An Exploratory Study of the Characteristics and Success Factors of Multi-Sided Platforms

Abstract

Multi-Sided Platforms such as Uber and AirBnb create value by enabling interactions between two or more customer groups. But designing and building a successful platform isn't easy. Early-stage Multi-sided platforms face greater challenges than traditional early-stage businesses because they must overcome the well-known chicken-and-egg problem. The firm can deliver value to one side of the platform only if there are participants on the other side of the platform. They must solve the challenge of how to get both sides on board their platform simultaneously. Despite increasing discussion in the media and amongst platform operators, academic research in relation to the success factors of Multi-Sided Platforms remains sparse. This empirical research aims to address this gap in the literature. An interpretative case study research strategy was adopted. Semi-structured interviews were conducted with eleven Founders of Multi-Sided Platforms in Ireland to gain an understanding of the characteristics and the success factors of their platforms during the launch phase. Even though the eleven platforms that participated in this research differ, clear patterns can be seen in terms of the way in which they launched and scaled during their formative years. An ideal type of transaction-centric Multi-Sided Platform was then derived from these patterns, together with the strategic decisions common to successful platform businesses. The research results highlight the importance of a founder having a personal and business network when solving the chicken and egg problem, the value of data generated on the platform, the advantages of first targeting a local market by focusing exclusively on the core transaction, the benefits of adhering to the principles of the Lean Start-up and the impact of having clarity of thought in relation to an exit strategy. Future research can adopt a more rigorous positive approach to confirm the findings of this study, extend the sample to other platforms in Ireland or other countries with different macro-economic environments. This research may be of value to new platform operators, owner-managers, business advisors and academic researchers.