A discussion about the software industry and their coders

Online and Offline Marketplaces and Tech Platforms are not well covered in conventional Business or Marketing courses. The classic 4P framework of Marketing (Product, Price, Place, Promotion) falls short in helping thinking through Multiplayer marketplaces like eBay, Amazon, Monster and Sony Playstation, Microsoft XBox or Windows like "products".

  One reason is that though two or multi-sided businesses have been around for a long time; business and marketing books haven't covered them adequately. Research is still on in explaining and understanding the dynamics of such markets. Some weeks ago I got a copy of Catalyst Code by David Evans and Richard Schmalensee (Published by Harvard Business School Press) for review and voila my search for a readable and comprehensive book on these subjects was finally over!

Two-sided businesses, Evans and Schmalensee explain, differ fundamentally from one-sided businesses (1SB) that we often deal with. In 1SB a company creates a product or service for end-users and manages a supply-chain to serve its end-users efficiently e.g. Renault/GM makes vehicles for drivers, McDonald's makes Burgers for kids and adults, or Dell makes computers & printers for enterprises and home users. However "Catalysts are multisided. They cater to two or more basic types of customers who do need each other and who depend on the catalyst to bring them together." Example eBay brings buyers and auctioners together, Monster brings job seekers and employers together or Visa brings merchants and consumers together. All catalysts basically do one or more of the following -- audience building, matchmaking, cost minimizing.

Functions of the 3 types of catalysts according to the authors:

1. Matchmakers  -- Facilitate Transactions and monetize by taking a percentatge, example: eBay, Yahoo! Personals 
2. Audience Builders -- To assemble eyeballs and monetize via advertising, example : Google, BBC
3. Cost Minimizers -- To Increase Efficiency and charge either one or all of the customers example : Windows, Xbox, Palm OS, Linux

  You can read through several scholarly research journals and online working papers (e.g. HBS working paper) or dive deep into this one book to get a clear picture of how two-sided businesses differ from traditional one-sided businesses. What is special about Catalyst Code is that the authors have offerred a clear 6 step framework to think about and build two-sided businesses.

Read the blog of authors Evans and Schmalensee.

Coming Soon: How Catalysts Operate