Platforms have become the cornerstone of the connected economy, reshaping industries by facilitating transactions between different user groups. Since the publication of "Matchmakers: The New Economics of Multisided Platforms" by David Evans and Richard Schmalensee in 2016, there has been much to discuss regarding the evolution of these platforms. As we approach the book’s tenth anniversary, it is crucial to assess whether these platforms have lived up to their promise and how they can adapt to the complexities of modern economies.
Core Challenges Engaging Platforms
In their groundbreaking work, Evans and Schmalensee identified four core challenges that platforms must address to thrive:
Getting Both Sides On Board: The so-called “chicken-and-egg” problem remains a significant hurdle. A platform is ineffective if it attracts only one side of the transaction. For instance, Uber cannot function without riders and drivers. Engaging both sides simultaneously continues to be a daunting challenge for platform founders, and many have struggled in the initial stages.
Pricing Value Across the Sides: Platforms need to adopt a nuanced approach to pricing. They must determine who bears the costs and how much they should pay while ensuring a value proposition that keeps participants engaged. The missteps in pricing strategies can haunt platforms, affecting long-term sustainability and participant satisfaction.
Designing for Trust: Trust is a crucial component of any platform’s ecosystem. Whether it’s Airbnb convincing travelers to stay in strangers’ homes or eBay fostering confidence between buyers and sellers, establishing trust is paramount. In an age increasingly influenced by cybersecurity threats and AI attacks, the task has become even tougher.
- Scaling Innovation: Platforms must foster continuous innovation to stay ahead. Once a business model is established, how do platforms keep innovating? The challenge lies in expanding use cases and developing ecosystem partnerships that ensure participants see fresh value without compromising profitability.
These challenges defined the initial wave of digital platforms and remain pressing issues nearly a decade later. However, a critical year for platform evolution awaits us in 2025 and beyond.
The Evolving Landscape of Platforms
Over the past decade, platforms have deeply infiltrated various sectors, ranging from retail to healthcare. They are redefining not just how business is conducted but also how people pay, travel, shop, and work. Yet, as the economic landscape changes, platforms are also grappling with an intensified regulatory environment. Governments are scrutinizing how platforms operate, focusing on pricing, competition, and the usage of user data.
At the same time, consumers increasingly demand control over their digital identities. AI technologies are fundamentally altering how we interact with platforms, often emphasizing conversational interfaces over traditional click-based interactions. Platforms must reassess their roles and reimagine participant matchmaking within these altered dynamics.
The tenth anniversary of "Matchmakers" thus serves as a pivotal moment to reflect on how platforms continue to shape innovation within this connected economy.
Introducing The Matchmakers Podcast
In light of these observations, Evans and Schmalensee are introducing a podcast series focused on the next generation of platform strategies. This new endeavor seeks to provide a contemporary lens on the four challenges of platform strategy, diving deeper into how entrepreneurs are navigating these issues in real time.
The "Matchmakers Podcast" aims to serve as a living chronicle of platform innovation, featuring interviews with founders and CEOs pushing the boundaries of what platforms can achieve. The series will emphasize the real-world lessons learned over the last decade and showcase innovative approaches to enduring challenges.
Why This Matters Now
We are witnessing a significant reset in the connected economy. Platforms face the pressing need to evolve or risk becoming obsolete. Emerging platforms are deploying established economics of matching in innovative ways that challenge traditional assumptions. This shift extends far beyond digital transactions, affecting both online and physical realms.
The anniversary is more than just a historical reflection—it’s a new starting point. As the landscape shifts, the playbook for platforms continues to be written, with today’s founders and CEOs at the forefront.
Join the Discussion: Your Role in the Future of Platforms
As you absorb the evolving narrative around platforms, consider where you fit into this landscape. If you are a founder or CEO working within this space, your experiences contribute to the current conversation about innovation in the connected economy. Engaging with the challenges and lessons of platform implementation can provide invaluable insights for others in the field.
In conclusion, platforms play a vital role in the connected economy—one that continues to expand and change in unprecedented ways. As we move further into an era defined by these digital marketplaces, the collaboration and collective learning among platform builders will shape the future. Engaging in conversations that encourage knowledge sharing and strategic insights can set the stage for the next wave of transformative platform businesses.
Join the community of over 15,000 subscribers to keep up with what’s NEXT. Discover more about these developments and ensure your voice is a part of the ongoing narrative surrounding the platforms that will define our economic future.
