{"id":1167,"date":"2015-10-04T18:22:05","date_gmt":"2015-10-04T22:22:05","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-digit\/submission\/two-sided-network-effects-for-a-food-tech-marketplace\/"},"modified":"2015-10-04T18:27:45","modified_gmt":"2015-10-04T22:27:45","slug":"two-sided-network-effects-for-a-food-tech-marketplace","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-digit\/submission\/two-sided-network-effects-for-a-food-tech-marketplace\/","title":{"rendered":"Two-Sided Network Effects for a Food-Tech Marketplace"},"content":{"rendered":"

\"Catercow\"<\/a><\/p>\n

CaterCow <\/a>is a food-tech startup that helps match caterers and restaurants with office managers and other customers looking to order food for meetings or events.\u00a0 As is typical in a two-sided market, there are both challenges to gaining traction and network effects to capitalize on once scale has been reached.\u00a0 Once CaterCow is able to achieve critical mass in a specific market, they are able to create significant value for both customers and partners.<\/p>\n

Network effects can work against you until you reach critical mass; then they work for you \u00a0<\/strong><\/p>\n

CaterCow has the classic chicken and egg challenges and indirect network effects (or cross-side effects) that most two-sided markets have.\u00a0 In order to offer customers the variety and availability that makes using CaterCow appealing, they need to achieve a critical mass of restaurant partners in a specific region.\u00a0 Likewise, restaurant partners are reluctant to spend energy and focus their attention on a new tool in the crowded food-tech space that doesn\u2019t have enough customers in place to drive significant business.<\/p>\n

Therefore, in order to get a healthy market going, it\u2019s essential to spend the necessary time and energy to get a core group of customers ordering frequently enough to attract exciting partners.\u00a0 Once that critical mass is reached, however, the self-supporting flywheel of customers driving partners, driving more customers, driving more partners, etc. can take effect and allow a relatively lean team to support a robust and growing market.<\/p>\n

CaterCow also benefits from direct network effects (or same-side effects) on the customer side.\u00a0 Customers have the ability to rate and review their experiences, which then feeds into the ranking and sorting for partners going forward.\u00a0 As a result, each customer that joins the site and leaves a review makes the next customer\u2019s experience a little bit better by pushing good partners to the top of the list.\u00a0 Additionally, much like you see in other business where customers can rate their experiences, partners have an increased incentivize to provide positive service to customers, making the entire network\u2019s experience better.<\/p>\n

 <\/p>\n

Once a market is up and running, CaterCow is able to successfully create value on both sides of the market.\u00a0 <\/strong><\/p>\n

Customer value creation:<\/p>\n