A Study of More Than 250 Platforms Reveals Why Most Fail⁠↗

We grouped the most common mistakes into four categories: (1) mispricing on one side of the market, (2) failure to develop trust with users and partners, (3) prematurely dismissing the competition, and (4) entering too late.

Sidecar pioneered the peer-to-peer ridesharing model before Uber and Lyft, but it never became a household name. It deliberately pursued innovation and a conservative slow-growth strategy in order to be financially responsible. The fatal flaw was not recognizing the importance of attracting both sides of the platform.

Second, since platforms are ultimately driven by network effects, getting the prices right and identifying which sides to subsidize remain the biggest challenges. Uber’s great insight (and Sidecar’s great failure) was recognizing the power of network effects to drive volume by dramatically lowering prices and costs on both sides of the market. While Uber is still struggling to make the economics work (and it may yet fail as a business), Google, Facebook, eBay, Amazon, Alibaba, Tencent, and many other platforms started by aggressively subsidizing at least one side of the market and made the transition to high profits.