Through a conversation with Malte Zur we explore how testxchange, Europe’s leading platform for testing and certification, extended their marketplace business into a bigger SaaS. “Come for the network and stay for the tool” is a legitimate strategy, especially in B2B, to leverage the power of network effects in order to drive demand for your software business.
In our second episode of the “Platforms 4 Future” podcast, we had a conversation with Malte Zur from testxchange (www.testxchange.com), an online marketplace for testing and certification.
Just a marketplace? By far not, as a closer look reveals. Besides offering a matchmaking between companies and labs, they have also developed a software to help product companies coordinate their product tests.
Marketplace enabled SaaS platform –
Saas enabled marketplace
In the conversation with Malte, we learned that their business model started as a marketplace; but they quickly realized that the bigger problem in the market was not to find the right lab with a single click, but to get all those tests which are required for a final product organized (and that could easily be several hundreds of them). Each component of a product sometimes require different tests, and companies spend a lot of time just to coordinate – a big source of inefficiencies.
A SaaS enabled marketplace combines:
- A marketplace component that connects supply and demand to conclude a transaction andthus can generate and benefit from real network effects
- A SaaS (Software as a Service) component that offers software features to the parties
This combination has been popularly described as “Come for the tool, stay for the network.” by Chris Dixon.
This combination of marketplace and SaaS expands the value proposition of the platform to two levels of our Platform Value Stack and enables testxchange to operate more than just one monetization model.
Malte Zur continues to explain: “It depends on the need of the clients: if we help the client to find a new lab, we monetize this with a commission model, so basically we’re matchmaking a lab to a customer. We also monetize in a classic license fee model, our software. If the two parties are looking for improving the way of collaboration, then we charge both sides to pay us their license fee for using our software.”
This combination of relational and intelligence based monetization, offers a perfect mix of high margin business models. Interestingly, the SaaS is currently bigger than the marketplace business. Hence, the marketplace becomes an enabler for SaaS business.
Customers don’t come for the tool and stay for the network, it’s the other way around. They come through the network (marketplace) and stay for the tool (Software).
“Sustainability is not the priority number one [for most of the users today], absolutely not and that is a problem, of course, for all of us, because it’s all these little parts that play into it” explains Malte Zur.
And this again shows a negative pattern we observe in B2B right now. Sustainability is still low priority and profits and costs savings are still higher ranked.
This bares the question of reconciling profits and positive impact, which are generally opposed.
Malte Zur continues: “We absolutely see ourselves as being a part of a larger problem that’s affecting everybody, and so it’s imperative for us to work on sustainability. I think we, as a platform, are also helping in this aspect, by making sure that the testing gets done more locally. We have such a globalized supply chain in some areas, that it’s normal for clients to bring a product from China, for example, test it here and return it there. The traditional way has so far worked very well, but with our global footprint, now our partner labs can absolutely offer to do the testing of a larger product that is also produced in China, right there, thus basically assembling a new product.”
So platforms are giving users the opportunity to become more sustainable, but in the minds of the users, it seems that sustainability and profits are still two notions that are not aligned. With platforms, we can influence behaviors, but for now, it seems that sustainability and profits are still two distinct notions.
Any tips on key to success?
To conclude, we asked Malte Zur about what he thought could be keys to success for corporates wanting to harness the platform economy:
“I think it’s really important to stay flexible, innovate and most importantly, you should be able to pivot. This is a phenomenal advice that a lot of persons give but it cannot be emphasized enough to be relevant and competitive in a digital age.”
And we only can underline this statement: Create your vision and set it as your north star and be flexible on your journey to achieve your goals.
Thank you Malte Zur for the great insights.