Platforms That Grow Are More Than Matchmakers

In 2011, Airbnb, the vacation-rental Web site, learned it wasn't just in the business of pairing up short-term renters with people who had a spare room or an empty apartment. It was also a risk manager -- or would have to be if it wanted to continue to grow. Seven years after EJ's misfortune, Airbnb is booming. It raised $1 billion in funding last year and is estimated to be worth $31 billion. I'd credit at least some of that success to the company's realization that it had to think differently about risk and to manage it. Platform businesses, like Airbnb, the transportation service Lyft, and even the dating site Tinder, often talk about themselves as if they're merely matchmakers (and some of them certainly are that). Many platforms encourage suppliers and buyers to review one another, thus creating online reputations. Airbnb has also created a feature called Social Connections, which lets users integrate their social networks into their transactions for extra verification and comfort.