STRAMGT 329: The Grand Bazaar on Clouds: Strategy for Marketplaces
Mohammad Akbarpour
Stanford GSB
SPRING 2023
STRAMGT 329: The Grand Bazaar on Clouds: Strategy for Marketplaces
Course Overview
In this class, we will analyze the economics and strategy of marketplaces for goods and services. We
will consider the forces that have led to the proliferation of these marketplaces, as well as the
strategic choices that determine which ones succeed. We will also study the strategy of managing
these marketplaces: how should matching work, how can marketplace design solve problems of
congestion or market thinness, how to get feedback and design a well-functioning rating system, and
how a platform should trade off the welfare of the different sides of the market as it enters and
grows. We will discuss marketplace design ideas that can improve trust and create a safe
environment. We will also learn how to design non-monetary markets such as school choice, kidney
exchange, and food banks. Finally, we will discuss the regulatory challenges of these marketplaces,
especially with regard to labor income, price control, and monopoly power. Applications include ridesharing and transportation; room-sharing and vacation rentals; Neobanks; creator/passion economy;
B2B marketplaces; dating; and organized labor markets.
Contact Info
Office Hours
Faculty Support
Mohammad Akparpour
mohamwad@stanford.edu
By appointment
Sharon Lumagui
sharonml@stanford.edu
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STRAMGT 329: The Grand Bazaar on Clouds: Strategy for Marketplaces
Mohammad Akbarpour
Stanford GSB
SPRING 2023
COURSE REQUIREMENTS
I.
Class Participation (20%)
II.
Final Project Assignment (80%)
I. CLASS PARTICIPATION (20%)
Students are expected to participate in class actively and constructively. Absence, tardiness,
and lack of preparation will have a negative impact on your grade. Laptops and other electronic
devices are not permitted and use of devices in violation of the policy will negatively impact
class participation.
Class Discussion. The first class will focus primarily on conceptual frameworks and key course
concepts. The rest of the class will apply these concepts to various cases, mainly presented by
guest speakers.
Preparation and reading should focus on the background and the relationship of the facts to
course concepts rather than being ready to argue a position about the case problem.
A few academic articles will also be used. Most of the articles have a bit of mathematics or
statistics in them. Students should not be concerned about technical material, but rather focus
on the ideas and background information presented.
In evaluating class participation, we will consider the following:
• Is the participant a good listener?
• Are the points that are made relevant to the discussion? Are they linked to comments of
others?
• Do the comments show evidence of having completed assigned readings?
• Do they move the discussion forward by introducing new aspects or issues to consider,
or do they restate points that have already been made?
Please keep in mind the following:
• Well posed questions are not only a legitimate way to interact but should be an
important part of our discussions.
• In most of the issues we discuss, there is some controversy in the industry and even
within firms about the best course of action for the relevant parties, or what the role of
government regulation should be, or whether the big firms are behaving in a way that is
good for the internet ecosystem and innovation. Enlightened debate about the best
plan to implement can add significantly to the understanding of the issues.
• Because of the varied backgrounds in the class, many of you will have important
contributions to make based on your personal experience. We will try to learn about
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STRAMGT 329: The Grand Bazaar on Clouds: Strategy for Marketplaces
Mohammad Akbarpour
Stanford GSB
SPRING 2023
your backgrounds over the course of the term, but you are encouraged to bring these
experiences to bear in the discussion.
Class Attendance. You are expected to attend every class. That said, other demands orillness may
require you to miss a class. In that light, please be aware of the following:
You are allowed one general excused absence. Due to the special circumstances, any student who
is feeling sick or has any of the symptoms (however mild) of Covid‐19 is advised to stay at home
and not come to the class, so this year we will have unlimited illness‐related absence policy.
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However, to excuse your absence from class, please do the following: Find out from a
classmate what was covered in class.
o Write a one‐page summary of the main points in class and upload it to the online
course site prior to the beginning of next class.
Students with extraordinary circumstances who may need to miss more than one
class for reasons beyond Covid symptoms should contact Professor Akbarpour at
mohamwad@stanford.edu in advance.
II. FINAL PROJECT ASSIGNMENT (80%)
Your final project assignment consists of three parts. The first must be submitted on Canvas by
11 a.m. on June 5th. The second and third must be submitted by 11:59pm of June 9th. All of the
parts pertain to the topic assignments, which will be available on Canvas.
The first two parts are done in a group. Groups will be formed randomly.
The first part (30%) is a group presentation on the last day of class. Details of the presentation
timing and rules will be announced on Canvas.
The second part (30%) is a 5‐to‐7‐page paper (12 pt., 1.5 spacing, 1‐inch margins, page count
not including any figures or references) summarizing the group’s findings for the project.
The third part (10%) is to be completed INDIVIDUALLY without discussion with group members.
This individual submission should be one‐half to one page (same format as above). Details are
provided below.
The peer-review part (10%) is to incentivize all group members to participate. In the past, some
group members contributed substantially less than others, which disappointed their
groupmates. This year, group members will rate their peers at the end of the quarter and only
the grade of those who are rated low by all other members of their group will be impacted.
This will be explained in more detail in the first session of the class.
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STRAMGT 329: The Grand Bazaar on Clouds: Strategy for Marketplaces
Mohammad Akbarpour
Stanford GSB
SPRING 2023
The goal of the project is to come up with a marketplace idea and analyze its prospects of
success using course concepts. During the quarter, you should assume you’re planning to
develop enough depth in understanding to finally convince a VC to provide pre-seed funding
for your idea. I may (or may not) bring a VC to the final student presentations session. That
said, you should not be worried if you learn at some point that your idea isn’t feasible for
some reason, or there’s a similar company out there. Most ideas fail anyways. The learning
goal is to practice the concepts of the class to evaluate an idea in a few weeks.
Your group papers (part 2) should explicitly address all of the following concepts. We will grade
the papers by giving a score to each topic. Of course, some of these are more/less important
depending on your idea, and we will take that into account.
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Who are the customers? What are the different sides of the market? What is the key value
proposition for each customer group/side of the market?
o What is the specific customer need addressed by this category of marketplace?
o What would happen if this marketplace or marketplace category didn’t exist –
what is the customers’ next best alternative to meet their needs?
o How much better is this solution compared to the next best alternative?
How does customer acquisition/distribution work on each side?
o Are there important players/intermediaries (e.g., app stores, search
engines, industry aggregators, advertising platforms)?
o Can business deals either facilitate or block entry? Can exclusive contracts play
an important role? Would they be important?
o Are there economies of scale in the marketing strategy? Explain why or why not.
What are the key choices about market design?
o What is the pricing strategy (for each side of the market)? Are there other
revenue sources or important elements of the business model?
o What is the matching approach (e.g., centralized versus decentralized)? Is
congestion an issue and how is it addressed?
What is the competitive advantage of a successful firm in this market? How sustainable
is it, and what are barriers to entry?
o What are sources of same-side and cross-side network effects? How strong are
they?
o Do participants on each side single-home or multi-home? How does this affect
market competitiveness and entry barriers?
o Are there barriers to entry due to marketing and distribution, e.g.,
scale economies?
o What is the role of data and/or machine learning?
o Are there other sources of economies of scale? What are they?
o What is the role of proprietary technology or know-how?
What is the expected industry structure?
o What does competition look like today? How is it likely to evolve?
o Is there room for multiple players in a steady state, or is this a winner-take-all
market?
o Are there different options for vertical integration and what are the tradeoffs?
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STRAMGT 329: The Grand Bazaar on Clouds: Strategy for Marketplaces
Mohammad Akbarpour
Stanford GSB
SPRING 2023
What are the key risks in front of this business / idea / industry?
o What are the most likely reasons for it to fail?
• What are regulatory issues?
o Is this business good or bad for each side of the market, in the short term and in
the long term? (e.g., in the case of Uber, the short term might take as given Uber’s
existence, while the long-term factors in the disappearance of taxi jobs)
o How is the value created shared across each side of the market and the
marketplace? (You might consider alternative scenarios for industry structure
here, if that is uncertain.)
o How might regulation impede the business?
o Do you think there is a role for regulation in making constituents better off in this
business?
The third part of your assignment is to write a one‐page executive summary of your paper. You
must do this individually, please do not discuss your write‐ups with anyone else. Your objective
here is two‐fold: 1) summarize the salient points of the paper in your own words, and 2) give
voice to your own points of view in case you disagree with the group consensus on a particular
point. The summary should NOT cover ALL concepts from the paper, but rather should pull
together a story for the problem that hits the most important of the concepts. Think of it as the
elevator speech you would give to a sophisticated listener on platform strategy for your
problem, after you did the background research. The individual assignment will be evaluated
for its ability to tell the story of this platform and identify the most important forces.
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