever change how you view platforms.
This article, "“Matchmakers” : Connecting with Customers in the Age of Platforms" was first published on Small Business Trends