Matchmakers are the kind of business that looks easy. Visa, Airbnb, Uber, Facebook, Google – what’s so hard, everyone asks? They work, they’re huge and they match millions – and even billions in some cases – of customers who want to transact with those who are capable of making that happen.
But, in fact, they’re the hardest business on earth to get off the ground and to keep running. Most who attempt fail.
But there’s a lot to be learned from Matchmakers who have waded into those dangerous waters and lived to tell the tale. Those stories from those who know it best are what PYMNTS will bring you each week 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,” just published by Harvard Business Review Press.
This week, Webster and Evans were joined by one entrepreneur who knows exactly what it's like to achieve that goal: 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.”
“For us,” Kahn said, “it's about being very vertical, being very focused. ... Having a very tight focus and going deep allows you to provide a better service experience and a better quality software experience. And that ultimately is what's required to drive traction.”
Boomtown, the matchmaker, creates a support network for SMBs that gives them the technical POS/store operations leg up that their box retailer counterparts have access to and can afford to support. Kahn and team recognized that store technology was not as “plug and play as Silicon Valley would like to claim it would be." Boomtown delivers the “service promise that local businesses need."
The hardest part of getting Boomtown off the ground was developing a platform that could be broad enough to attract multiple businesses, but not so broad that it didn't provide the functions it was intended to serve – and making that first encounter a repeatable process that went above and beyond for their SMB customer.
"We learned that the first interaction between a merchant, a partner and our technicians was critical. The first interactions really had to be a 10 out of a 10. If we did not hyper-manage that, we would fail to attract those participants back to the platform or to keep using the platform. It really set the tone," Kahn said.
From there, what his team learned is the value of “multi-sided communications.” Transparency, Kahn emphasized, is critical, because as much as any business is focused on getting the formula right the first time, when that doesn’t happen, it's about ensuring that it's adjusted quickly.
"For us, or for any platform, it's those first experiences that are critical to even getting into the next small steps for growth," Kahn said. "Once we felt like we had a process that satisfied each stakeholder to the platform then we felt like we could expand it."
Another critical decision that Kahn addressed was achieving balance on all sides – equilibrium to keep all sides of the matchmaker business on board. Getting all the sides of a business model to align at the time is key – but, as Webster pointed out, sometimes you need critical mass on one side of the business a tiny bit earlier than the other to get that flywheel going.
How did Boomtown – and how should other companies – approach this, Evans and Webster wondered?
"That's a decision that platform businesses have to go after based on the demand, or buyer side," Kahn said. And regardless of how big a company is, he said it's important that both sides are worked on at the same time.
"Don't overbuild. Keep the quality," Kahn noted.
So what has this matchmaker learned from his own experience, and what can entrepreneurs take away from it?
"It always takes longer to get the flywheel going than you think. You have to be more conservative. It's easy for platform businesses to be capital intensive, and so you really have to be really measured. You have to be disciplined. You have to eliminate distractions. And if you do that, you get steady growth and you end up with a very durable business."