CATALYST CODE: HOW TO IGNITE A PLATFORM BUSINESS AND RULE A PLATFORM-CENTRIC ECOSYSTEM 20 April 2012 Catalyst Course 2012 David S. Evans Founder | Market

CATALYST CODE:HOW TO IGNITE A PLATFORM BUSINESS AND RULE A PLATFORM-CENTRIC ECOSYSTEM

20 April 2012 Catalyst Course 2012

David S. EvansFounder | Market Platform DynamicsVisiting Professor | University College LondonLecturer | University of Chicago

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Platform Businesses Dominate the Economic Landscape

Catalyst Panorama

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OpenTable: Intermediary between Two Different Kinds of Customers


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The OpenTable Business Model Restaurants Pay and Consumers Use it for Free


$100 million revenue in 2010 | $1.35 billion markets cap

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The Result:Positive Feedback Effects Fuel Open Table Growth


27 million reservations in 2011Q4 a month up from 19 million in 2010Q4

25k restaurants in 2011Q4 up from 20k in 2010Q4

More than 40% yoy growth in revenue

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Many “Multi-Sided Platform” Businesses Operate Like This Positive Feedback Effects Fuel Business Growth

COMPANY CUSTOMER SIDE A CUSTOMER SIDE B

Windows Users Developers

Google Search Searchers Advertisers

Deutsche Bourse

Liquidity providers Liquidity takers

eHarmony Men Women

Paris Match Readers Advertisers

Roppongi Hills Shops Shoppers

American Express

Cardhodlers Merchants


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These Multi-Sided Platforms Include Many Massive Global Businesses


Catalysts Create Real ValueProviding a Platform Where Customers Can Meet and Transact

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Platforms can create tremendous value by eliminating pain points in exchange

To ignite, platforms must solve extremely difficult coordination problem

But if do, they can generate tremendous profits through positive feedback effects

Sustaining those profits requires treacherous navigation in an n-dimensional universe of colliding platforms like Google

Search (3-sided), Facebook’s Social Network (4-sided) and Microsoft Windows (3-sided)


Catalysts, Platforms and Two-Sided MarketsDefining Terms

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(Economic) Catalysts are intermediaries that create value by brining two or more types of agents (businesses or people) together.

(Multi-sided) Platforms are the virtual or physical places that catalysts create to enable multiple types of agents to find and transact with each other and thereby create and exchange value.

Economists sometimes call these platforms Two-sided Markets a term that was introduced in the pioneering work by French economists Jean-Charles Rochet and Jean Tirole.

A customer type is sometimes call a platform “side”.


The Catalyst Curriculum

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Catalyst Panorama

How Platform Businesses Dominate the Economics Landscape

Catalyst Defined

The New Economics of Two-Sided Markets

Catalyst Construction

How to Use the Catalyst Toolkit to Build a Profitable Platform Business

Catalyst Ignition

How to Start a Platform Business and Obtain Explosive Growth

Catalyst Competition

How to Compete When there are Colliding Platform Ecosystems


Documents

CATALYST CODE: HOW TO IGNITE A PLATFORM BUSINESS AND RULE A PLATFORM-CENTRIC ECOSYSTEM 20 April 2012 Catalyst Course 2012 David S. Evans Founder | Market