Platform Launch Strategies

Excerpt

Today, digital platforms mediating between independent groups of users account for a total market value of about US-$4.3 trillion and an employment base of several million direct and indirect employees (Evans and Gawer 2016). A multi-sided platform (MSP) – in the literature also referred to as two-sided platform, two-sided market, or multi-sided market – constitutes a market that enables interaction between at least two sets of users through an intermediary, where the decisions of each group of users on either side of the market affects the outcomes of the users on the other side(s) (Rochet and Tirole 2004; Rysman 2009; Hagiu and Wright 2015). MSPs have impressively demonstrated their disruptive potential in well-established global industries. Airbnb, for instance, leads the CNBC disruptor 50 list (CNBC 2017) and, with a market valuation of US-$31 billion, comes second after the Marriott group in the lodging industry (Bensinger 2017). Its two-sided platform mediates between traveling people who seek accommodation and hosts willing to share their accommodation. The exponential growth of its platform started around 2011, when the critical inflection point (in respect of the number of users) was reached and network effects started to kick in (Hagiu and Rothman 2016). As the first in its industry, Airbnb has been able to solve one of the critical early-stage challenges of MSPs, namely the mutual baiting problem, which often is referred to as the ‘chicken-and-egg dilemma’ of multi-sided digital platforms. …