Strategic Platform Sizing and Participant Selection
Quality Over Quantity
Many people think that the biggest platform always wins. We often hear things like "Facebook succeeded because it has the most users" or "Amazon dominates because it has the most products." But is bigger always better?
The truth is more complicated. While size matters, the quality and relevance of connections on your platform often matter more. Some of the most profitable and sustainable platforms aren't the biggest - they're the ones that create the most valuable matches.
In this blog, we'll explore how platforms can succeed by focusing on quality over quantity, and how to find the right balance between being open to everyone and being selective about who participates.
Garvit Sahdev enjoys understanding the ideas that shape our world. The Thoughtful Tangle is an initiative to share this journey and experience with friends who love to do the same. He selects one idea and dives deep into it to understand its basics, relevance, impact, and opportunities around it.
Not every platform needs to be as big as Amazon or Facebook. The right size depends on what your platform does and who it serves. Basic fundamental thing is that you have to maximize value for users.
When to go broad:
When your service has universal appeal
When the value increases significantly with more options
When economies of scale create major cost advantages
When to go niche:
When serving a specific group with unique needs
When expertise and specialization create value
When trust and community matter more than variety
Let's compare two job platforms:
Finding Your Right Size
How do you know what the right size is for your platform? Ask yourself these questions:
What problem are you solving? Is it a general problem that affects everyone, or a specific problem for a particular group?
How important is variety? Does having more options significantly increase value for users?
How important is specialization? Do your users need deep expertise in a particular area?
What resources do you have? Bigger platforms typically require more funding and resources to build and maintain.
The Power of Relevance
Having the right participants matters more than having many participants. Ten potential customers who are likely to buy your product are more valuable than a hundred who aren't interested.
To assess participant relevance for your platform, consider:
Who are your ideal users on each side of the platform? Be specific about their needs, behaviors, and characteristics.
What kind of matches create the most value? Identify the connections that lead to the best outcomes.
Which participants are most likely to stay active? Active users create more value than those who sign up but rarely engage.
Remember: It's better to have 100 highly engaged, relevant users than 1,000 users who rarely find what they're looking for.
Screening Mechanisms: Filtering for Quality
How do successful platforms ensure quality? They use various screening mechanisms to filter participants.
Interest-Based Screening
Some platforms screen based on interests or needs:
GitHub attracts developers who care about code quality
Etsy focuses on handmade and vintage items, attracting both sellers and buyers who value craftsmanship
Peloton targets fitness enthusiasts willing to invest in premium home exercise equipment
Signaling Through Branding and Design
Your platform's look, feel, and messaging send signals about who belongs:
LinkedIn's professional design attracts career-minded individuals
Raya (an exclusive dating app) uses minimal, sophisticated design to signal exclusivity
Robinhood's simple interface signals that it's for everyday investors, not financial professionals
Using Pricing and Barriers as Quality Filters
Strategic barriers can help filter for quality:
Membership fees (like Amazon Prime) attract committed users
Application processes (like Airbnb's host verification) ensure minimum standards
Skills tests (like Upwork's proficiency tests) verify capabilities
The key is finding the right balance between accessibility and quality. Too exclusive, and you might not have enough participants. Too inclusive, and quality might suffer.
The Value of Being Selective
Being selective about who participates can create significant value. When platforms curate their participants, they often can:
Charge higher fees because they're providing higher-quality matches
Reduce support costs because carefully selected participants cause fewer problems
Build a stronger reputation and trust among users
To calculate whether selectivity makes financial sense for your platform, consider:
How much more would users pay for higher-quality matches?
How much would support costs decrease with better-vetted participants?
How would retention improve with better match quality?
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