Matchmaking Business Model

 

The matchmaking business model is when you identify two or more customer groups and brings them together in your marketplace.

This Pathway Requires

A multi-party arrangement (triadic) where an Organisation identifies two (or more) different customer groups A and B; and brings them together on the Organisation’s digital or physical marketplace.

The value proposition of the Organisation is transactional, and lies in the matchmaking between A and B via this new marketplace. Trade was one of the first activities of mankind; but making a business from running a marketplace has only recently become widespread. This pathway requires:

• Identifying potential buyers AND potential sellers; AND making them arrive at the same time to the marketplace (a double challenge)
• Creating high level of trust with these each of these two groups – that they can fulfil needs by trading on the digital or physical marketplace organized by the Firm
• Charging mechanisms are almost always a fee based on actual trade
• Construction of the marketplace and the mechanisms of customer engagement are rarely outsourced

Successful C2C exemplars include: Airbnb who identified people’s homes as an asset to be rented out, created trust among renters and those who do the renting, and created sufficient value to be able to collect significant fees for its service. Stock markets are well known B2B platforms that started in the physical space and are now almost exclusively digital. In many cases creativity about what is to be traded is the key to success. Failure rates are very high for this business model – designing the offer and building the trust takes time and effort.

Scalability – Typically high.

Profitability – Margins are typically small – profits rely on volume.

Risk – Entry from copycats and envelopment from multisided business models. This model also requires that customer groups A and B are entrepreneurs.

Opportunities and rewards

What are the opportunities and rewards for a matchmaking business model from other business models?

Matchmaking business models are typically low margin businesses, and the best way to enhance profitability is to either add a portfolio of services or to move to a multi-sided offering.

Adding additional services that are based on the product business model or on the solutions business model are one of the best ways to increase profitability. Such services are typically offered to both sides of the market place. For example, auction houses offer valuation services for a fee, and Airbnb offers services to would-be landlords that allow them to prepare their properties for rental.

Adding a new customer group that brings a new additional revenue stream on account of their interactions with my current customers is an essential element of becoming a multi-sided business model. Such actions will be challenging, costly and is typically only achieved in stages, but might be a very profitable final end point. The new customers are likely to be advertisers, and whoever they are it is essential that they engage with my existing customers in a value adding manner. I will need enhanced capabilities to service this new group of customers (the advertisers). Once again, to be really effective as a multi-sided business model, I will have to digitize many elements of my offering.

Risks and threats

What are the risks and threats to a matchmaking business model from other business models?

Matchmaking business models are typically low margin businesses, and the best way to enhance profitability is to either add a portfolio of services or to move to a multi-sided offering.

Matchmaking business models work best in an environment of firms using the product business model. Solutions business model typically have a high “stickiness” and so when an industry transitions to using a solutions business model, my matchmaking business model maybe under threat.

It may be very difficult to counter an effective multi-sided business model competitor, especially if the multisided organisation is able to use one of its customer groups to subsidize the costs (and prices) of its offering. If the appearance of the extra customer group debases the offering in the eyes of your customers (as in say advertising supported educational offerings) you may be able to resist by maintaining the integrity of your offer. Otherwise you might be forced to change to a multisided business model (see text above).

Adzuna

Adzuna is an example of a marketplace matchmaker business model. Through its website, the company connects job seekers to employers looking to hire.

Overview

Adzuna aggregates job listings from many different websites (e.g., monster.com) and makes this database of jobs searchable by jobseekers. Adzuna then redirects the job seeker directly to the website where the job was posted (e.g., to a job search aggregating website or to the hiring company’s website) to apply for the job. Adzuna earns revenue from job listing websites and companies paying per-click to have their listing appear in premium locations (e.g., at the top of the search results). As a marketplace business model, Adzuna connects job seekers, who do not pay to look for jobs, and recruiting websites and companies with job offers.

History

Adzuna was founded in 2011 by Andrew Hunter and Doug Monro. Andrew was previously head of marketing for Gumtree and Doug was previously COO of Zoopla. The company received £300,000 from Passion Capital and other angel investors in 2011, £500,000 from Index Ventures and The Accelerator Group in 2012, and £1m from the same investors in 2013. In July 2015, the company raised £2m from over 500 investors through the crowdfunding website Crowdcube. The company now has job listings for 12 countries, including the UK, France, Germany, Brazil, Russia, India, and South Africa.

Customers

In this matchmaking business model, the company’s customers are job seekers and job listing websites.

Engagement  — Value Creation Proposition

Adzuna creates value for jobseekers by aggregating offers from a variety of job listing websites and providing these jobs in a searchable database for jobseekers. For the employer, Adzuna provides exposure to a large set of qualified candidates and allows the employer to choose from candidates who make an application, without having to pay a finder’s fee to a recruiter. Value is created, therefore, by providing a marketplace where the two customer groups can “exchange” – that is, where they can transact with one another.

Delivery — Value Chain

Adzuna’s proprietary software and algorithms scan websites for job listings and presents these to job seekers when they search for key terms, locations, job descriptions, etc. In this way, Adzuna can connect a very large number of job opportunities and job seekers. Job listing websites do not have to interact directly with – nor do they need to sign up with – Adzuna in order for Adzuna to access the jobs that they are listing. However, companies and job listing websites can pay Adzuna on a per-click basis to have their listings appear in premium locations (e.g., at the top of the search results).

Monetisation — Value Capture

Adzuna charges companies and job listing websites a small fee each time a job seeker lands on the website of a company that has paid to place its job listing or advertisement on Adzuna’s website. These fees are charged per-click or per-acquisition depending on the arrangement the company or job listing websit has with Adzuna.

Company Website: https://www.adzuna.co.uk/

Airbnb

Airbnb is a peer-to-peer accommodation rental company; it is an example of a triadic marketplace business model, bringing together travellers in need of a short-term accommodation and owners of the properties willing to rent them.

Overview

Airbnb connects these buyers and sellers by maintaining a website that allows the parties to find each other based on their preferences, handling the payments, and increasing security by identity verification processes. Airbnb also provides insurance for the hosts. Airbnb is also an example of the so-called “sharing economy”: it does not own any properties, but relies on people monetising their underutilised assets – in this case, homes, rooms, or apartments. Unlike traditional hotels, Airbnb scales not by increasing inventory but by growing the community of hosts and travellers and matching them with each other.

History

Airbnb was founded in 2008 in San Francisco; the same year it received $20,000 from Y- Combinator (a start-up mentoring program). In 2014 Airbnb closed its latest round of funding at a $10 billion valuation. This makes Airbnb worth more than some major hotel chains including Wyndham Worldwide, valued at $9.2 billion, and Hyatt Hotels, at $8.4 billion. Currently there are more than 600,000 properties listed on the site; to date the company has had more than 10 million nights booked in more than 19,000 cities in 192 countries, mostly in Europe. In late December 2013, the company reported it had over six million new guests in 2013, and nearly 250,000 properties were added in 2013. Airbnb competes directly with hotels; on average apartments on Airbnb are 21% cheaper than hotels in most major US cities. Also, the success of Airbnb has started a wave of clone companies. Airbnb faces local competition from companies such as Wimdu in Germany, 9flats in the UK and iStopOver in Canada.

Customers

Airbnb connects two groups of customers: travellers in need of accommodation and landlords willing to rent out their place for short term.

Engagement  — Value Creation Proposition

Airbnb creates value for its both customers in different ways.

For guests: it gives travellers the option of cheaper accommodation, which is especially important in cities like New York, London, Paris, with low availability of budget accommodation options. Also, it allows travellers to experience their destination less like a tourist and more like a local by staying at locals’ places rather than standardised hotels, which makes for a more special experience during travelling.

For hosts: the primary benefit for hosts is the ability to receive additional revenue by short-term renting of their homes (or rooms in it).

Society: It is also argued that Airbnb has creates social value: it brings tourist money to less visited neighbourhoods and it serves as a complement to hotels, allowing for overflow when hotel capacity is stretched.

Delivery — Value Chain

Airbnb’s website provides a search engine, which matches customers to properties, sets prices, and flags potential problems. Airbnb takes a number of important measures which enable establishing trust between the two transacting parties, such as identity verification. To use Airbnb, site visitors search for listings in their destination city. Once they have found a place, they can send a message to the host with any questions about the room or its location and reserve their booking.

Hosts list their properties on Airbnb’s website. Airbnb encourages hosts to provide as much information about themselves and the property as possible and offers them a professional photographer for their property. Hosts with good reputations get more business. Through Airbnb, guests and hosts can verify each other’s driver’s license or passport, e-mail address and phone number, and connect Facebook profiles. The host and the guest agree on the convenient method of exchanging the keys.

Afterward, guests and hosts rate each other online, so there is a huge incentive to deliver a good experience because bad reviews means less ability to participate in the market in the future for both hosts and guests. Airbnb also automatically provides $1 million in insurance against damage or theft to nearly all of its hosts (some countries have restrictions) and only rarely gets claims.

Monetisation — Value Capture

Customers pay for the stay in full using a credit card or PayPal. Airbnb holds the money until a day after guests check in, ensuring that they are not swindled out of their cash and that the guests are treated well. In exchange for providing the market and services like customer support, payment handling and $1 million in insurance for hosts, Airbnb takes a 3% cut from the renter and a 6% to 12% cut from the traveller, depending on the property price.

Algomi

Algomi represents an exemplar “matchmaking” business model in the financial services sector, specifically catering to buyers and sellers in bond markets, and the exchanges on which they trade.

Overview

Algomi’s algorithms provide bond matching technology that enables secure and discreet dealer-to-dealer transactions, and provide access to information to buyers and sellers that improves liquidity in the bond market. By linking the exchange, banks and investors, Algomi’s technology transforms exchanges into centralized marketplaces for bond trading.

History

Algomi – which comes from Algorithms for Market Intelligence – was launched in June 2012 by Stu Taylor (Former Global Head of Matched Principal Trading and creator of PIN-FI at UBS), Usman Khan and Robert Howes (Founders of CAPXD), and Michael Schmidt (Former Head of European Credit Trading and IB Board Member at UBS). Algomi is backed by investment from Lakestar, and a panel of Strategic Advisors, and has grown to over 140 employees at the end of 2015. It currently has offices in London, New York and Hong Kong, with client support and sales in Chicago, San Francisco, and Boston. As of October 2015, the company had more than 120 buy-side firms and 11 banks – including HSBC, Deutsche Bank and Credit Suisse – using its technology, which it launched in 2014.

Customers

Algomi serves the buy-side and sell-side of bond markets, as well as the exchanges on which bond trading occurs. Algomi’s clients – hedge funds, asset management firms, pension fund managers, sovereign wealth funds, and endowments, among others – hail from New York, London, and Hong Kong.

Engagement  — Value Creation Proposition

In a nutshell, Algomi has developed a suite of technology products that facilitate trading in bond markets, where a lack of liquidity has become a serious problem for buyers, sellers, and the exchanges themselves. Behind its technology are three main algorithms that serve buyers and sellers of bonds, and bond trading exchanges. For buyers, a matching algorithm called Synchronicity will find suitable bonds based on the buyers’ inquiries, similar to how Amazon shows similar products in search results. The buyers’ inquiries are made securely and discreetly within Algomi’s network. In addition, Algomi has developed a calibration algorithm that helps connect the group of people needed to complete the trade, within what Algomi calls its Honeycomb network. As Usman Khan, co-founder and CTO of Algomi said in a recent interview with FusionWire, “If a salesperson in another part of the bank previously missed a trade, or entered an enquiry on a similar bond, they’re pulled into that group.” In this way, Algomi’s calibration algorithm helps traders connect with the right people – buyers to potential sellers, and sellers to potential buyers – to facilitate the trade.

Finally, Algomi has developed a prioritising algorithm that helps sales people sift through large amounts of data on different bonds, helping them make decisions about which bonds to trade – by locating liquidity – by prioritizing the data for them. Khan, in his interview with FusionWire, explains: “So what is it that helps traders identify opportunities across the myriad of systems they have access to? Information. Who holds the bond? Where is it priced? When was it last traded? We realised this information can help people understand where liquidity resides.” As a recent article in Bloomberg explains, “Algomi harnesses data from banks so it can be searched by its buy-side clients using its Honeycomb network. Once given permission, an investor can click on debt he wants to buy or sell, and a heat map will appear on the screen. It may show, for example, that HSBC traded that bond a week ago or that Deutsche Bank currently has interest in the bond. Banks may share pre-trade data with their own customers to show them what’s available.”

This access to information is a key element of Algomi’s value proposition. Whereas previously bond traders would gather information about the market, or particular bonds, by speaking to each other on the phone – which kept the information invisible to the rest of the market – Algomi centralizes, makes accessible, and helps traders prioritize this information. In addition, by seeking information about a particular bond over the phone, other traders would know who was interested in which bonds, and the market could begin to move against individual traders seeking to buy or sell the bond about which they were inquiring. Algomi’s technology keeps traders’ inquiries secure, and centralizes all of them so that portfolio managers, for example, can get an overview of what’s potentially moving in the market or not.

The discreetness with which Algomi’s technology allows traders to inquire and access information about bonds is another key element to the company’s value proposition. The Honeycomb technology displays the investor’s portfolio and planned transactions visually, showing the investors any information shared with them from multiple sell side firms, without revealing their intentions until they are ready to open a communication channel. This reduces “information leakage” so that traders can place calls about sensitive trades in confidence. As a knock-on effect, this also reduces market noise associated with multi-dealer enquiries. Once the investor has revealed their inquiry to the chosen bank, the sales contact is notified internally as to exactly which other salespeople have clients who are most likely to be the other side of the trade, again reducing the number of potential leakage points surrounding a trade.

For compliance teams, Algomi’s Honeycomb technology offers full Order Management Systems integration and provides a detailed audit report recording price and liquidity discovery from the moment an enquiry is loaded. Every button click on the Honeycomb Network is tracked and pulled into a report that demonstrates the process undertaken by the buy-side trader, and the information they received that led them to their final decision around execution. This means a dealer is able to prove that a best execution process has been followed even on trades where this would normally be difficult to demonstrate.

Finally, for bond trading exchanges, Algomi’s technology has been shown to greatly increase liquidity, by identifying execution opportunities that existing markets cannot see, across all fixed income platforms. This adds valuable additional revenue flow for the Exchange.

Delivery — Value Chain

To actually complete a trade, buyers and sellers connect either manually on electronic platforms or, for larger or more illiquid trades, on the telephone. The algorithms are developed in-house, and can be configured for each client to best represent the client’s strategies and business model in the bond market. Users of Algomi’s technology interface with it through their existing terminals, and the software runs on Java. The technology is integrated into clients’ existing IT infrastructure, including messaging, application servers, and databases.

Monetisation — Value Capture

Algomi charges its clients a fee to use the technology and join the Honeycomb network – it does not charge a trade-related fee or commission. The company does not disclose the fees that it charges for the use of its technology.

Company Website: www.algomi.com

BGL Group

BGL Group is a fintech business using a matchmaking business model as its core business to connect consumers with insurance and utility providers on price comparison websites.

Overview

BGL Group also operates a product business model, distributing insurance through its brands on price comparison sites including its own.

BGL Group owns the comparethemarket.com, one of the most popular price comparison websites in the UK for vehicle, home, and life insurance policies, money products, and utilities. Through Comparethemarket.com, BGL Group matches consumers (buyers) who search for insurance policies or service contracts, and utilities providers (sellers) who offer their products. The comparison site platform reduces the search costs for consumers shopping for policies and contracts, by aggregating and objectively comparing available options, while reducing customer acquisition costs for sellers by taking on the burden of marketing.

Although BGL Group’s other business model is product-based, in which their brands distribute insurance products underwritten by third-party companies, the fact that these products are predominantly marketed to customers via price comparison sites indicates that the matchmaking business model is the dominant one.

As BGL Group is not publicly listed and not obliged to disaggregate its financial reporting, it is not possible to determine the distributions of revenue among its various subsidiary companies being generated by the respective business models.

History

BGL Group is based in the UK and was founded in 1992 as the Budget Insurance Company. BGL Group is owned by BHL (UK) Holdings Limited, and the Canada Pension Plan Investment Board (CPPIB), who took a 30% stake for approx. £675M in November 2017. The company grew incrementally over time with an early focus on competitive insurance pricing in digital markets. The group’s most notable brand, Comparethemarket.com, was launched in 2004 and given its iconic meerkat figurehead in 2009.

BGL Group joined the unicorn club (i.e. startup companies that had succeeded in growing and attracting international investments) in 2017, following a valuation of $ 3 billion. Currently, the company employs around 3300 people and registered 6.5m comparethemarket.com customers in 2018, up 16% from 2017. BHL (UK) reported 2018 profits of £100.3m on revenues of £694.5m, up from £75.9m (+32%) and £626.3m (+11%) respectively in 2017.

Customers

BGL Group has two main customer groups: consumers (buyers) who search for insurance policies or service contracts on the price comparison websites, and providers (sellers) who offer their products there, either directly or via branded intermediaries and distributors.

Engagement  — Value Creation Proposition

How BGL Group creates value for consumers (buyers): Consumers benefit from being able to compare the widest possible variety of products on one site.

How BGL Group creates value for providers (sellers): Providers gain direct access to large markets of consumers. Search costs on both sides are reduced by the matchmaking function of the platform, meaning better outcomes of fit in terms of product attributes and customer profiles are obtained. The more successful this model becomes, the greater the incentives for participation on both sides are.

Both buyers and sellers benefit from network effects due to the respective concentrations of each on the matchmaking platforms. Also, BGL Group can use its comparison sites for listing the insurance products it distributes in the market, thereby gaining an advantage over competitors who incur costs for participation on the platform.

Delivery — Value Chain

BGL Group distributes consumer insurance products underwritten by providers through its Insurance, Distribution and Outsourcing Division (IDO).

How BGL Group works for consumers (buyers):

Consumers use the comparison sites to obtain better suited or cheaper policies and ensure that an objective perspective on the available market is achieved without having to research numerous individual insurers.

How BGL Group works for providers (sellers):

For insurance distributors and utility providers, value is obtained from increasing the churn rate of contract customers. The price comparison sites incentivize customers to shop for new policies more often than they would otherwise, due to the prospect of potential savings. The greater the number of transactions completed on the comparison site, the greater the revenue earned.

Monetisation — Value Capture

BGL Group makes money by charging fees to both buyers and sellers. Specifically, buyers can use the matchmaking price comparison sites for free but pay for their contracts directly with sellers once an agreement is signed. Sellers pay fees to the price comparison sites in various formats, most commonly for each signed policy. For utilities and physical product insurance–a flat fee is typically paid, whereas, for health or welfare-based insurance and money products–a percentage-based commission fee is applied.

Digital Technology

The company uses machine learning to avoid fraud, at the point of quotation, while “validating the 99% of genuine customer inquiries.” Also, BGL Group uses Intelligent Assistants (AI) to support continuous improvement and measurable results by rapidly recognizing who a customer is, what is looking for, and providing the right information at the right time. This means that in the future, the company’s business model may change to “multi-sided”.

https://www.bglgroup.co.uk/about-us/heritage

Bla Bla Car

Bla Bla Car operates a matchmaking business model via its website: it connects drivers and passengers who are willing to travel together between cities, whilst offering the opportunity to directly interact with one another.

Overview
Passenger-customers complete the financial payments to drivers after initial contact is made. Bla Bla Car derives value from pairing the two groups – it does not provide other key components of the transaction, such as the vehicle or meeting-point facilities.

The company’s main focus is to facilitate the exchange of ridesharing between the two customer groups, but also augments the value of its core match-making platform by providing complementary products. These include free additional insurance coverage, profile building and member ratings. Bla Bla Car allows users to check drivers’ ratings and offer access to the number of connections drivers have on LinkedIn and Facebook. All profiles, photos, ratings, ride offers and ride comments are moderated by BlaBlaCar to maintain trust and respect in the community.

History

The French ride-sharing service was founded in 2006 by Frédéric Mazzella. Motivated by the absence of a peer-to-peer transportation network, he aspired to pair motorists with passengers needing a ride between cities. “The idea was to organize all the available seats in cars just like we organize all the available seats in planes and trains, with a real search engine, and this did not exist.”  It has since then grown into a global, people-powered transportation network with 10m registered users across 13 countries, and 2m people use the service every month. 

Bla Bla Car has become one of the best-funded technology start-ups in Europe, after receiving in $200m in its latest funding round. The company has taken investment from US venture capital firms Insight Venture Partners and Lead Edge Capital, as well as Stockholm-based Vostok New Ventures. 

In April 2015, the company announced that it acquired German start-up, Carpooling.com – which was its biggest competitor – and a Hungary-based company Auto hop. The price of the acquisition was not disclosed. Apart from these two companies, it has also made five other acquisitions.

Customers

Bla Bla Car connects two groups of customers via its website, namely drivers travelling from one city to another, with travellers seeking a vehicle to travel in the same direction. It does not serve customers looking to travel a few miles within a city. The average BlaBlaCar ride is about 213 miles.

Engagement  — Value Creation Proposition

In pairing up its two customer groups, Bla Bla Car creates the opportunity for both groups to share the costs of the journey. Drivers are able to save on fuel costs by sharing them with passengers, and passengers can enjoy cheaper travel means than that of traditional routes, such as trains or buses. The French start-up claims that the average ride in Europe costs roughly $25 per person, significantly less than the region’s costly high-speed trains.

For each destination, Bla Bla Car sets a ceiling price in order to ensure that costs are fairly distributed and car-owners are unable to make any profit. Passengers are able to pay drivers via PayPal, or in person.

In order to reinforce the safety of the platform, Bla Bla Car performs security checks on the mobile numbers, e-mails and bank accounts of its users, and encourages members of the community to rate each other, in turn building trust for frequent members. Bla Bla Car also introduced the ‘Ladies Only’ filter, for women who may feel uncomfortable sharing a ride with a male driver. ”

In addition to drivers’ personal car insurance, customers may also benefit from additional insurance coverage – provided free of charge, in partnership with AXA insurance company. In case of breakdown during a ride offered through the Bla Bla Car platform, customers may benefit from roadside assistance and towing to the nearest garage. If the vehicle cannot be repaired within a reasonable delay, the driver and passengers will be transported to their destination. 

The company also creates value for the wider economy as it has revolutionized travel by introducing a cost efficient, social mode for travelling. According to the company’s estimation, £216 million is saved by drivers of Bla Bla Car every year. This ridesharing system also generates tremendous benefits for the environment; an estimated 1,000,000 tons of CO2 was saved over the last 12 months. 

Delivery — Value Chain

Customers are able to connect with each other via the Bla Bla Car website and access member profiles easily. The company is technology-driven and uses various social media channels to communicate with its customers, including Facebook, Twitter, Google+, YouTube and Pinterest. Customers can also access the site via Bla Bla Car’s mobile application; which been downloaded over 15 million times, allowing users to gain quick information at a faster speed.

In order to tailor to their global set of customers, Bla Bla Car provides excellent customer service, with more than 450 English-speaking employees from over 30 different countries.

Monetisation — Value Capture

The company does not reveal financial information, but based on its flat-rate commission of €2 per ride and its claimed current 600,000 rides per month, revenues are in the region of €1.2m a month.

Busuu

Busuu operates a matchmaking business model, in which a user who would like to learn a language is connected with another user who speaks that language but is also looking to learn the language of the other user.

Overview

Founded in 2008, Busuu has more than 50m users globally and operates through both a website and a mobile app. The Busuu website is “social”: it encourages users to interact with each other in their native languages via messaging and video-chats in order to practice, exchange knowledge and learn from each other. The website also contains standardised learning units. Users are given free access to the “marketplace” but can also pay for premium access to interactive courses for 12 languages and private video tutoring with certified tutors. This is an example of a “freemium” product business model that Busuu operates alongside its marketplace matchmaking business model. This write-up will focus on the marketplace business model.

History

Busuu is named after the language Busuu, spoken by only a small number of people in Cameroon. Busuu was founded by Adrian Hilti and Bernhard Niesner in 2008. The company spent around a year developing the website, and ended the “beta” version of the site in February 2009, transitioning to the site and infrastructure. In October 2012, PROFounders Capital and a group of private investors invested €3.5m in Busuu, after the company won several awards between 2009 and 2012, including the Tech Crunch award for Best Education Startup. Exact numbers of Busuu’s current employees were unavailable in public sources, but the company’s LinkedIn profile lists the company size as between 11 and 50 employees.

Customers

Busuu serves two different customer groups:

Individuals — Busuu’s marketplace matchmaking business model connects users who want to learn a language with other Busuu users who are native speakers of that language. Users can learn from each other because each is the native speaker of the language the other wishes to learn (e.g., a native English speaker who wants to learn French connects with a native French speaker who wants to learn English). Individual users tend to be looking to refresh their language skills or learn a new language, but do not want to commit to a course neither in terms of time nor money. They seek a way to learn “on the go” and have easy access to the Internet.

Companies — Busuu services are available to companies, an offering which provides considerable cost savings vs. these institutions having to build and provide their own online language courses. This is particularly interesting for SMEs, with limited budgets for learning and development. In some cases, Busuu will tailor its services to the company’s needs, which is an example of a work-for-hire business model.

Engagement  — Value Creation Proposition

Busuu’s overall value proposition is to connect language learners with each other, and to give them access to learning material in order to facilitate language learning and provide a low-cost and flexible solution for studying a foreign language.

Users of the marketplace-based website is free, where users access basic learning tools (e.g., dictionaries), interact with each other via instant messaging and video chats, and access a limited number of learning units. These users benefit from interacting with others and practising their language skills. The website does not require a commitment to the learning process hence suiting users that prefer flexibility in terms of time and location. Free grammar lessons are also available for users to read.

In the product business model that Busuu operates alongside its marketplace matchmaker business model, more detailed grammar lessons, tutorials, and videos can only be accessed through Premium monthly membership.

Delivery — Value Chain

Users register for free on the Busuu website or app, choose their native language and the language they want to learn and can start interacting with each other: the basic idea behind Busuu is that users exchange knowledge and help each other in learning their preferred language. Busuu’s algorithms connect users with opposite language demands (e.g., native English speaker wanting to learn Italian can be connected to a native Italian speaker wanting to learn English), and the various training material for the free and paid versions are created in-house by certified teachers.

Monetisation — Value Capture

Premium users pay a subscription plan to access additional learning material (£11.69 for one month, £7.50 /month for six months, £4.50 / month for twelve months and £3.75 /month for 24 months). Companies pay premium subscription in order to offer Busuu services to their employees. Bulk discounts are available for corporations and universities, based on the number of users.

Busuu website: https://www.busuu.com/enc/about

Etoro

eToro is an electronic trading brokerage that uses a matchmaking business model to link investors with each other.

Overview

eToro operates an exemplar matchmaking business model. It is the largest online social trading and investment network. It combines the value propositions from electronic trading brokerages and virtual social networks. eToro links investors from around the world to share, follow and copy each other’s trading activities. At finger click, they can obtain the wisdom of the crowd on trading and investment in currencies, commodities, indices, stock and Bitcoin.

The platform enables transparent user profile and visualised data analysis to help present trading performance and identify top traders with comprehensive measurements. Users can copy the investment portfolio of traders at their choice. Top traders can earn a monthly salary, commission from their assets under management and cheaper transaction costs benefits.

Essentially, eToro provides everyone with access to a managed portfolio without going through traditional asset management processes and thus helps ordinary investors to avoid the demanding customer criteria, complex on boarding/off boarding procedure and variety of fees to different parties. As a complementary product, eToro offers free online tutorials through its Financial Trading Academy.

History

In 2007 in Israel, eToro was founded by brothers Yoni Assia and Ronen Assia together with David Ring. Yoni has a BA and MSc in computer science, Ronen majored in art and design and David was working as R&D manager prior to joining eToro, he also holds BSc in electrical engineering, MBA in finance and MSc in computer science.

Till today, eToro has secured a total of $73m funding in 7 rounds from 15 investors including BRM capital, Chemi Peres, Cubit Investments, and Ping An (full list available at: https://www.crunchbase.com/organization/etoro/investors). It currently has 300 employees, over 4 million users covering 140+ countries with more than $20m of assets under management.

Customers

Customers tend to be individual traders who want to trade actively or want an actively managed portfolio but do not fit the $100,000 wealth management service customer entry criteria. They are usually tech-savvy with a general knowledge of trading and investing.

Engagement  — Value Creation Proposition

eToro offers low to mid-market investors access to low cost, high variety investment strategies. The eToro Open Book consists of comprehensive investor profiles and users are encouraged to explore trading performance, latest update on market opinions etc. on the platform. This facilitates a learning process for people who are not experts in trading to learn from others at no costs. Users can make decisions to trade a variety of investment instruments, follow other users to get updated information on their trade activities and social feeds and/or “copy” another trader’s portfolio for a given total investment amount.

eToro also ranks traders into cadet, rising star, champion and elite levels, each of which have increasing number of benefits including special deposit rate, rebate on the spreads and commission fee from copiers’ funds, depending on a number of criteria such as number of follower/copiers.

eToro blends social with finance through its online website, where users can manage their money more effectively and flexibly and learn from other investors. According to a Platformeconomics article, a 2012 MIT study found that eToro members whose networks allowed them to cull from a wide range of strategies earned a 30 percent better return on their investments than members who never copied anyone else’s trades.

eToro Academy provides free training including e-course, webinars, trading guides etc. to familiarise users with the platform and finance knowledge and customer services through online chat, email or phone etc. channels.

Delivery — Value Chain

Users need to have minimum deposit of $50 to register on the eToro website. There are mainly three segments on the website: People (discover other traders and their insights), Markets (market intelligence) and Trading (3 platforms, Open Book to copy top trader’s position, WebTrader and Mobile App).

eToro maintains transparent information of each trader such as past return performance, portfolio distribution, risk appetite, trading activity frequency etc. for users to make judgement on who to follow or copy for free.

The technology behind eToro’s social network and web applications is HTML5, Java Script, and Flash, and the company offers both iOS and Android apps.

Monetisation — Value Capture

Essentially an electronic broker, the major revenue comes from commission/spread per transaction made through the platform. The minimum deposit to open account is $50. eToro charges spread on variable basis for each transaction. It does not charge a monthly fee but charges for withdrawal or inactivity fees. The size of the spread depends on the type of trade (currency, stock, etc.).

Company Website: http://www.etoro.com/en/customer-service/faq/

Eventbrite

Eventbrite uses a matchmaking business model to bring together event organisers and attendees for live event experiences.

Overview

Eventbrite is a global online marketplace for live experiences that enables its users to search for, find, and create events. Events include music festivals, marathons, conferences, hackathons, air guitar contests, seminars, political rallies, charity events, gaming competitions and more. The social e-commerce platform allows for event organizers to plan, promote, and sell tickets to events. It also enables attendees to find and purchase tickets to these experiences.

Eventbrite at its core employs a matchmaking business model, as it operates the digital platform that brings together event organizers and attendees, facilitates their interactions, and enables the exchange of financial payments via its marketplace.

Eventbrite also provides other complementary products to both event planners and attendees, which help encourage the use of the matchmaking platform. Complementary products include the provision of statistical data to event planners, customer service teams to help run events, event promotion services and Eventbrite monitoring applications.

History

Eventbrite was founded in 2006 by Kevin and Julia Hartz. Since then, it has completed four acquisitions, opened offices in Melbourne, Dublin, and Nashville. The company is based in San Francisco, where it employs nearly 300 people.

The company has raised a total equity funding of $198.28M in 9 Rounds from 19 Investors. Investors include Tiger Global, DAG Ventures, Sequoia Capital, T. Rowe Price, and Tenaya Capital.

As of 2016, the company accounted for 187 countries hosting events with Eventbrite, two million events held yearly and four million tickets processed per month. Total number of tickets sold on Eventbrite in 2014 was 80 million. 

Customers

Eventbrite caters to two customer groups, which it serves via its online ticketing platform. The first customer group encompasses the event organizers, who use Eventbrite to help plan various events such as corporate events, weddings, birthday parties and more. The second customer group consists of event attendees who, use the platform to search for, find and purchase tickets to these social events.

Despite it occasionally selling concert tickets, Eventbrite mainly targets smaller functions and corporate events such as business conventions. 

Engagement  — Value Creation Proposition

For its first customer group, the event organizers, Eventbrite creates value by facilitating the processes of event planning, promotion, and ticket sales. Organizers are also able to access various resources on event management on Eventbrite, such as free planning and promotion templates, live demos and the latest research and reports. In 2010, Eventbrite was the first company to reveal data regarding the financial benefits of “sharing:” for every Facebook share of a paid event, an additional $2.52 of revenues was generated by the event organizer, whilst driving 11 additional page views of the event page. 

Eventbrite also provides marketing options to help organizers promote their events, such as the tools to customize event pages. The website offers direct access to Facebook, Twitter and other social-networking tools, and organizers are able to send invitations and e-mail reminders from their Eventbrite account. Eventbrite also gives attendees the option of spreading the word with built-in sharing tools on the event page, thus improving the promotion of events on behalf of the organizers. They can also offer multiple ticket options including reserved seating and add questions to assess their attendee types, thus gaining an insight into their customer profiles. Organizers can also benefit from up-to-date dashboards and reports that monitor the volume of ticket sales. Eventbrite also offers the option of a customer team to run the day smoothly on behalf of organizers.

The second customer group, or attendees, can view all events that are taking place around the world by way of the Eventbrite platform. The website allows attendees to get offline and engage in the of their social activities preference. They are able to filter location and types of events to match the ones of interest.

Delivery — Value Chain

Event organizers can set up their free online accounts online within minutes and fill in the event details. On the day of the event, the EventBrite mobile application allows organizers to rapidly scan attendees’ tickets directly from their phones.

Eventbrite has also introduced a novel initiative, a wristband designed to speed up attendees’ entry to events. Organizers get happier attendees via the wristband and access to even better analytics from Eventbrite, which can help them track attendee movements at an event.

Customers are able to view events on Eventbrite’s social media pages. The company’s target markets are those that are IT literate. Eventbrite has integrated with Facebook Open Graph to change the way attendees find and share events. Eventbrite sends out monthly “Event Picks” newsletters using data from previous events with high attendance rates, as well as events the recipient’s Facebook friends have signed up for. Eventbrite now also sends out social notification emails, so if two friends are attending the same event, the third friend will receive a Facebook notification.

Monetisation — Value Capture

The company takes a 2.5% fee on the ticket value plus $0.99 per ticket up to a maximum of $9.95 per ticket. It adds 3% for credit cards processing. (It does not charge for free events.) The company does not run any advertising. 

Eventbrite sold more than 11 million tickets in 2010 for $207 million in gross sales.[viii] As of 2015, the company has processed more than $3.5 billion in gross ticket sales and more than 200 million tickets in more than 180 countries. 

About us. Available: https://www.eventbrite.co.uk/about

Farfetch

Farfetch uses a matchmaking business model to connect independent boutique stores with shoppers looking for unique fashion clothing.

Overview

Farfetch is an exemplar of a matchmaking business model that brings together independent boutique stores that do not have an e-commerce website, with shoppers looking for unique and curated fashion clothing and accessories. It does not hold inventory, which distinguishes it from a Product business model.

History

Farfetch was launched in 2008 by José Neves (a Portuguese entrepreneur), as an online website that matches independent boutiques all around the global, with shoppers who are looking for a curated shopping experience. The company divides its fashion brands into two shoppable categories: lux brands that offer high-end luxury products, and lab brands that include emerging and experimental labels. The average spend on the website is $650 per order as of May 2014, and annual sales surpassed $250 million in 2014.

Customers

Online Shoppers: Shoppers looking for unique merchandise not found everywhere. These shoppers are usually affluent consumers who buy fashionable clothes but have few places to shop locally.

Independent Boutiques: Small boutique stores looking to sell their products on an online platform. They are given access to a global customer base looking for distinctive articles of fashion and accessories. The main focus is smaller businesses that could not build the same experience on a smaller scale.

Engagement  — Value Creation Proposition

Independent boutiques are offered an opportunity to compete in the online marketplace while still maintaining their brick-and-mortar stores and visual identity. At the same time, they can avoid the hassle of establishing and managing their own e-commerce site, customer service, fraud control, technology and maintenance. In addition, Farfetch allows these stores to boost their brand awareness. Farfetch gives shoppers the ability to view and purchase clothing from a collection that has been refined by hundreds of different buyers, each with their own unique style and vision. This gives shoppers the sense of viewing a curated collection of fashion items.

Delivery — Value Chain

The Farfetch website provides a simple marketplace where shoppers who want to buy clothes are linked to boutiques who sell them. Shoppers can search the Farfetch website by color, size, product type and then directly purchase the product over the Internet using Paypal or a credit card. The boutique is then required to ship the order directly to the customer. As well as its website, the company has iPhone and Android apps called “Farfetch Discover” through which customers can access the boutique vendors.

Monetisation — Value Capture

Farfetch provides the marketplace and takes a percent commission on every purchase – rumored to be 25%. The shopper pays a shipping fee depending on the size and weight of the order.

Funding Circle

Funding Circle is an online credit marketplace that uses a matchmaking business model to connect retail investors with SMEs seeking capital.

Overview

Funding Circle is an online credit marketplace that connects individuals looking to invest capital, with SMEs seeking to borrow funds. While it represents an “exemplar” matchmaking business model, the business also operates an additional product business model to cater to its borrower-customers – in turn enabling a highly interconnected platform of products and services that create greater value. These services help manage and guide both investing and borrowing decisions – through credit scoring, risk assessment and account management.

Funding Circle facilitates both secured and unsecured loans and assigns risk accordingly. The risk assessment of the loan is displayed alongside the company’s profile on the online marketplace. Investors can then bid for the loan, offering from £20 to the full loan amount. Once the loan is funded borrowers accept the terms and can access the funds. SMEs can apply for loans from £5,000 to a maximum of £1million, with the exception of property development, which has an upper limit of £3million due to the reduced risk associated with this type of loan.

Investor-customers also enjoy the benefits of the marketplace’s complementary products, such as automated investing, and tracking and monitoring tools. They can choose to be an ‘active’ – selecting the loans they prefer – or ‘passive’ – selecting the risk profile they desire, allowing Funding Circle to automatically bid for loans on their behalf.

In offering valuation and risk-band credit rating services for SMEs, Funding Circle also employs a product business model. The risk band provides and independent view on how creditworthy a company is, which can be helpful for companies looking to improve their ability to access credit. Small businesses can then work to improve their risk band rating through not defaulting on repayments.

History

Founded in 2010 by Samir Desai, Christian Grobe, Sam Hodges, Matthias Knecht, James Meekings, and Andrew Mullinger, Funding Circle is UK based peer-to-peer lender (P2P) focused on lending to SMEs. The company has grown rapidly and reached a valuation of $1 billion in April 2015. The company has facilitated over £1.3 billion worth of loans in the UK and has raised over $272 million in funding, the most recent a Series E funding round raising $150 million in April 2015. The company operates in the UK, US, Germany, Spain and the Netherlands.

Customers

Funding Circle caters to two main customer groups: investors and borrowers. Its customer base accounts for 15,000 small businesses borrowing from over 50,000 investors.

Investors include individuals, local councils, the UK government and institutional investors, while borrowers encompass all SMEs.

Engagement  — Value Creation Proposition

Investors:

Value is created through return on investment (ROI). Funding Circle is able to typically offer a higher ROI than traditional financial products.

Investors also gain value from Funding Circle’s credit scoring indicating the credit worthiness of potential borrowers, reducing the risk for lenders.

The ability to build a large portfolio of loans – reducing the overall risk – is also a benefit provided by the Funding Circle platform, while some lenders also appreciate the societal value of lending to local businesses.

Funding Circle also provides increased flexibility, compared to more traditional investments products, as it is possible to sell loans on a secondary market for a small 0.25% fee.

Borrowers:

This group benefits from lower fees compared to traditional sources of funding and can access credit quickly and easily.

Delivery — Value Chain

Funding Circle’s online platform is maintained by data scientists and provides an integrated service for both customer groups. Algorithms manage all borrower and investor applications to assess credit worthiness and suitability. In addition to the automated system, borrowers have the option to engage with an account manager for advice on their loan application.

The application process takes less than 7 days. The loan is then available for investors to bid on. Once sufficient lenders have committed funds, the borrower chooses to accept the terms and confirms the loan.

Monetisation — Value Capture

Revenue is generated from both customer groups. Borrowers are charged an origination fee of between 1.49% and 4.99% of the funded loan. Investors are charged a 1% annual servicing fee. Additional fees can also be charged for fast track services and late payments. Funding Circle does not publish detailed financial reports but the company has facilitated over £1.4 billion in loans and industry sources reported revenues to be approximately $50 million for 2015.

Green Man Gaming

Green Man Gaming uses a matchmaking business model for its online market bringing together buyers of video games and video game publishers.

Overview

Green Man Gaming is an example of a matchmaking business model. It operates a web-based market for PC video games that brings together buyers of video games and video game publishers. The company differentiates itself from the incumbents by allowing gamers to trade-in used games for credit towards their next purchase through Green Man Gaming’s marketplace, a familiar concept from physical retail that had hitherto been utterly alien to the digital market. As of 2015, Green Man Gaming had over 350 video game publishers participating in its market, with a total of over 5,200 games available to consumers.

History

Green Man Gaming was founded by Paul Sulyok and Lee Packham in 2009. It is backed by the London-based venture capital firm Eden Ventures, and operates in a market with strong incumbents such as Steam, the widely recognised “king” of digital distribution for PC games. In 2015, Green Man Gaming was ranked by the Sunday Times at #23 in the 15th annual Sunday Times Hiscox Tech Track 100.

Customers

Green Man Gaming operates a multi-sided platform business model. It stand in the middle of a triadic relationship, with gamers (customers) on one side, and game producers & publishers on the other.

Engagement  — Value Creation Proposition

The “core” of Green Man Gaming works exactly like any highly-scalable, bus-model digital distribution marketplace: the producers & publishers make their wares (i.e. PC video games) available to customers via the Green Man Gaming platform. Customers do not purchase the games directly from the video game producers, however, but instead purchase them through Green Man Gaming. Users can also trade in their “used” digital video games for credit towards their next purchase.

For a trade-in market to exist in the digital space, Green Man Gaming must convince video game producers & publishers that they can benefit from a digital trade-in model, which – in its traditional retail incarnation – benefits the reseller but not the original producer/publisher. Such partnerships are essential because, otherwise, said producers & publishers could easily enforce Digital Rights Management systems that allow gamers to only purchase new digital games and shut down the grey market.

Delivery — Value Chain

Green Man Gaming does not own any of the inventory that passes through its marketplaces. Buyers and sellers sign up to the company’s website and trade directly with each other once they are connected via Green Man Gaming’s marketplace. The unique interaction that Green Man Gaming offers comes from allowing customers to trade-in used games for in-store “credits”. These credits can, of course, be redeemed for new games, thus opening the market to more price-sensitive customers who would otherwise only be comfortable with grey market prices. When such a trade-in happens, both Green Man Gaming and the game’s producers/publishers enjoy a portion of the resell value. The company has a proprietary algorithm that allows the platform to calculate the ever-changing value of a traded-in game.

Green Man Gaming not only has the buy-in of video game producers & publishers, but also the buy-in of several of its direct competitors, including Steam. Currently, it is possible to purchase a game on Green Man Gaming and then “activate” it on the widely-adopted Steam platform, and later sell the Steam-activated game back on Green Man Gaming. This allows customers to experience the “best of both worlds”, enjoying the various features and complements on both platforms, thus reducing some of the barriers to adoption.

Monetisation — Value Capture

Green Man Gaming sits in the middle, taking a cut from each transaction that occurs, happily, with near-zero marginal costs.

Hailo

Hailo is a matchmaking business model in the transportation industry that connects customers with individual taxi drivers through their app.

Overview

Hailo represents an “exemplar” matchmaking business model in the transportation industry that mobilizes mobile and location technology. Hailo has developed an app for mobile phones along with the supporting infrastructure that links (a) people wanting a taxi (they have the app on their phone) to (b) individual taxi drivers supplying taxi services (who also have the app on their phone). As a matchmaking business model, Hailo facilitates the connection of these two groups, although they can relatively easily (and do) bypass Hailo’s intermediation. Hailo’s app not only mobilizes mobile phone technology, but also satellite location technology because it pinpoints both customers and potential taxis on the mobile phone display.

History

This London-based firm was founded in November 2011 by three London taxi drivers with a personal interest in deploying technology to improve taxi service in and around London. The company, which has about 200 employees, had annualised sales of over $100 million, and has raised about $90 million from investors as of April 2014. It operates in 6 countries and 16 cities, with over 1 million registered passenger customers. In London, in 2013, it served 5m passenger journeys through 14,000 black cabs.

Hailo was neither the first nor the only important firm that offers this taxi location service: others include Taxipal, Uber, Get Taxi, Lyft and Gett, all of which have slightly different competing offerings. Easy Taxi is the most similar company to Hailo, but it operates in the Latin American and African markets. Hailo is singled out as a useful exemplar because it built an app that addressed drivers’ concerns, and built a community of cab drivers to support it, in the face of rising competition to taxis from companies like Uber.

Customers

The business model represented by Hailo connects two groups of customers – (1) people (consumers) needing a ride “immediately” with (2) available taxi drivers. The customer base is currently limited by the geographical presence of Hailo and by the requirement of customers to have the app installed on their phone. In the cities where Hailo currently operates – London, Toronto, Chicago, Barcelona, and, as of this year, New York – it has a large potential market.

Engagement  — Value Creation Proposition

The value proposition is to connect potential passengers with empty cabs faster and more efficiently than rival methods such as calling for a cab on the telephone, logging onto a website, or hailing one on the street. Hailo allows the potential taxi driver and passenger to communicate directly with each other, and ascertain things such as waiting times, and capacity in the overall system. The speed and reliability of the system is potentially better than other systems.

The taxis benefit when there are more passengers on the system, and the passengers benefit from having more taxis on the system. Currently there are some “direct network effects” – passengers do not directly benefit from seeing others on the system (for instance, there is not yet a system that allows customers to rate drivers), and likewise drivers have few direct benefits apart from sharing live traffic information between themselves. Additional direct network effect benefits may develop in time: for instance the customer rating systems.

Delivery — Value Chain

Hailo has produced and maintains an app that runs on a smart phone to connect those needing a taxi with taxi drivers, backed by a website. When a customer launches Hailo on their phone, they automatically see on the map where Hailo-connected taxis are. The “hailing” takes place by clicking “Pick Me Up Here,” at which point drivers are offered the opportunity to “Accept Hail,” get your location information, and pick you up. The mechanics of Hailo’s operation run on a complex algorithm that takes into account the taxi’s location in relation to the would-be passenger, how long (including traffic) it would take to get there, and other data.

A taxi driver can sign up through the website for free, and after downloading the app his or her phone becomes embedded in the network of Hailo users. As well as receiving passenger hail requests they can also see bursts of passenger activity and traffic conditions in map view, useful information created by the Hailo taxi driver community. The app and website have been developed in-house by Hailo’s engineers, incorporating GPS location feeds and utilising mobile smartphone handset technology. From a marketing perspective, raising awareness of the service has been key. This has involved stunts like using key investor Richard Branson to celebrate 3 million London journeys and applying entertainment marketing to taxis, which hasn’t been done before.

Monetisation — Value Capture

In London, Hailo takes a 10% commission of the total fare including any tip, with a minimum commission, which varies by time of day with a minimum fare of £10 at evenings and weekends. The current minimum commission varies between £0.80 and £1.50. The pricing model is different depending on the market. For example, in Ireland the driver pays 12%, in the US, where cabs typically are cheaper, the passenger pays a fee to use Hailo and in Japan the taxi fleets pay.

Housetrip

Housetrip is a matchmaking business model where individuals can rent out their entire home for short periods of time to visitors.

Overview

Housetrip is an example of a matchmaking business model. Individuals can rent out their entire home for short periods of time to those who need accommodation while traveling. The exchange between the two parties occurs via Housetrip’s website. The company competes with AirBnB in the marketplace for short term rentals of entire homes, but not in marketplaces for spare bedrooms.

History

Housetrip was founded by Arnaud Bertrand and Junjun Chen in 2010 in Lausanne, Switzerland. This company offers holiday rentals on a peer to peer model. As of May 2015, Housetrip raised $60 million in funding, has presence in 20,000 destinations, and more than 300,000 properties are listed on the website.

Customers

Housetrip serves two categories of customers: the hosts (namely the landlords or others who have a right to lease their property) and the customers (namely customers who require a holiday accommodation). Target market is different from AirBnB, this one focus on a house instead of rooms.

Engagement  — Value Creation Proposition

For the guests, Housetrip offers the options of inexpensive alternative holiday accommodation and short let contracts in different cities. This accommodation option appeals to travellers who seek a sense of staying in a real home instead of a hotel during their trip. For the hosts, Housetrip allows listing of properties for free, and offers a way for hosts to list the days that their property is available, along with additional scheduling functionality built into the website. For those renting their properties, Housetrip offers an additional source of (passive) income.

Delivery — Value Chain

Housetrip curates a large catalog of houses in cities around the world, making the catalog available on its website to individuals in need of accommodation. Once both sides of the transaction have been connected (i.e., a traveller has found a house she is interested in), Housetrip facilitates the sharing of information about the property and information about the guests and hosts, as well as facilitating the eventual payment using third party providers such as PayPayl.

To list their property in Housetrip, hosts complete an online profile on Housetrip’s website, along with details about the property – including at least three photos. An internal verification team based in Lisbon assesses each property and places those that are deemed acceptable onto the website. The verification team looks at photo quality and descriptions of the property, and performs fraud detection checks (the details of which are not publicly available).

Monetisation — Value Capture

Housetrip charges hosts and guests a commission per transaction, in the range of 10-20 percent. The rental prices are determined by the hosts, and can vary by day and by season. Hosts can also set the maximum number of occupants, and require a security deposit if they choose. Payments are made online through Housetrip’s website.

Just Eat

Just Eat is an example of a Matchmaking business model. It connects local restaurants and individuals looking for a meal to be delivered to their home or office.

Overview

Customers order from restaurants listed on the Just Eat website, Just Eat sends these orders to the restaurants, the restaurant fulfils the order and uses their own resources to deliver the meal, and Just Eat pays the restaurants twice per month the total revenue from the orders through its website less a small commission that Just Eat charges the restaurant.

History

Founded by Jesper Buch in Denmark in 2001, Just Eat is an online service acting as a web based intermediary between independent takeaway food outlets and customers. Thanks to its successful move and growth in UK, Just Eat has quickly developed into one of the leading online take-away platforms in the world with 8.1m active diners and over 11,000 registered restaurants, operating in 13 countries and floated on the London Stock Exchange since 2004 with a market value of £3bn in May 2015 and 1,075 employees. It started with bootstrapped investment and was later backed by Vitruvian.

Customers

Just Eat targets individuals who are looking for a takeaway or delivery meal from a local restaurant. Customers must have access to the internet in order to place an order through Just Eat’s website.

Engagement  — Value Creation Proposition

In its matchmaking business model, Just Eat provides value to individual consumers and local restaurants. For individual consumers, Just Eat provides a convenient one-stop-shop for local take-out and delivery meal options, offering updated menus for each restaurant listed on the website and an easy payment system. Individual customers can also review and read reviews of each restaurant. Also, with customer’s online profile that he or she sets up with Just Eat, the customer does not need to give his or her address or payment information for each new order.

For restaurants, Just Eat offers access to a larger customer base, and has enabled most of the restaurants that are part of the Just Eat network to increase their sales over time and per customer.

Delivery — Value Chain

Once a customer has registered with Just Eat, they can get access to local restaurants that offer takeaway and delivery meals. Just Eat simply mediates the transaction between the restaurant and the customer – that is, the restaurant is still responsible for preparing the meal and delivering it to the customer. Just Eat develops its software in-house and uses third party web hosting services to host its website around the world.

Monetisation — Value Capture

Just Eat charges a fixed commission per order, on average around 10.3% of the value of the order from customer. They also charge a fixed sign-up fee and other service fees from restaurants including the option to rank more highly on searches within the Just Eat website and app.

JustGiving

JustGiving operates a matchmaking business model which provides a global online social marketplace connecting donors to charitable organisations.

Overview

JustGiving operates a matchmaking business model. It provides a global online social marketplace for giving, connecting donors and charitable organisations. The firm’s headquarters are located in Bankside, London. The online marketplace provides tools and processing services to pay and receive charitable donations. The company’s website allows people to donate to charities registered with the site with a debit or credit card online. It also offers people doing sponsored events the chance to build their own page to collect sponsorship from supporters. JustGiving charges a fee for each transaction.

History

In 2001, Zarine Kharas and Anne-Marie Huby founded JustGiving. Justgiving is considered as a “Tech for good” company, founded on the principle of: “For profit and for good.” JustGiving achieved profitability in 2006. In June 2011, JustGiving claimed that it had provided its service to more than 9,000 UK registered charities and 1.9 million fundraising pages for users, collecting over £770 million since launch. The cumulative total passed £1 billion in March 2012.

JustGiving operates worldwide, and so far the company has facilitated transactions in 164 countries, worth a total of over $3.3 billion.

In 2014, JustGiving’s income was £14 million, from raising around £250 million for charities. JustGiving employs 65 staff, 42 in London, the rest in the US where they opened in 2003.

Customers

The business model represented by JustGiving connects two groups of customers:

People (consumers) who want to donate with (2) available Charities/causes on the website.

The business model also connects (1) people doing sponsored events with (2) supporters doing sponsorship.

Engagement  — Value Creation Proposition

The value proposition is to let fundraisers collect and transfer money to their chosen charities online. In return, the charities receive an efficient, instant service. Also, the numbers that can be reached on the internet via JustGiving tend to be far higher than organisations or individuals could achieve through their own networks alone.

Delivery — Value Chain

The use of the website is pretty straightforward. Charities and donors register for free with an email address and a password. Users then choose between 3 choices: “fundraising for a registered charity” or “raise money for something else” and create a JustGiving croud funding page or “you work for a charity” in which case users will then create their own campaign on Justgiving for causes. JustGiving creates its matchmaking software in-house, and uses Hadoop to manage its services in the cloud.

Monetisation — Value Capture

JustGiving charges a 5% fee on each donation. The fee is only taken after the gift is received by JustGiving. JustGiving also charges charities £15 per month for the service + VAT. JustGiving also participates in and facilitates transactions with the UK Government’s Gift Aid – where the UK government donates an extra 25% on top of donations to an eligible charity. Here’s how it works: Let’s say a person donates £10. Justgiving will send the £10 to the charity the same week. Than JustGiving reclaims a Gift Aid from the government (which takes a month), adding £2.50 to the donation. JustGiving charges the 5% fee from the Gift Aid and sends the rest to charity. So for every £10 donated, the charity gets 11.74£ and they get it faster. Currently, over 80% of donations operated through JustGiving are eligible for this scheme.

Digital Technology

JustGiving website: www.justgiving.com

JustGiving Wikipedia Entry: https://en.wikipedia.org/wiki/Justgiving

Lending Club

Klarna is a fintech product business model that offers e-commerce payment service to merchants and to provide instant credits to consumers.

Overview

Lending Club is an online credit marketplace operating in the US. The company is at its heart a matchmaking business that connects people who are happy to make loans with small businesses and individuals. However, the business also operates a highly interconnected platform of products and services that create additional value for its customers.

Individuals and SMEs apply for loans that, if approved, are then divided up into $25 fragments that can be purchased on Lending Club’s online platform. These fragments, termed ‘notes’, have an associated risk profile attached to them indicating the risk and the return available. Investors can choose to be an ‘active investor’ – selecting the notes they prefer or ‘passive’ – selecting the risk profile they desire, allowing Lending Club to purchase the notes on their behalf. If a borrower defaults on their loan the note holders are not repaid. The grade given to each note indicates the potential risk associated with it. These grades range from ‘A1’ indicating the lowest risk to grade ‘G5’ as the highest, in total there are 35 grades. The lower the rating the higher the return is for the investor. Notes can be traded on Lending Club’s platform creating additional liquidity.

Lending Club offers personal, business and medical patient loans.

Personal borrowers can apply for loans between $1,000 and $40,000 at rates ranging from 5% to 30% depending on individual circumstances. While business can borrower up to $300,000 with rates starting at 5.9%. Patient solution plans allow for up to $50,000 in borrowing and charge between 4% and 25%. Patient solution loans are only available to patients receiving treatment at a Lending Club enrolled practice.

History

Lending Club was founded in 2006 as a Facebook application designed to let connected people lend to each other. The business evolved into a stand-alone P2P lender after receiving $10.26 million of venture capital investment in August 2007. The company then experienced rapid growth and it became the first P2P lender to go public in December 2014. Lending Club has made over 1.6 million loans, worth around $20 billion. However, since its IPO Lending Club’s shares have lost close to 75% of their value as the business has faced various challenges including the resignation of CEO Renaud Laplanche.

Customers

Lending Club has six major customer groups (all customers must be based in USA)

* Individual investors

* Institutional investors

* Individual borrowers

* SME borrowers

* Medical patients

* Medical practices

All together the company processed 1.6 million loans. 14% of borrowers are repeat customers, and it is estimated to have over 700,000 users.

Engagement  — Value Creation Proposition

Lending Club creates value for each of these five groups in different ways:

Individual investors:

Lending Club provides a high ROI for lenders and its online platform allows individuals to lend relatively small amount compared to traditional investing platforms and the ability to build a portfolio of loans reduces risk.

Institutional investors

Lending Club allows companies to diversify their portfolios and make decisions quickly based in Lending Club’s credit checking. Large investors including hedge funds have utilised Lending Club’s platform, as traditional institutions have neglected SMEs and individuals with weak credit records.

Individual borrowers

Quick and easy way of accessing loans of between $1,000 and $40,000

SME borrowers

Quick and easy way of accessing loans up to $300,000

Medical patients

Financing options to help pay for medical bills accessed through medical centres affiliated with Lending Club.

Medical practices

Medical practices must pay a fee to become associated with Lending Club. This relationship enables practices to offer credit financing to patients. The availability of credit increases the likelihood of a patient agreeing to pay for the treatment they need.

Delivery — Value Chain

Potential borrowers and lenders access the service through the Lending Club website. Borrowers apply online and if they are successful their loan is assigned a grade between A1 and G5 (35 in total) based on their credit worthiness and the underlying risk. Investors also sign up online and build a portfolio of notes that represent small fractions of loans, this can be done passively or actively on the company’s website. Investors receive monthly repayments and interest into their online accounts as borrowers repay their loans. If a borrower defaults on their loan then the holders of notes associated with that specific loan will lose their money. Medical practices can contact the company through the website to arrange a meeting to discuss enrolling with Lending Club. Patients can access loans through the site or through their doctor’s medical practice.

Monetisation — Value Capture

Lending Club had revenues for the full year 2015 of $430million. This was 103% above the previous year’s results. The business had a net loss of $5million for the full year 2015 and facilitated over $8.4billion worth of loans.

Lending Club charges a 1% service fee on each loan but extra collection charges may apply if borrowers miss payments and loans are not repaid on time. These include 8% of the amount recovered and 30% of legal fees, plus costs if required.

Liquid

Liquid.com is a global cryptocurrency platform powered by blockchain technology using a matchmaking business model to offer trading, exchange, and financial services.

Overview

Liquid.com is a global cryptocurrency platform using a matchmaking business model to offer trading, exchange, and financial services for beginners and pros traders. Liquid’s user-friendly platform allows customers to buy, sell and trade Bitcoin, Ethereum, XRP and many other cryptocurrencies with fiat currencies (e.g. JPY, USD, and EUR)–bridging the gap between traditional exchanges and simple on-ramps (deposit of fiat into the system and converts funds to cryptocurrency). The platform is powered by blockchain technology to keeps track of all the transactions.

A crypto exchange platform match customer willing to buy and sell crypto and manage their portfolio. Liquid uses World Book–a proprietary software engine–to enhances liquidity and provide price stability on the Liquid cryptocurrency exchange platform. World Book technology matches orders and gives access to liquidity pools sources, through a unified platform where traders and investors can easily buy and sell digital assets. In a product business model that complements the core matchmaking business model, Liquid offers different products and services for crypto trading and related activities.

The company is the world’s largest crypto-fiat platform by transaction volume that is regulated in Japan. Liquid trading platforms exceeded $50 billion in transaction volume in the past 12 months and it appears to be moving towards a global presence. As part of this global expansion plan, the company is planning to launch in the United States.

Liquid’s competitors include Binance, Kraken, OKEx, Bitfinex, Coinbase, BitMex, and Huobi. As of May 2019, the leading cryptocurrency exchanges worldwide by volume are OKEx which had a 30-day volume of $57.3 billion, followed by Binance with $53.96 billion.

History

In 2014, Quoine (the parent company of Liquid) was founded and launched Quoinex to offer fiat currency to cryptocurrency trading. Co-founders Mike Kayamori and Mario Gomez Lozada raised $100 million through an initial coin offering and launched Qryptos: cryptocurrency to a cryptocurrency exchange. Further to this, they became the first global cryptocurrency exchange to be officially licensed by the Japan Financial Services Agency.

In September 2018, the historical trading platforms, Quoinex and Qryptos, were merged and relaunched as Liquid. It also launched IEO Mission Control, an end-to-end technology solution that offers a safe and secure platform for token issuers and participants. During 2019, Liquid added to credit and debit card deposits, launched Liquid Infinity, and released the Liquid Pro mobile app. In April 2019, the company raised venture funds at a valuation of over $1 billion, making it one of the rare unicorns in Japan. Liquid has secured funding from investors including venture fund IDG Capital and crypto mining giant JAFCO Co, Bitmain Technologies.

Customers

Liquid.com has different customers: retail customers, professional traders, investors, and corporates, looking for buying, selling, and trading cryptocurrencies. The platform also includes a network of exchanges, banks, regulators, and investors.

Engagement  — Value Creation Proposition

How Liquid.com creates value for its customers:

Liquid.com offers a one-stop trading platform, which allows customers to access a worldwide network and match trades across multiple transactions and cryptocurrencies. Liquid exchange focus on providing high cryptocurrency fiat liquidity, cryptocurrency stability, quality execution, transparency, and trust.

Liquid users have to go through a KYC process, which involves uploading a national ID, a selfie, and proof of address. Liquid further ensures trust through the two-factor account authentication and data encryption to keep user data safe.

Delivery — Value Chain

How Liquid.com works for its customers:

Liquid.com exchange delivers the transparent cost of trade to both the buy-side and sell-side. The company’s most notable feature is World Book (a proprietary software engine) that enhances liquidity and matches orders on a unified platform. Traders and investors can easily buy and sell digital assets on the platform using Bitcoin, Ethereum, and multiple fiat currencies.

Monetisation — Value Capture

Liquid makes money by charging transaction fees for trading on its platform: traders pay a flat fee of just 0.10% for both maker and taker trades, which can be discounted at 50 % if paid in QASH. Liquid processes crypto withdrawals for free, regardless of which network the asset is using. However, withdrawals are all bundled and executed once a day.

Digital Technology

Liquid.com uses the latest technologies to keep customers’ funds safe and to stay ahead of vulnerabilities and exploitation attempts. The company harnesses the power of blockchain technology to keeps track of all transactions recorded within the platform. Even though blockchain suffers from the scalability issue, technology still helps keep the transaction data safe through the use of cryptographic algorithms. In the future, the company should use AI to increase customer engagement, providing to customers personalized solutions, moving from a “matchmaking” to a “multi-sided” business model.

LMAX Exchange

LMAX Exchange is an FCA-regulated multilateral trading facility (MTF) for FX trading that operates a matchmaking business model.

Overview

Recognised as one of the UK’s fastest growing technology firms (2015 Winner – Deloitte UK Technology Fast 50, Tech Track 100 Sunday Times: 2015, 2014, 2013), LMAX Exchange is a London-based FCA-regulated multilateral trading facility (MTF) for FX trading. LMAX Exchange provides a low latency, order-driven execution venue for electronic trading on the foreign exchange market (FX).

LMAX Exchange operates an “exemplar” matchmaking business model in which it provides FX order matching low latency technology in the FX industry, delivering a unique vision for global FX trading – a transparent, neutral, level playing field for all market participants, regardless of status, size or activity levels.

LMAX Exchange’s OPEN order book is driven by streaming, no ‘Last Look’ limit orders supplied by General Member liquidity providers. In a Product business model that complements its Matchmaking business model, LMAX Exchange offers a range of key products, including spot FX, precious metals, commodities and equity indices, with complete pre and post-trade transparency and order execution where no ‘last look’ is standard. Orders are executed in strict price/time priority at an average speed of 4ms. LMAX Exchange is the emerging benchmark for global FX.

History

Launched in late 2010 LMAX Exchange was established based on the vision that the exchange execution model is the most efficient and cost effective way to trade liquid products, such as Spot FX. In 2012 LMAX Exchange experienced a management buyout from parent company Betfair. FX volumes traded through LMAX Exchange hit $1 trillion in 2013 and grew to over $5 trillion as of March 2016. Headquartered in London, the company has Sales and Operations hubs located around the world:

Hong Kong – Operations + Sales
Tokyo – Matching engine + Sales
Singapore – Sales
United States – Sales
New Zealand – Technology hub

The latest published results in 2014 show the company’s first year of full profits.

Customers

Global banks, funds, professional traders, brokers, proprietary trading firms, corporates and asset managers are all client categories serviced by LMAX Exchange.

Engagement  — Value Creation Proposition

LMAX Exchange offers brokers, dealers, proprietary trading firms, corporations and institutional asset managers a platform on which to trade foreign exchange. LMAX Exchange focuses on low latency industry leading technology providing transparency, low spreads, platform stability, quality execution and neutrality. LMAX Exchange’s trading technology has been recognized for excellence and innovation by the FX industry.

Delivery — Value Chain

LMAX Exchange delivers conflict free, neutral execution and transparent cost of trade to both, the buy-side and sell-side. LMAX Exchange is not a market-maker, and unlike some ECNs, the open order book is driven by streaming, non ‘last look’ limit orders supplied by top tier banks and institutional liquidity providers. Liquidity providers include top 25 global banks and non-banks including: JP Morgan, BNP Paribas, Citadel, XTX, Citibank, Goldmans Sachs. On LMAX Exchange participants trade anonymously in an environment where all have access to the same prices, liquidity and execution quality regardless of status, size or activity levels.

Monetisation — Value Capture

LMAX Exchange only charges execution fees for trading on its platform. Trading clients pay a flat fee per million traded. There is no fee built into the spreads.

Lyst

Lyst is a matchmaking business model connecting fashion retailers with customers, providing curated content and using big data analytics.

Overview

Lyst is an example of a matchmaking business model connecting fashion retailers with customers. Fashion products typically consist of clothing and accessory items of different brands. In addition to the catalogue of items, Lyst also provides curated content in terms of fashion blogs, trends and other social media. It uses big data to its advantage by hiring data scientists who work on the analytics aspect of the website and figure out the required metrics like profile of the online users, peak time of order placement, colours being sold hot at the moment etc. This data in turn is passed over to the designers, retailers etc.

History

Lyst was founded in 2010 by Chris Morton. To date, the total funding amounts to £20.5M by venture capitalists. Though we do not have official financial data, the information from multiple interviews suggest that there has been 400% growth rate year on year 2010 to 2013 and the sales amount to 40 million pounds. The website solves the complex problem of adding 25,000 items per day, and 1.4 million price changes and 15 million item updates a week. The key differentiation between Lyst and other e-commerce sites is that Lyst started investing in big data early on to its advantage and also the aspect of curated content which helps Lyst understand the customer tastes and gives an opportunity to influence them.

Customers

Lyst serves two sets of customers: fashion retailers and fashion customers.

Engagement  — Value Creation Proposition

For retailers, Lyst provides access to a broad base of customers online, along with insights of big data in terms of customer tastes, preferences and the profile of customers.

For retail customers, Lyst provides access to all fashion data as a one stop shop. Each retailer curates the collection of fashion items it makes available through Lyst, which gives retail customers the feeling of browsing a curated fashion collection.

Delivery — Value Chain

Lyst provides a website consisting of a large fashion catalogue and facilitates the customer’s search for clothing and accessories using metrics like colour, designer, inventory age, price range etc. The customer identifies an item of choice and orders through the website. The order is transmitted to the retailer/designer who delivers the product to the customer. Lyst does not hold any inventory.

Monetisation — Value Capture

Lyst generates revenue from customers as well as the retailers/designers. The fee for retailers and for customers is a percentage of each transaction.

Naked Wines

Naked Wines is a wine retailer utilising a match-making business model to mediate between wine producers and consumers.

Overview

Naked Wines represents an “exemplar” match-making business model in the wine retailing sector because the transaction between wine producers and wine consumers is fully mediated by Naked Wines – it would be very difficult for the wine buyers and sellers on Naked Wine’s platform to cut the intermediation.

The model revolves around an online platform which links (a) quality independent winemakers around the world with limited production capabilities and b) end-customers seeking to explore and enjoy a broad variety of quality wines at a much lower price than from existing brick-and-mortar retailers. An innovative element of the model is that customers can sign up as ‘angel’ investors by prepaying at least £20 on a monthly basis. The company then uses this money to fund independent winemakers in advance so that they can afford the risk of producing larger than usual quantities. In this way, and by selling directly with no other intermediaries, Naked Wines can enjoy heavy discounts which are passed onto end-customers with discounts ranging between 25-50% on the full retailing price, on top of being able to redeem all the money previously prepaid. The complementary aspects of the model include: a) close monitoring of customer preferences via a detailed feedback system which can predict future purchases; 2) effective cash flow management since the company mainly invest money on the behalf of end-customers; and, 3) a pure marketplace section in which demand for new winemakers is tested with limited quantities and a bidding system until stock lasts.

History

Naked Wines was founded in Norwich, UK, in December 2008 by Rowan Gormely, the founder of successful firms such as Virgin Money and Virgin Wines, with backing capital from wine merchant Wein International and a German logistics partner. As of December 2013, the company had around 200 employees and over 140,000 customers in the UK as well as 60,000 in the US and Australia where it recently expanded. To date, Naked Wines has invested over £25 million in 135 independent winemakers across four continents, achieving around £35 million revenues and £1 million of pre-tax profit in 2012. In 2013 revenues climbed to around £50 million and the company received a third round of £6.4 million funding from Wein International to finance its international expansion.

Naked Wines blends elements close to traditional wine clubs models – e.g. Sunday Times wine club – and more recent approaches mixing brick-and-mortar retailing with an online website – e.g. Majestic – with other characteristics more commonly found in social network and crowd-funding platforms. For example, customers can share experiences and reviews as part of the Naked Wines community and, importantly, they can enjoy the feeling of being investors in independent winemakers. Overall, the most similar concept is arguably Virgin Wines, which however does not include the innovative crowd-funding element. In the long term, Naked Wines aspires to develop into a sort of ‘Kickstarter’ platform for wine investors. In this vein, to test expansion potential into finer wines requiring longer (up to 3 years) time for maturity, Naked Wines launched the first UK wine bond in September 2013, offering customers the possibility to invest with potential returns between 7-10%, payable in cash or wines.

Customers

The business model represented by Naked Wines mainly serves TWO groups of customers. The first is consumers of wine, a minority of which are not subscribers of the ‘angel’ system based on monthly payments and simply use the website to source good wines when needed (without additional discounts). Through the recent wine bond sales, Naked Wines is also testing the possibility to appeal to customers more interested in traditional investment opportunities rather than wines.

Engagement  — Value Creation Proposition

The value proposition is twofold. On the one hand, Naked Wines offers customers interested in quality wines the possibility to buy from a large number of independent winemakers around the world with home delivery and at a substantial discount. Customer engagement is also achieve via the above mentioned crowd-funding mechanism which makes customers feel as though they are proactively supporting independent winemakers, with characteristics similar to fair-trade certifications. These customers also enjoy a sense of exclusivity – i.e. the same wine is not available elsewhere – and of being part of a creating winemaking process – i.e. each customer can interact with winemakers and provide feedback online – within a like-minded community. On the other hand, it offers these independent winemakers crowd-funded investments (generally in the region of £50,000) to reduce the risk of increasing their production volumes in exchange of very low prices which are then partly passed onto end-customers. Winemakers can also enjoy the possibility of being connected to their customers – an important aspect for small producers in this sector.

The model is bus-oriented for end-customers – although they might decide to tailor their investment to particular winemakers using the marketplace function – and taxi-oriented for independent winemakers, depending on their wine’s characteristics and production capabilities. The two sides reinforce each other, because the more customers buy from a given winemaker, the more funding it receives and the higher the discount Naked Wines is able to offer.

The platform is used to market a large number of wines in three ways, generating a certain degree of network effects. First, customers can compose their own wine cases thus generating information on their preferences which are used by Naked Wines to improve its investment strategy. Second, they can buy pre-packed wine cases through which the company generates economies of scale for winemakers and reduce warehouse and inventory costs, e.g. by increasing rotation of low-selling wines. Third, on a weekly basis, winemakers who recently joined the network can pitch a given amount of cases of their wines to test market demand and the logistics aspects of the business. In all cases, customers can use their wallet of prepayments and there is a sophisticated feedback system which they can use to grade the wines they drink and which shapes suggestions and the composition of pre-packed cases.

Delivery — Value Chain

The value-chain of Naked Wines is rather straightforward. Consumers use the website (or the Naked Wines app) to scan available products, express their preferences, bid on the marketplace and socialize with other users and/ or winemakers. In the US and Australia, the company is also testing the possibility to run its own vineyards to engage more effectively with its customers.

To keep delivery time fast, Naked Wines uses a network of warehouses throughout the UK (and the US/ Australia). Winemakers thus ship to these warehouses and then Naked Wines delivers them to the final customer. In this way, the company can also use its stock to create pre-mixed cases thus increasing product rotation and keeping inventory costs down. Its standard delivery is £4.99 for next business day (£6.99 for Saturday deliveries) to almost everywhere in the UK if an order is placed before 5pm. However, delivery is also free to most UK postcodes for orders above £80. From spring 2014, the company is testing a same-day delivery service in London for £14.99.

In terms of marketing, Naked Wines has an intensive promotional activity, mostly based on discount vouchers for the first order – often offered as part of initiatives of co-marketing with other companies. Every month, customers also receive an email with an offer for a free bottle (generally worth £10-15) if they place a minimum order and on a weekly basis other email advertising new wines on the internal marketplace. With respect to branding activities, most of the wines specially produced for Naked Wines include a label with a dedicated ‘personal’ message of ‘thank you’ from the winemaker to its Angel customers.

Monetisation — Value Capture

The latest financial information about the company suggests that Naked Wines closed 2013 with around £50 revenues and additional funding from investors. The fine wine bond sale in autumn 2013 was also successful: the company hoped to raise at least £1 million, set an upper limit of £5 million and received offers for £6.2 million, with two-thirds of subscribers opting for the 10% return in wine credit. Although the company does not disclose its margins, information released to the public for the bond sale suggests it enjoyed between approx. 30% gross profit on wine purchases, with selling/distribution costs amounting to 13-16% and other operating expenses between 11-13%, for total pre-tax profits in the region of 4-6%.

Not On The High Street

Not On The High Street (NOTHS) is a matchmaking business model which links independent businesses with consumers looking for customized specialty products.

Overview

Not On The High Street (NOTHS) represents an “exemplar” matchmaking business model which links independent producers or businesses, which have a limited physical store and web presence, with consumers looking for customized or specialty products within different categories such as home furnishing, gardening, fashion retail, jewelry and art, that are not easily available in traditional high-street shops. NOTHS does not fulfill orders, and does not own any inventory. Instead, NOTHS chooses producers to trade in its online marketplace, and makes it easy for customers worldwide to browse and buy unique bespoke goods. Other internet retailers in the same market, such as US-based Etsy, sell their products direct to customers, whereas NOTHS fully mediates the transaction between buyer and seller.

History

Entrepreneurs Holly Tucker and Sophie Cornish co-founded NOTHS in the UK in 2006. They secured the initial round of funding from close family, but were struggling with securing any outside funding from external investors. However, the duo made progress and the company has since raised £27m from investors, most recently in 2012, when they attracted £10m from Fidelity, Index Ventures and Greylock Partners, which valued the company at a little less than £100m.

Initially, at its website launch, the company had 200 partner producers. NOTHS now hosts 5,000 independent producers featuring an excess of 250,000 unique design and specialty products. In September 2014, the company launched its first dedicated overseas marketplace in Germany (notonthehighstreet.de), with more than 100 active German partners onboard as well as a number of existing UK partners.

The company now employees around 200 staff at its headquarter in Richmond Upon Thames, South West London, and has grown its revenue from £134,000 in 2006 to £127m in 2014, a 53 per cent increase from the year before.

Simon Belsham, Tesco’s former online director has now taken over as the CEO of NOTHS, replacing Holly Tucker who has been the sole leader since Sophie Cornish stepped down in 2012.

Customers

The business model represented by NOTHS serves two customer groups: (1) buyers who are looking for specialised or customised products and (2) producers and manufacturers of such products

Engagement  — Value Creation Proposition

NOTHS value proposition is twofold.

First, the company offers buyers looking for customized or specialized products variety from thousands of independent producers and hundreds of thousands of different products with home delivery.

On the other side NOTHS offer visibility and marketing for producers through their marketplace, which also include search engine optimization, with search engines like Google and Yahoo. Moreover, the website offer producers with their own storefront, dedicated web address, and unlimited slots for different products.

Additionally, NOTHS intermediates the payment, which takes place through NOTHS web site and takes a number of important measures which enable the establishment of trust between the two transacting parties. NOTHS holds the money from buyers until the product delivery is complete, ensuring that the buyer is not swindled out of their cash and the producer does not sell to a customer who will not pay.

Delivery — Value Chain

NOTHS has produced and maintains a website and an app that connect customers want to buy products from their partner producers. Customers can browse their website and look for desired products. The customers can then place an order and pay through NOTHS checkout. NOTHS then mediates the order, and holds the payment until the products are delivered. After delivery buyers can rate the products and the producers delivery on NOTHS website, increasing the incentive for producer to deliver a good quality product at the right place, to the right time. NOTHS does not hold inventory, and producers are required to ship the product to end customers.

Monetisation — Value Capture

NOTHS earns money from upfront fees paid by the producer of products though a one-off payment of £199 and a 25% commission on each sale that NOTHS intermediates.

Onefinestay

Onefinestay is an upscale accommodation company, that operates a Matchmaking business model between homeowners and travellers.

Overview

Onefinestay is an upscale accommodation company, that operates an exemplar Matchmaking business model, where a homeowner (host) can offer their property to a traveller looking for upmarket accommodation.

History

Onefinestay was launched in 2009 in the UK by Greg Marsh, Demetrios Zoppos, Tim Davey and Evan Frank. It’s mission is to help homeowners earn a hassle-free income off of unused properties that would otherwise stand empty, and provide travelers with a new category of upscale accommodation i.e. an ‘unhotel’4 experience. In February 2011, Onefinestay raised $3.7 million Series A funding, and in June 2012, the company announced a $12.2 million Series B funding round, led by US-based venture capital firms. As of 2014, the company has raised around $40 million in investment.

Customers

Onefinestay has two customer groups: travellers, who are looking for an accommodation, and hosts. Hosts are typically high-income individuals who are interested in renting out their unused property and want to outsource the operational aspect of the rental process. Travellers tend to be middle to high-income individuals who travel often and are either looking for a luxury break or want to get away from the traditional hotel experience and live like a local.

Engagement  — Value Creation Proposition

Onefinestay allows travellers to live like locals, by staying at real people’s homes. Travellers can enjoy all the creature comforts while still receiving hotel amenities that matter, such as toiletries, cleaning, Wi-Fi and local recommendations. Unlike AirBnB that serves as a marketplace to link travellers and hosts Onefinestay provides a full-service platform for their customers, and keeps hosts and travelers separated.

Onefinestay offers a website which matches customers looking for properties to rent, and property owners looking to rent out their unused property. Onefinestay allows hosts to rent their home when not needed, giving them the ability to make revenue off of unused space. This is generally short-term but can extend to long-term (but not permanent). Onefinestay offers a complete management service for hosts including insurance, cleaning and maintenance for the property. For a traveller, Onefinestay offers a unique way to experience a new city or location, giving people access to stay in one-of-a-kind homes. It also allows a traveller to experience a destination from the viewpoint of a local.

Delivery — Value Chain

Hosts list their property on the OneFineStay’s website, and the company will manage the entire booking process, in addition to providing the property with hotel-style services such as toiletries and bed furnishings. Onefinestay contracts with third party agencies to provide cleaning services. Onefinestay also manages all administrative duties such as pricing and payment, and will pay the host directly at the end of the traveller’s stay.

Travellers search listings in their destination city, and submit a request on Onefinestay’s website to confirm availability and price. Travellers are provided with hotel-like amenities in a more relaxed at-home environment. They receive an iPhone providing free data and local calls, and are given local area recommendations. Travellers receive 24/7 phone support and Wi-Fi in all properties. Hosts and travellers do not rate each other, and do not interact.

Monetisation — Value Capture

When a traveller books online, the full payment is charged on a credit card. Travellers pay the pre-determined listed nightly rate for the property. Hosts pay an unspecified percentage of the nightly rate to Onefinestay to cover maintenance costs such as cleaning, insurance as well as services (rumored to be around 40% of nightly rate). In addition there is an ‘agency fee’ which depends on the property, time of year and occupancy level of the home.

Paytm (One97)

Paytm (a subsidiary of One97) is a digital wallet business with a match-making business model that connects merchants and individuals.

Overview

Paytm is a subsidiary of One 97, an established diversified Indian company that has a range of offerings including top-ups, tickets, hotel booking, superstar talk, discount deals, music, video, games and etc. In this case, we will be focusing on a specific subsidiary of One97 – Paytm – a digital wallet business.

Paytm (a subsidiary of One97) is a digital wallet business with a match-making business model. It has two customer groups, the account holders (typically individual consumers) who deposit money into the e-wallet; and the merchants who accept payments made from the e-wallet. The individual account holders benefit from easy to use cash-free payment facility (the electronic wallet) which is fast and convenient, and the merchants benefit from not just a fast and easy payment system but other related services.

In order to increase the attractiveness for both customer groups, Paytm created other offerings such as wealth management for wallet deposits, value added services for merchants and other banking options . Paytm also created its own e-commerce site like the Western Ebay or Eastern TMall, which is accessible by its e-wallet customers.These new business offerings are enhancements of the matchmaking model that might have a different business model.

Paytm is competing with cash, the traditional payment method in India. It is also competing with other international payment methods that work in India such as Paypal or Alipay. Paytm’s competitive advantage is its localization and government support.

It is reported in 2019 that Paytm has a combined user base of 350 million, hands 5.5 Billion transactions a year, and the total transaction volume exceeding 50 Billion USD; and the company is benefitting from the general trend of digitalization. (thehindubusinessline.com 2019)

History

Paytm was founded in 2010 by Vijay Shekhar Sharma initially as a pre-paid mobile and bill recharging platform, rapidly growing as it expanded services into e-wallets, e-commerce and ticketing and bringing on big clients such as eBay and Uber (techciricle, 2015). Growth has been both organic and acquisitive, with the company recently buying Cube26 in 2018 to help improve consumer engagement and social media interactions with content. As the company has grown it has required additional external funding, raising capital from some investors such as Softbank, Alibaba and, most recently, Berkshire Hathaway (Crunchbase) which valued the company at over $10bn (bloomberg, 2018) Some of this growth capital has been enabled by the company spinning out its e-commerce business from the payments and banking company in 2016 to allow it to raise capital separately, given the different growth cycles and opportunities of the two businesses (livemint). From 2017-18 revenues in the payments business grew more than 4x while losses also expanded 1.7x as a result of greater advertising and new business costs (economictimes, 2018); the Indian digital payments industry is expected to grow to $500bn by 2020 (ibef, 2019) and $1tr by 2023 (economictimes, 2018). E-commerce also made a loss, struggling in particular as it competes with Flipkart and Amazon India which between them have over 80% market share.

Customers

Paytm has two customer groups. Individuals (consumers and some SMEs) who use Paytm to pay and merchants who receive money via Paytm. On the merchant side, given the demonetisation initiative in India the potential payments customer base is broad; the company had over 7 million installed merchants in 600 districts accepting mobile payments via QR Code across India in early 2018. On the individual user side, Paytm has 140 million (economictimes, 2019) monthly active users and about 350 million annual active users.

Payment banks in India – which Paytm operates for retail customers – are mandated by the regulator to reach small businesses and low income households (theasianbanker), however Paytm payments has pricing plans for businesses of all sizes. The company also has intentions outside of India, recently announcing a tie-up with Yahoo Japan and Softbank to enter the Japanese market where the Government aims to double the number of cashless transactions by 2025 (moneycontrol, 2018). The founder has been quoted as having ambitions on the US market as well (paymnts, 2018).

Engagement  — Value Creation Proposition

How Paytm creates value for merchants:

Value is created for companies by allowing them to receive a wide range of digital payment methods, both online and in store. As well as the more traditional methods such as debit and credit cards, this also includes more recent innovations such as QR codes, email links and text messages as well as Paytm’s own digital wallet service and competitor services such as United Payments Interface (UPI)[1]. Paytm is also able to supply the hardware required for physical in-store purchases. Additionally, Paytm’s payment services also link into its Smart Retail platform, a solutions-based business model that provides additional value in helping retailers manage and optimise payments and other important topics such as analytics, inventory and customer engagement under one system.

How Paytm creates value for individuals:

Compare to western countries, Indian people are not used to card payment. In india 95% transactions are made via cash (qz 2019). Therefore Paytm becomes appreciated by users who want to go through cashless transaction without going through the complicated process of creating a bank account.

Delivery — Value Chain

How does paytm work for merchants:

Sign up is free, and set up to receive a QR code to start receiving payments via the Paytm app and platform is nearly instant (paytm, 2016). For larger businesses further registration appears to be required. Additional point of sale hardware can then be purchased or rented for physical sales, and Smart Retail can subsequently be added.

How does Paytm work for individuals:

Sign up is also free. Unlike payment gate ways such as paypal, where the bank account and paypal account needs to be long to the same person, Paytm allows deposits into the wallet from other people’s card. Users do not need to have a bank account, he/she can simply give cash to a vendor and ask the vendor to transfer money into Paytm wallet.

Monetisation — Value Capture

While sign-up for the services is free Paytm tiers its fees based on the size of monthly transactions. For small start-ups and home businesses, there are no transaction charges for receiving unlimited funds via UPI or Paytm’s own bank as long as transactions via credit card, Paytm’s wallet and internet banking are limited to ₹50,000 per month. In this instance card and internet banking transactions are charged at 1.75% plus tax. For sole proprietor businesses unlimited UPI and Paytm’s bank transactions are charged at 1% plus tax, whereas wallet transactions are charged at the same rate but contribute to a ₹5,00,000 monthly limit with the other methods charging 1.75% plus tax. Large businesses can receive unlimited number of payments but are charged 1.75% plus tax on all transactions. For this size of business Paytm is also able to offer customised plans (paytm, 2019). Smart Retail is priced on a subscription model with better pricing the longer a retailer signs up to the service, costing from ₹ 999 monthly to ₹ 10999 annually for the point of sale system. The additional CRM system costs from ₹ 999 monthly to ₹ 9999 annually.

Digital Technology

Paytm does not consider itself as a technology firm. Technologies are deployed to solve Indian problems. So that technologies are means to an end. Therefore, the firm does not advertise their superiority of technology.

Quikr

Quikr is an online classified advertising company uses a matchmaking model that where buyers and sellers meet and transact.

Overview

Quikr is an online classified advertising company where buyers and sellers meet and transact. Sellers are able to post advertisements for their products for free on the platform, and buyers are able to view ads and buy the products of their choice, directly from the seller. Quikr operates the digital platform that connects the two groups and facilitates exchange between buyers and sellers. Thus, at its core Quikr operates a matchmaking business model.

Quikr kept its platform free for the first three years. When its monthly unique visitors crossed 10 million, it decided to monetise the platform, like other classified ad companies such as Gumtree. Quikr Premium Services charges users and businesses for premium listings, that is, placing their ads higher on Quikr search results.Thus, the company also operates an additional product business model aimed enhancing the value of the Quikr platform to its seller-customers.

In 2016, Quikr launched a complementary product, ‘Quikr Doorstep’ that offer its buyer-customers with delivery services, while also addressing customers’ issues of trust, payment and logistics in consumer-to-consumer transactions in the country,” said Pranay Chulet, CEO of Quikr. Quikr is the largest online and mobile classified ads company, as stated by The Economic Times. 

History

Quikr is an Indian-based company operating across more than 1000 cities in India. The company was founded by Pranay Chulet in 2008 and has since raised more than $150 million from a clutch of investors including Warburg Pincus, Nokia Growth Partners and Norwest Venture Partners.  Quikr has raised $350 million in 7 rounds and has made six acquisitions since its launch. 

Quikr’s investors include Kinnevik, Matrix Partners India, Omidyar Network, and eBay Inc.

Quikr launched vernacular language support for its consumers in 2015 that allows consumers to choose from seven different languages – Hindi, Tamil, Telugu, Kannada, Malayalam, Gujarati and Marathi. This new feature allows consumers to browse, search, post ads and interact with buyers and sellers in their language of choice. 

Customers

Quikr has two customer groups that it serves via its marketplace. The first customer group includes online shoppers who wish to buy products in an aggregated and diverse marketplace . The second customer group includes sellers who wish to increase their online visibility and sell their products quickly. These include individuals as well as small businesses.

Quikr has over 19 million visitors each month across 160 business categories in 65 cities in India. 

Engagement  — Value Creation Proposition

Online Shoppers:

Quikr creates value for the online shoppers by providing them with a wide range of products nationwide, all aggregated in one marketplace. Products sold on Quikr range from 14 categories, including mobile phones, household goods, cars, real estate, jobs, services and education.

The Quikr platform operates across desktop, laptop and mobile phones, and allows consumers as well as small businesses to sell, buy, rent and find things across its multiple categories with great ease.

To tackle potential issues pertaining to security and trust, Quikr provides the option of making online payments from the chat platform, as well as collecting the product from the seller and delivering it to the buyer. While this option delivers value to both parties – as sellers are able to receive payments quicker online and buyers feel confident in delivery by Quikr – issues of distrust are reduced mostly for buyer-customers. A buyer has the option to return the product to the delivery person on the spot, if he/she is not satisfied with it. To prevent sellers from duping buyers, Quikr keeps the cash in an escrow account. The money is transferred to the seller only once the buyer has received, and is satisfied with the product, much like how other e-commerce majors operate, for example Ebay and Gumtree. 

Small Businesses:

Businesses can promote their products or services on Quikr by ‘Posting Ads’ for them. Unlike newspapers, there is no space restriction on ads placed on Quikr. Multiple images can also be uploaded, alongside detailed written descriptions. Businesses that don’t have websites can also benefit from Quikr by providing contact details for buyers to reach them directly. Businesses can gain greater visibility by way of Quikr’s 19 million monthly visitors.

Businesses that are looking for quick growth or to get rid of surplus stock can try Quikr Premium Services. These are paid services and ensure that ads stay on top of the page for up to 30 days ensuring they get the highest possible visibility. Premium ads get 10 times the response as free ads.

Small businesses can also sign up for ‘Leads on SMS’ for a small fee. This ensures that they get the contact details of potential customers looking to buy their products in a given locality/city.

Delivery — Value Chain

Selling on Quikr takes less than 30 seconds; sellers are able to Post Ads for free by filling out a short form online. Purchasing on Quikr is also swift, as buyers are able to select the city and product category they want and browse from the thousands of Quikr ads. Buyers are then able to click on products of interest and contact the seller directly, either by calling a number listed or replying to the ad post itself. Buyers can also sign up for ‘Quikr Alerts’ to get notifications of products available for sale in their locality.

Quikr also allows sellers to purchase Premium Ads which makes their ads more visible to customers on the webpage. To opt for a Premium ad, sellers have to start posting your ad on Quikr. As part of the Post ad flow, they will then have an option to either post ads as a free ad or a Premium paid ad. 

Monetisation — Value Capture

The company makes money from three verticals – premium listings, lead generation and advertising.  Lead generation has become an important component of the online industry in recent years, epitomized by the emergence of countless sites devoted to capturing customer information that can be sold to companies looking to acquire new customers. 

Further information on monetization is not published on public sources.

Robinhood

The core of Robinhood is a matchmaking business model between individual investors and High Frequency Trading (HFT) companies.

Overview

Although Robinhood is managing multiple business offerings with multiple revenue streams, it’s essential business model is matchmaking, as a broker between individual investors and High Frequency Trading (HFT) companies. Based on this matchmaking role, Robinhood is able to develop additional product offerings to individual investors such as margin loans, deposit accounts and other investor services.

This matchmaking platform built for mobile and web only delivery has no storefront or “high street” presence. Robinhood’s first tier or “free” offering enables unleveraged cash investors to trade a range of financial instruments in US listed companies as well as in the cryptocurrency market with zero commissions or dealing charges.

Within the US market Robinhood’s main competitors are long established brokerages with digital platforms such as TD Waterhouse, Charles Schwab, Scottrade and E*Trade. Each of these companies have had to react to the significant customer outflows moving to Robinhood by introducing their own zero commission offering. However, the social sharing that Robinhood has instituted in its mobile first strategy instils a competitive advantage appealing to the upwardly mobile demographic that Robinhood seeks (Senators Call, 2018).

As Robinhood looks to enter the UK, and eventually Europe, its most notable competitor will be Freetrade, a UK based financial technology company which offers a freemium share dealing service founded by Adam Dodds and Davide Fioranelli in 2015.

History

Robinhood was founded in early April 2013 by two ex-Stanford, New York based HFT system builders, Vladimir Tenev and Baiju Bhatt with a mission to “provide everyone with access to the financial markets, not just the wealthy”. The fact that the cost to a broker to execute a trade wasfractions of a penny” and yet commission charges ranged from $5 a trade to as high as $10 per trade highlighted an inefficiency and an opportunity

The company was launched via crowdsourced technology site, Hacker News in December 2013 after receiving an initial seed invest of $3m. This initial funding round was led by ndex Ventures and joined by Andreessen Horowitz and Rothenberg Ventures. Fintech angels Tim Draper and Howard Lindzon also participated in the round.

Traction for the company was robust with 150,000 signing up to the prelaunch waiting list and surpassing 500,000 by September 2014. In the following three years the platforms user base grew to 2 million executing over $75 billion in transactions. Since then the company has grown to over 6 million users whilst maintaining a relatively light employee base of less than 50 team members (Techcrunch, 2013).

As of May 2018 Robinhood, had raised a further $539m in venture funding valuing the company at $5.6Bn. The further rounds of funding were led by Yuri Milner of DST Global and were supported by Thrive Capital and Greenoaks Capital (Crunchbase 2019).

Customers

Robinhood have two distinctive customer groups. The first group is individual investors primarily young people that have difficulty in financial investment. The second group is HFT companies i.e. Citadel Securities, Two Sigma, Wolverine, and Virtu. Because when orders are made by individual investors i.e. purchasing a share, the order is transferred to these HFT companies by Robinhood. So that investors did not purchase shares or options or cryptocurrencies from exchanges but from institutional investors. Therefore, Robinhood is a matchmaker.

Engagement  — Value Creation Proposition

How value is created for HFT firms is not clear. It is intuitive to assume these firms will have a better price than trading in the exchange.

Most advertised values that Robinhood created are for individual investors. Robinhood’s mobile first strategy has appealed predominantly to a millennial demographic with over 80% of its current clients being born between 1980 and the mid 1990s, many of whom Tenev describes as having been previously “disillusioned with the state of the financial markets”. For many Robinhood has been a gateway to investing and has allowed clients with relatively smaller account sizes of between $1K-$5k to access the US financial markets with significantly lower costs.

In 2018 Robinhood launched a social network to provide free financial commentary and analysis inline with its narrative that access to financial knowledge and information should not be at a cost to the customer.

Bhatt and Tenev have been curious on how to connect users with each other because most people have found their way to investing through social conversations. Incentive strategies such as “Free Stock” sees users receive a free stock after a friend who has been referred to the platform funds their account, has given the platform a degree of social virality (Tearsheet 2017).

With users averaging 12 engagements with the app per day, Robinhood has greater engagement than all of its direct competitors added up, according to Bhatt. “The stock market is inherently social,” says Bhatt. “From the days of open outcry in the pit it’s always been about humans interacting and transacting. What we’ve got in our product right now is the beginning of a much longer product focused on social” (Fastcompany 2017).

Delivery — Value Chain

How Robinhood works for retail investors is that they receive commission free brokerage services and as a percentage of investment holding these savings are significant alongside the transaction service there is also the social financial insight community integrated into the platform allowing all users to access information and knowledge in line with their needs.

The secondary customer, to whom Robinhood sells the order flow of the retail investors receive value from an unsophisticated retail order flow creating additional liquidity in off exchange dark pools.

Monetisation — Value Capture

The majority of income is generated from interest charges charged to account holders paying for access to leverage facilities. The Gold Tier as it is known offers a “leverage subscription” charged at a base $5 per month. Interest is then charged at 7.2% per annum versus the 2.05% paid on cash balances. Access to professional financial reports and Level 2 market access is included in this subscription amount. Users on the Gold Tier also gain instant access to funds on withdrawal and deposit (Robinhood 2019).

The monetisation of the order flow sold to the HFT has proven to be somewhat controversial for Robinhood as by nature dark pools are not transparent. For many this is seen to be manipulation with an element of conflict of interest as the order is not routed to the exchange or to the best execution price but rather to the company paying for the flow. When challenged over this Robinhood indicated that it receives on $0.00026 per $1 (or 2.6c per $100) in trade value routed through the HFT firm, playing down the contribution of this revenue stream to the business. However, a closer look at Robinhood’s payment for order flow indicates that it generated ten times the revenue other brokers receive from market makers for the same volume. Analysis by Bloomberg of Robinhood’s submission to the Securities and Exchange Commission (SEC) calculated that the company generates almost half of its income from payment for order flow (Medium 2019).

Digital Technology

Robinhood is relatively more open than other fintech companies about their technology. They hold tech talks and have articles about some of their technology usage and development. There seems to be two important aspects of Robinhood technology. One is its front-end application that facing users, and the other one is its back end supporting system that contains billions of financial data points. More details regarding its Andriod application development and data lake could be found at robinhood.engineering.

SecretEscapes

Secretescapes is a travel flash-sale site that follows a matchmaking business model by connecting luxury hotel offers with individuals.

Overview

Secretescapes is a travel flash-sale site that follows a matchmaking business model. By conducting flash-sales on its website, Secretescapes connects luxury hotels and other accommodation providers with individuals looking for luxury accommodation. As a matchmaking business model it facilitates the connection of guests and hotels and these groups can and do bypass Secretescapes once connected. Users return to Secretescpes website, however, in order to view the ever-changing catalog of luxury accommodations available at flash-sale prices, and resorts will continue to list on Secretescapes as they can tap into a larger user base to sell their excess capacity at short notice.

History

The website was founded in 2010 by Alex Saint and Tom Valentine. Prior to SecretEscapes, Alex Saint found Dealchecker.co.uk, an aggregator travel deals website, which was subsequently sold. Tom Valentine worked for an online fashion brand Koodos.

Secret Escapes now operates in the UK, Germany, Sweden, the US, Denmark and Poland. As of June 2014 it had 5 million customers and launched a new app to drive further sales.

Secret Escapes is partially funded by private equity backers including Atlas Venture, Octopus Investments and Index Ventures.

In 2014, the company achieved revenue growth of 300%, and secured a $60 million investment from Google in 2015.

Customers

The website connects those looking for luxury accommodations with hotels, resorts and other accommodation providers.

Engagement  — Value Creation Proposition

Secret Escapes create value for its participants in the following ways:

Customers: the opportunity to stay at a luxury hotel or enjoy a luxury holiday at a discounted price, sometimes up to 70% from the original price. If a price on a flash sale is not the lowest online price the website will push for additional perks from the supplier or drop the flash sale altogether. To participate in the flash sale, one must become a member, for which no restrictions or fees apply.

Hotels: Secret Escapes offers the opportunity to generate additional revenue on unoccupied rooms at a lower customer acquisition cost. By placing a deal in the web site a hotel operator is able to access this database of people and sell the rooms at a short notice. As the deals are negotiated on a weekly basis, the hotel operator has the ability to sell those rooms that were subject to last-minute cancellations. Further, as the website targets high earners, these customers are likely to spend more at the resort when they arrive.

Delivery — Value Chain

To access the deals on Secret Escapes, one must become a member by providing a few details and creating an account. In this way, the web site builds up a database of potential customers who are willing to consider taking a holiday at a short notice. Once a guest books a hotel on the website, SecretEscapes sends the information to the hotel and the hotel contacts the guest for further arrangements and to recover the rest of the funds.

Monetisation — Value Capture

Secret Escape charges a small booking fee from each member booking an offer. In addition it offers an option to hold a sale item for additional fee of £25. Secret Escape also takes a commission from the sales it makes for hotels. There is no upfront cost for the hotels.

Skyscanner

Skyscanner is matchmaking site that helps people find and compare the best offers in flights, hotels and car rentals.

Overview

Skyscanner is global search engine that helps people find and compare the best offers in flights, hotels and car rentals. The main business model is a website that provides a free search service for a) travellers, and simply directs them to b) the third party travel agent, airline, hotel or car rental where the final transaction takes place; therefore, Skyscanner only charges a lead-fee to b) and does not intermediate in the final transaction, making this an example of a multi-sided business model and not a matchmaking business model.

History

Skyscanner was founded by Gareth Williams and co-founders Bonamy Grimes and Barry Smith as a response to Gareth’s frustration with the tedious process of searching for flights to visit his brother. The success of the first prototype, that spread by word of mouth reaching thousands of visitors per day, lead to the official launch of Skyscanner in Edinburgh in 2003.

The company grew to become the largest flight search engine in Europe and expanded internationally opening offices in Singapore, Beijing, Shenzhen, Miami, Barcelona, Sofia and Budapest. In 2013 the company received funding from Sequoia, the venture capital firm behind Apple and Google, who valued the company at $800 million. Today Skyscanner receives over 60 million visitors per month and offers search in 30 languages.

Customers

Skyscanner has two customers: travellers and service providers. a) Travellers are people around the world who like to plan their own trips, and only need Internet connection and a computer or mobile device to access the website or mobile app. The second group b) are travel agents, airlines, hotels and car rental companies.

Engagement  — Value Creation Proposition

The search engine helps travellers find and compare the best available offers saving them a considerable amount of time, while getting very accurate results. The platform allows users to easily filter and customise results to find exactly what they need through an easy to use tool (website or mobile app). On the other hand, travel service providers benefit from the leads at a relatively low cost, while keeping the transaction in their site; Skyscanner offers them a powerful advertising channel that reaches more than 60 million visitors per month. The interaction between the two parties happens directly in the service provider’s environment, not through Skyscanner.

Delivery — Value Chain

Users access the website or mobile app and enter their search criteria. Their proprietary algorithm and software enables searches many different service provider sites through a meta-search process. It presents the results in an easy-to-use interface on its website. Results are organised from the lowest price to the highest, and customers can filter by other criteria like number of stops or airline companies. Then, when the user clicks on the selected option she is immediately directed to the service provider’s website to finalise the transaction.

Monetisation — Value Capture

Skyscanner does not disclose financial statements and therefore we do not know its revenue breakdown; we know the company earns money from cost-per-click, cost-per-acquisition, and advertising displays and provides search services to other websites; however, as a search engine we infer its main source of revenue is per click leads charged to travel service providers.

Snapdeal

Snap deal is an Indian retail business using a matchmaking business model that connects brands with buyers.

Overview

Snapdeal is an Indian based company that serves Indian customers and has both Indian and International brands in its marketplace. Snapdeal features best priced deals on branded products like mobile phones, electronics, computer peripherals, apparels, cosmetics, perfumes, watches, bags, sunglasses, footwear, kitchenware and more. It has been rated as the number 1 e-commerce site in India by Dataquest/Sapient E-commerce Survey 2011.[i]

Snapdeal operates the digital B2C (Business to customer) marketplace, that allows third-party sellers to sell their products on Snapdeal’s website directly to Snapdeal’s customers. Snapdeal operates a portfolio business model; the company at its core operates a matchmaking business model, where it connects online sellers directly to online buyers.

It also offers complimentary products such as delivery and logistical support to businesses to help encourage the use of its matchmaking platform.

History

Snapdeal was founded by Kunal Bahl and Rohit Bansal in 2010, initially as a group deals’ site, akin to Groupon, offering customers discounts at restaurants, hotels, movie theatres and the like. [ii] The company had 70 per cent market share in the group deals and operated a matchmaking model. [iii]

The founders had seen how the giant Chinese online marketplace Alibaba.com worked and wanted to recreate the model.[iv] In 2011, Snapdeal became an online marketplace, as eBay was the only marketplace in India at the time. [v] The company’s business model therefore changed from a product business model to a matchmaking model.

Snapdeal is one of the fastest growing e-commerce companies in India with the largest online market place, as quoted by SuccessStory.com. [vi]

Snapdeal has partnered with several global investors such as SoftBank, BlackRock, Temasek, Foxconn, Alibaba, eBay Inc., Premji Invest, Intel Capital, Bessemer Venture Partners, Mr. Ratan Tata, among others. In October 2014, Snapdeal received $627 million funding from Japanese multinational corporation, Softbank.

Customers

Snapdeal has two customer groups; online shoppers in India, and small to medium businesses looking to expand their e-commerce sales across India by using Snapdeal’s marketplace.

Unruly

Unruly operates a matchmaking business model that connects website publishers or content owners with advertisers looking for space.

Overview

Unruly operates a matchmaking business model in the online advertising industry. Unruly signs up website publishers to its marketplace to make ad inventory available to advertisers. Unruly uses programmatic Real-Time Bidding (RTB) to match publishers with the advertisers that are willing to pay the most for the eCPMs (effective cost per thousand impressions, or total earning / total impressions in thousands). The RTB process ensures that both publishers and advertisers get the content and placement that delivers the highest ROI. The process is entirely automated and happens within milliseconds, making the transactions efficient and lowering costs. In separate work-for-hire and product business models that operate alongside the matchmaking business model, Unruly provides bespoke services and standardized tools, respectively, to help advertisers create “viral” content that is specifically tailored for web and mobile users.

History

Scott Button, Sarah Wood, and Matt Cooke founded Unruly in 2006 having met years earlier as classmates at university. In 2014 Unruly posted record revenues of $43m (£27.4m), representing 23% year-over-year growth. The Company’s most recent round of funding of $25m (£16m) was in January 2012, backed by Amadeus Capital Partners, Van den Ende & Deitmers, and Business Growth Fund. Other supply-side platforms include Altitude Digital, OpenX, Pubmatic, Rubicon Project, and Sonobi. In September 2015, Unruly was acquired by News Corp, and was valued at £114 million.

Customers

Unruly connects two types of customers: advertisers in need of reaching a large audience with their content and website publishers that want to attract large audiences to their websites and platforms

Engagement  — Value Creation Proposition

Unruly believes that video content cannot simply be replicated from TV advertising for online audiences, and therefore uses data analytics and beta testing to provides brands with best practices on how to create content that will be shared, clicked, liked, and promoted most heavily. For publishers it is mainly about accessing a wider range of advertisers by placing inventory on the exchange. The alternative for publishers is managing the selling process internally on a private network (difficult to set up) or each transaction individually (easy for large placements e.g. events and sports, but very hard for small, high volume, online placements).

Unruly attracts advertisers to its platform through two methods. One is the supply of ad inventory from publishers, which determines the number and kind of advertisers that will be drawn to Unruly’s exchange. The bigger and more recognizable the publishers that Unruly can sign on to provide ad inventory to the exchange the more success Unruly will have in attracting advertisers. The other half of the engagement for Unruly is providing advertisers the tools to first determine how to create viral content, second, where to place it, and third, the technology to automatically format the content so that it appears in native format no matter where on the web or mobile platforms the ad ends up being placed. Without engagement on both sides of the aisle Unruly would have a difficult time attracting either publishers or advertisers to its exchange, since the value creation proposition would be hard to determine.

Delivery — Value Chain

For publishers, there is UnrulyX and Unruly Activate, supply side platforms that focus on mobile newsfeeds and content streams (UnrulyX) and the Open Web (Unruly Activate) that aim to place viral content in native format so users (the advertisers’ target) have the best possible experience and are more likely to share what they see. By making inventory available through Unruly publishers are widening their access to viral content that will drive traffic to their websites or mobile platforms.

Advertisers can use Unruly’s data analytics platforms to deliver curated content to the exchange, with technology such as Unruly ShareRank, Unruly Custom Audience, Unruly Analytics and Unruly’s Viral Video Chart. ShareRank, Analytics, and the Viral Video Chart allows advertisers to see what tools are most effective for creating viral content, while Custom Audience is built on top of these platforms to give advertisers access to the type of content that elicits strong emotional responses from viewers and target ad purchasing with that information.

Monetisation — Value Capture
Advertisers pay the accepted bid price, which is filtered through Unruly and passed on to the publisher. Unruly, being the gatekeeper for the process, takes a fee from the auction process.

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