Bruno Pedro

Enabling a two-sided market

If you’re building or growing a platform business, you will face the challenge of understanding how you can enable a two-sided market. Two-sided markets are important because they are the engines that will make your platform grow without your intervention.

(…) for a platform business, user commitment and active usage, not sign-ups or acquisitions, are the true indicators of customer adoption. That’s why platforms must attract users by structuring incentives for participation—preferably incentives that are organically connected to the interactions made possible by the platform.—Choudary, Sangeet Paul, “Platform Revolution”, p. 85.

In other words, you must measure daily and monthly active users, not the number of new signups you get every month. Your primary focus is on growing those numbers, so you have a good share of people who are using your platform every single day. Once you get there, you can open your platform to third-party makers, users of your platform that use it to make things that other people will use. Makers will be the driving force behind multiplying the value of your platform as they will be promoting the things they make and attracting even more usage.