Businesses that act as “matchmakers” are not exactly a new idea. The earliest marketplaces date back thousands of years. But in the mobile web age, businesses that act as matchmakers have gone turbocharged.
Uber, Amazon, eBay, Airbnb, PayPal — the list goes on and on for days among businesses that have found ways to reduce the friction among stakeholders and become profitable to boot. It’s nothing if not an impressive roster and certainly a strong advertisement for becoming a matchmaker.
One small problem with the model, though: Matchmaking is not nearly as easy as it looks once it’s already successful. For more brands try to build successful matchmaking business than actually succeed — because actually succeeding in matchmaking is almost unfathomably hard.
There is, of course, no secret recipe to being the perfect matchmaker — to running the marketplaces that will attract the maximum buyers and sellers or to making sure that one notches an Uber-like experience every time they’re at the plate.
That said, there are still good ideas and less good ideas, and while sticking with the recipe doesn’t guarantee success in either business or cooking, absolutely ignoring it goes right rarely and wrong almost always.
So in honor of Thanksgiving 2016, with a big assist from the innovators who’ve helped us throughout the year with our new Matchmakers series, we decided to write the starter menu for innovators and matchmakers.
We have their recommended ingredients for matchmaking gone right, presented for you here in an easily digestible form.
We’re not at all sorry about the food puns.
So goes into the matchmaker meal prep?
- Have A Clear Idea Of What You’re Cooking And Who It’s For
Sounds like an obvious step, but one always worth mentioning — all of the efforts at matchmaking will be for naught if what whips up isn’t actually what anyone is actually looking for. Those looking to build innovative new payments platform often forget this step, notes Lars Dige Pedersen, CEO of Creditcall and chairman Of Xena.
“Any alternative payment method is only going to be successful if it can benefit from network effects, and it’s all about reaching scale, name recognition and coverage. Many merchants are beginning to realize that it’s not that people like to pay. Obviously, they would much rather not pay. But since we have to, we’d like it to be an experience that is extremely seamless and one that we trust.”
The right ingredient? Frictionlessness — consumer and merchants don’t want payments so much as they want friction-free transactions in the background.
“The key word is ‘friction.’ Matchmaker business models are all about facilitating different things in a frictionless way. If everything else works well and the payments experience is friction-filled, then, of course, it goes against the whole premise of what the business model is.”
- Balance The Ingredients (You Don’t Taste Everything That Is There)
Just because the customer doesn’t know it’s there — can’t taste or see it — doesn’t mean it isn’t fundamental to making the matchmaking endeavors go right. That’s the lesson from myriad matchmakers, enabled by WePay cofounder and CEO Bill Clerico, who noted key elements are often mostly invisible.
“I like to call it an iceberg, where 80 percent of the work was done below the surface of the water on the back end to just deliver that 20 percent of functionality that the end users needed,”
The right ingredient? Making sure that the back-end is balanced — and the supplier is set — long before the “tastings” ever begin.
“The best platforms find ways to offer immediate value to suppliers before the buyers even come, then they can focus on attracting buyers. The ones that fail don’t have a clear strategy about how they can add value before the network really takes off.”
- Keep It Simple And Data-Focused
There is always the risk of overengineering a solution — or getting so caught up in all of the elements one could add to the matchmaking dish — that one loses sight of what they are really there to do, according to LevelUp Chief Ninja Seth Priebatsch.
“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. 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.”
The right ingredient? Data — it makes everything taste better for everyone.
“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.”
- Expand The Ingredient List
To some, and from the outside, it might seem counterintuitive that Amazon spends so much time encouraging other merchants to join its platform – who invents their competitors to sell besides them? But according to Amazon’s vice president of external payments, Patrick Gauthier, those millions of competitors drives nearly half of Amazon’s volume.
“The mental model has not changed; the means to do it have evolved and have become more sophisticated. Merchants of all stripes, sizes and serving all manner of verticals want to connect with Amazon’s audience of 300 million consumers and merchants cannot afford not to do that.”
The right ingredient? Contrast — because sometimes elements that appear to compete can actually enhance the total flavor.
“What needs to be avoided is Groundhog Day buying — consumers keep doing the same things over and over — there has to be something different to break that cycle.”
- Consider, From Time To Time, Trying A Very Different Recipe Book
The way things are, are not necessarily the way things will be — and part of doing some successful matchmaking, according to Circle CEO Jeremy Allaire, is realizing that a rapidly evolving world means platforms can start pulling in fundamentally different ingredients to make massive changes.
“We’re interested in really re-conceptualizing what a spending account is and what the user experience is for the value that people store in their spending accounts. I think the companies that are driven by software, technology and consumers — and can get the benefits of scale and efficiency that come from that — can do a really good job of helping to create a new experience for banking and what might be possible.”
The right ingredient? The blockchain (or disruptive technology that can perhaps be leveraged to add an element that both sides of the matchmaking really, really want).
“They may not articulate it that way, but they certainly want the benefits [of using the blockchain for cross-border funds transfers]. They want speed, low costs, security, openness, global reach — these are the same kinds of things that other internet protocols have brought.”
As we said, these are only the starting recipes, the basic meal construction of matchmaking gone right: focus on the core users, a diverse offering set, simplicity, variation and openness to innovation and evolution.
Those ingredients alone aren’t sufficient, of course — but without them it is hard to imagine any attempt at matchmaking succeeding all that well for all that long.
It’s not easy work, though the best make it look like it is.
There’s a reason the rest of us stick with serving up turkeys.