<p>Prior to launch, managers, entrepreneurs, and investors need to know whether a nascent or existing market can sustain a platform. Answering this question predates and informs the entry strategy. Establishing startup criteria for platform entry involves combining revenue projections for the market with break-even analysis. Two sidedness significantly complicates the process owing to the role each side plays in value creation for the other side of the platform. This work presents decision metrics for understanding whether room exists for a platform, how many customers it needs on each side to survive, and cost thresholds each side cannot exceed. Additionally, it also identifies which side facilitates entry, when crowded markets should be avoided, and provides a means for evaluating and comparing entry strategies. Taken together, the results translate into a checklist for platform entry.</p>

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Entry Conditions for Two-Sided Platforms

  • J. Manuel Sanchez-Cartas,
  • Daniel Arce

摘要

Prior to launch, managers, entrepreneurs, and investors need to know whether a nascent or existing market can sustain a platform. Answering this question predates and informs the entry strategy. Establishing startup criteria for platform entry involves combining revenue projections for the market with break-even analysis. Two sidedness significantly complicates the process owing to the role each side plays in value creation for the other side of the platform. This work presents decision metrics for understanding whether room exists for a platform, how many customers it needs on each side to survive, and cost thresholds each side cannot exceed. Additionally, it also identifies which side facilitates entry, when crowded markets should be avoided, and provides a means for evaluating and comparing entry strategies. Taken together, the results translate into a checklist for platform entry.