EP045: David Evans & The New Economics of Multisided Platforms

Tim’s guest, David Evans, is one of the world’s leading authorities on multisided platform-based businesses. 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. 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 today’s episode, David Evans explains how matchmakers work best in practice, why they do what they do, and how entrepreneurs can improve their chances for success.

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Key Takeaways:

[1:03] The three big ideas behind the book, Matchmakers.

[3:15] David Evans describes three scenarios for overcoming the critical mass challenge that platform entrepreneurs face.

[8:01] Scenario three requires pre-commitment from one side of the match to encourage investments into the platform. David gives an example from the video game industry.

[11:37] The crux of the platform-based business is that there’s reluctance on both sides of the platform, and entrepreneurs have to overcome that reluctance.

[14:09] David Evans describes how Apple used the self-supply strategy model to gain commitment and users.

[20:20] Developing the right pricing model is crucial to a successful matchmaker business. David Evans offers some pointers.

[24:37] David Evans offers a description of the history and future of the payment card industry, which all started with Diner’s Club.

[36:50] Using mobile devices and payment platforms to move money can transform economies in developing countries.

[42:38] Why haven’t mobile devices and payment platforms taken off in the United States? Friction must exist and be big enough to make consumers change habits and adopt new technologies.

[47:25] How to best connect with David Evans and gain additional insights on Matchmaker businesses.