A Multi-Sided Platform is a business model that brings together two or more different user groups and creates value through their interaction. The platform itself does not produce goods but enables exchange between the sides. The value for each side typically increases with the number and quality of participants on the other side.
Credit card companies are a classic example: they connect cardholders and merchants. The more merchants that accept the card, the more attractive it is for cardholders, and vice versa. Google connects searchers and advertisers. Airbnb connects hosts and travelers. Pricing on multi-sided platforms is often asymmetric: one side is subsidized (low or no fees) to attract the other side, which then generates the revenue. Google offers search for free and monetizes through advertising.
What is decisive for the success of a multi-sided platform are network effects and solving the chicken-and-egg problem at launch. A common mistake is launching the platform with too many user groups simultaneously instead of first getting the simplest bilateral interaction running.
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