Matchmakers; The New Economics of Multisided Platforms

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. Economists call matchmakers multisided platforms because they provide physical or virtual platforms for multiple groups to get together. Dating sites connect people with potential matches, for example, and ride-sharing apps do the same for drivers and riders. Although matchmakers have been around for millennia, they’re becoming more and more popular—and profitable—due to dramatic advances in technology, and a lot of companies that have managed to crack the code of this business model have become today’s power brokers.

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 Matchmakers, David Evans and Richard Schmalensee, two economists who were among the first to analyze multisided platforms and discover their principles, and who’ve consulted for some of the most successful platform businesses in the world, explain how matchmakers work best in practice, why they do what they do, and how entrepreneurs can improve their chances for success.

Whether you’re an entrepreneur, an investor, a consumer, or an executive, your future will involve more and more multisided platforms, and Matchmakers—rich with stories from platform winners and losers—is the one book you’ll need in order to navigate this appealing but confusing world.

David S. Evans is an economist, business adviser, and entrepreneur. He has done pioneering research into the new economics of multisided platforms. He has also consulted for many of the largest multisided platform businesses in the world and served as an adviser to a number of start-up matchmakers. He has co-founded four companies. David also holds academic positions at the University of Chicago Law School and the University College London.

Richard Schmalensee is the Howard W. Johnson Professor of Management and Economics, Emeritus, at the Massachusetts Institute of Technology. He served as the dean of the MIT Sloan School of Management for nine years and as a Member of the President’s Council of Economic Advisers. Dick he is one of the world’s leading scholars on the economics of industrial organization and has done pioneering research on the new economics of multisided platforms.