Then, once an aggregator has gained some number of end users, suppliers will come onto the aggregator’s platform on the aggregator’s terms, effectively commoditizing and modularizing themselves. Those additional suppliers then make the aggregator more attractive to more users, which in turn draws more suppliers, in a virtuous cycle.
This is because marketplaces are not a race to growing GMV, they are a race to creating the most value for both the supply and demand side (liquidity). When you start in a small, focused market, it’s a lot easier to build liquidity and get to a meaningful percentage of that market, becoming the best place for both the supply and demand to go.
This matters, because while Web 2.0 failed at preventing centralization, we need to explore how and why these failures occurred. Without a proper retrospective analysis of what Web 2.0 was trying to do and why it failed, we risk repeating these failure modes with web3.
When it is all said and done, I believe that historians will look back at the Coronavirus pandemic as the greatest catalyst for progress and creativity in human history.