Marketplaces have the best business model

I’ve been hearing frequently that the best business model you can have is to be a marketplace.  I heard it on this podcast from a16z “The Marketplace Rules” and again today when i read the HBS article called “What Airbnb, Uber, and Alibaba Have in Common

The article states that there are 4 types of businesses in the world: 

  • Asset Builders: These companies build, develop, and lease physical assets to make, market, distribute, and sell physical things. Examples include Ford, Wal-Mart, and FedEx.
  • Service Providers: These companies hire employees who provide services to customers or produce billable hours for which they charge. Examples include United Healthcare, Accenture, and JP Morgan.
  • Technology Creators: These companies develop and sell intellectual property such as software, analytics, pharmaceuticals, and biotechnology. Examples include Microsoft, Oracle, and Amgen.
  • Network Orchestrators. These companies create a network of peers in which the participants interact and share in the value creation. They may sell products or services, build relationships, share advice, give reviews, collaborate, co-create and more. Examples include eBay, Red Hat, and Visa, Uber, Tripadvisor, and Alibaba.

And of those four, the Network Orchestrators are rewarded the most in the market: 

Because they actually generate better business numbers:


It makes sense as these businesses can scale faster and more efficiently than any traditional business.  I’m always a bit amazed that eBay isn’t more recognized as the leader and pioneer in this category.  What they did 15 years ago is what many of the marketplaces are trying to replicate today.  Kudos to them. 

That’s it.  Just wanted to share the article…