Inside The Mind Of The Matchmaker

Matchmakers are the type of business that dares to go where many other businesses refuse to even try: as the intermediary that matches customers with a need with customers who can meet their needs.

It only looks easy. Uber, Google, Visa, Airbnb, Facebook, Westfield Malls, NASDAQ and Microsoft are all matchmakers who’ve cracked the code on getting a critical mass of customers on board. It takes years, sometimes even decades. In reality, the work to keep a balance of customers on both sides is never really done – and many who try never make it out of the starting gates.

But there are lessons to be learned from Matchmakers who’ve treaded these waters, invested in those who’ve gone for that swim and at least lived to tell their success stories. Those stories from those who know it best are what PYMNTS brings you every Tuesday in its new video/audio series: The Matchmaker Is In.

These 30-minute shows are hosted by Karen Webster and David Evans, economist, MPD Founder and co-author of the hot new book on platform business — “Matchmakers: The New Economics of Multisided Platforms,” published by Harvard Business Review Press.

Since the series was launched in May, we’ve interviewed: Chip Kahn, the Mayor of Boomtown; XOR Data Exchange CEO and Founder Mike Cook; managing director of Future Payments at BarclayCard Nick Kerigan; Paul Purcell, Partner At Continental Advisors; and LevelUp Chief Ninja Seth Priebatsch. Here is a bit about what Webster and Evans talked about with these payments and commerce matchmakers.

The Matchmaker Is In

In their kickoff session, Webster and Evans were joined by one entrepreneur who knows exactly what it’s like to build and launch a matchmaker business – many times: Chip Kahn, the Mayor of Boomtown, a marketplace for empowering neighborhood businesses who need expert POS technical support with top drawer crowdsourced technicians. Kahn is a four-time serial entrepreneur whose last venture in payments was IP Commerce.

Kahn’s advice to the burgeoning matchmakers of the world?

Basically not to make the matchmaker rookie mistake: “Don’t go too broad, too fast,” Kahn said during the conversation.

Kahn went on to explain that matchmakers have two options to consider: a horizontal approach, which can mean that matchmakers end up trying to be a lot of things to a lot of people, and a vertical focus. While there are reasons to do both and both are certainly viable, Kahn emphasized, the choice should be driven by what he calls “the cognitive pressure for your customer.”

Catch more of the episode here.

Ask For Permission, Not Forgiveness

Next up was a conversation with XOR Data Exchange CEO and Founder Mike Cook to get the scoop on how his permission-based data exchange platform works.

These exchanges supported by XOR Data Exchange are not your typical shared database platforms. They are built because industry players have a problem that data – the right data – can solve. And even though data owners are able to contribute their data to a common exchange, their data isn’t shared with anyone they don’t want to have it shared with, nor is it ever used in any way other than how the data exchange parties have stipulated it to be used.

As Cook points out, any company that contributes data is always the true owner of that information and has control over ensuring that the data is used only for the explicit and agreed to purpose that XOR has permissions for.

“We’ve built a lot of privacy enhancing technologies that allow us to let companies share information without actually flying the data around,” Cook explained.

XOR Data Exchange’s use of privacy-enhancing technologies can be seen as a nuanced approach, because, as Cook explained, “we’re a data aggregator that follows data minimization and that’s pretty disruptive because using privacy as a competitive advantage is something new.” Privacy in terms of not having data contributed used for purposes other than what it was intended – and privacy in terms of consumers not having their identities used against them to commit financial fraud.

Catch more of the episode here.

‘Enabled By The Mobile Age’

How can technology work to bring new merchants to new buyers, without lopsided development or imbalances on either side of the scale? That in part was the focus of discussion between Webster, Richard Schmalensee, co-author “Matchmakers” and Nick Kerrigan, Managing Director of Future Payments at BarclayCard in the U.K.

“We like to think of platforms as something interactive and enabled by the mobile age,” said Kerrigan, who noted that matching buyers and sellers is a process that traces back to the Ancient Greeks, and card payment networks stretch back across several decades, with one milestone having been passed as Barclays itself marks the 50th anniversary of debuting its credit cards in the United Kingdom.

But, noted the executive, when it comes to payments, innovation “is an art as much as science in terms of what is likely to succeed,” where bringing supply and demand together can be a dicey proposition – and where it is important to identify the friction points that exist for consumers and suppliers that can be alleviated through technology, enough so that it can in effect change consumer behavior.

Catch more of the episode here.

The Lending Club Saga Takes Center Stage

One of the rapidly changing topics that’s caused a lot of stir recently has been the evolution of online P2P lending marketplaces. For this episode of Matchmakers, Paul Purcell, Partner At Continental Advisors, gave his take on P2P lending’s fatal mistake.

It’s a complex question to be sure — and one which Purcell joked couldn’t be answered in a 30-minute chat. That didn’t stop him, of course, from pointing out — from his investor standpoint — some of how the P2P lending marketplace has gotten off-kilter.

“To be fair to the founders of that industry, I think they were really angling at trying to create a two-sided marketplace,” Purcell said. “There was not enough supply (dollars) to fund what was migrating to their platforms. They had a very innovative idea, but I don’t think their dreams of getting the funding supplies for those loans played out.”

“The lack of stable funding is ultimately what was created. It’s really bad to unwind in businesses, whether it be consumer credit or mortgage business,” Purcell said. “When that starts to happen, the risks spread.”

The power of network economies cuts both ways – when they go up, it’s a beautiful thing. When they go south it tends to spiral down hard, if not harder than it did on the way up, Purcell noted.

Catch more of the episode here.

Building A Mobile Payments Network

Wanna know the secret to launching a mobile payments network? Don’t make its value proposition to either merchants or consumers about payments.

That was the insight from LevelUp Chief Ninja Seth Priebatsch, someone who has been beavering away at building a mobile payments network since 2011.

“What consumers want and what merchants want boils down to delivering a better payments experience, getting more data out of that payment experience and using that data to deliver intelligent offers, rewards and customer engagement promotions,” Priebatsch emphasized.

When it comes to the mobile payments landscape, we’ve all seen the battle lines drawn between branded mobile application and network-based applications. Enabling them to have their own branded application, which should showcase the best experience possible for their customers, but also opening themselves up to other network experiences.

Though there’s an ever-evolving list of challenges facing payments players, there’s typically one that always sticks out a bit more than the others.

“It’s so easy to get distracted optimizing very specific parts because there are so many challenges to go after that you lose sight of the fact that at the end of the day it’s very simple,” he said. “Consumers want to save time and money and you have to deliver on that, while merchants want to use payments to make more money and understand their customers better.”

Catch more of the episode here.

To catch all the other Matchmaker episodes, click here.