Building and Investing in Marketplaces

So if we want to understand why network effects often fail to lead to marketplace monopolies, we should start by considering the Thumbtacks against the Taskrabbits, the Tinders against the Bumbles, and the Upworks against the Fiverrs, all in relentless competition against mirror-image services. These services all have network effects in the traditi... See more

Market-making is certainly a characteristic of Aggregators; Google, for example, is a one-stop shop for users, advertisers, and content suppliers. What makes Aggregators unique, though, is their infinite scalability, driven by the effectively zero marginal and transactional costs necessary to serve one more user, advertiser, or supplier.

Marketplace monetization depends on two factors — Transaction complexity and the asymmetry in value to the demand and supply sides

If companies can provide incentives for early adopters to participate before critical mass is achieved, they’re more likely to pose a credible threat to incumbents. As Charlie Munger said, “Show me the incentives and I’ll show you the outcomes.” A lot of business models that failed in Web 2.0 will become viable in Web3. The next generation of platf... See more