Marketplaces are remarkable entities. As they growth they develop a mind of their own. Like an ant colony. They develop their own behavior and set of rules. And as they grow the entrepreneur has less and less power to giver it.
But fundamentally what drives marketplaces is their failure to do what is their exact purpose: to create a ‘match’ between the two parties, supply and demand. It’s their imbalance that drives them and creates the rules of engagement.
Am architects of a marketplace has 3 main levers to pull; and these main levers are all aimed at constantly trying to rebalance and imbalanced marketplace. That’s the name of the game.
By skillfully maneuvering these three, and the many moving parts within each of them, a successful marketplace emerges and grows. And as it grows the network effects get stronger until at some point it overtakes the architect’s power to do very much.
Here I analyse these three levers and I draw on one very interesting analogy which – though seemingly wacky – has a lot of truth in it and has always fascinated me. The behaviour of marketplaces has stark similarities to dating. Why dating as an analogy? There’s probably more analogies to be made to surface the power of these 3 levers, economic policy making is another. But far more people relate to dating than policy making. Plus its far more interesting Jcontinue reading »