Lunchclub: Algorithmic Networking

Scott Duke Kominers; George  Gonzalez

Case | HBS Case Collection | January 2020

Lunchclub: Algorithmic Networking

by Scott Duke Kominers and George Gonzalez

Abstract

Algorithmic networking startup Lunchclub coordinates in-person meetings between professionals who would have been unlikely to meet. The company faces marketplace design, growth, and monetization challenges: The executive team has to refine Lunchclub's marketplace strategy and determine whether the company should continue to focus on its current use cases and geographical hubs or expand the platform's scale and scope. And while Lunchclub unlocks significant value by brokering new connections, the team still has to identify whom to charge and how.

Keywords: monetization strategy; Networking; Business Startups; Marketplace Matching; Market Design; Growth and Development Strategy; Information Industry;

Language: English

Format: Print

14 pages

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Citation:

Kominers, Scott Duke, and George Gonzalez. "Lunchclub: Algorithmic Networking." Harvard Business School Case 820-051, January 2020.

This paper develops a class of equilibrium-independent predictions of competitive equilibrium with indivisibilities. Specifically, we prove an analogue of the “Lone Wolf Theorem” of classical matching theory, showing that when utility is perfectly transferable, any agent who does not participate in trade in one competitive equilibrium must receive her autarky payoff in every competitive equilibrium. Our results extend to approximate equilibria and to settings in which utility is only approximately transferable.

Hatfield and Kominers (2012) introduced a model of matching in networks with bilateral contracts and showed that stable outcomes exist in supply chains when firms' preferences over contracts are fully substitutable. Hatfield and Kominers (2012) also asserted that in their setting, full substitutability is equivalent to the assumption that all indirect utility representations of each firm's preferences are quasisubmodular; we show here that this claimed equivalence result does not hold in general. We show instead that full substitutability is equivalent to weak quasisubmodularity of all indirect utility representations.

Home delivery has shifted from a luxury service aimed at young urban professionals to a core part of many businesses, which is used by almost everyone. That upheaval has strained capacity of many delivery services and changed how they relate to the suppliers that they depend on. Specifically, it has meant a less immediate focus on customer acquisition and retention, and more investment in metrics and technology for supporting retailer operations. As delivery becomes a substantial fraction of stores’ sales, marketplaces can help coach suppliers on more efficient fulfillment; identify and share best practices around staffing, store layout, and delivery processes; and provide technology solutions to help small businesses optimize their operations around delivery, such as cloud-based inventory logs and modern point-of-sale systems.

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Lunchclub: Algorithmic Networking

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