"What You Don't Know About Your Marketplace Type" - James Currier, NFX Guild
Summary
TLDRThe video script offers a comprehensive guide for building successful marketplaces, highlighting 12 key factors. It emphasizes the importance of network effects, identifying the right playbook for different marketplace types, and addressing asymmetries in supply and demand. The speaker also stresses the need for providing economic advantages, considering frequency and average sales price, and preventing multi-tenancy and disintermediation. The script concludes with the significance of owning the payment flow, market fragmentation, market size, and the potential to expand into adjacent markets.
Takeaways
- 🌐 The core of a successful marketplace is the network effect, where both supply and demand sides contribute to each other's growth, creating a self-sustaining ecosystem.
- 📚 Understanding the type of marketplace is crucial, whether it's two-sided, one-sided, three-sided, or an insider marketplace, as each has different dynamics and strategies for success.
- 🔍 Identifying asymmetries in supply and demand is key; marketplaces often start with an excess on one side and must work to balance it to create a functional market.
- 💰 Providing an economic advantage to one or both sides of the marketplace is essential for sustainability and growth.
- 🔄 Frequency of transactions is important; higher frequency can lead to stronger customer loyalty and a more robust marketplace.
- 💰 High Average Sales Price (ASP) can significantly impact the potential size and success of a marketplace, especially when combined with frequency.
- 🚫 Watch out for 'multi-tenancy' where suppliers can easily switch between platforms, which can erode profits and create challenges for the marketplace.
- 🛑 Disintermediation, where direct relationships form outside the marketplace, can be detrimental and needs to be prevented to maintain the marketplace's relevance.
- 💼 Owning the payment flow is vital for marketplaces as it provides better control over revenue and the ability to offer additional services.
- 🏪 High fragmentation in the market can be advantageous for marketplaces as it reduces the risk of being dominated by a few powerful players on either side.
- 🔑 Solving the complete need for one side of the marketplace can lead to deeper integration and loyalty, reducing the risk of disintermediation.
- 🌟 While market size is important, the potential for growth, especially if the marketplace can expand the market itself, should not be overlooked.
Q & A
What are the 12 key factors to consider when building a successful marketplace?
-The script outlines 12 factors: network effects, the right playbook for market type, asymmetries in the marketplace, economic advantages for participants, customer frequency, high average sales price (ASP), avoiding multi-tenancy, preventing disintermediation, owning the payment flow, market fragmentation, solving complete needs of one side, and the overall size of the market.
Why is the network effect important in a marketplace business model?
-The network effect is crucial as it is the core of what makes a marketplace business work. It creates a virtuous cycle where the value of the marketplace increases as more participants join, making it hard for competitors to replicate.
What is meant by 'playbooks' in the context of marketplace types?
-Playbooks refer to the strategies and approaches tailored to the specific type of marketplace, whether it's geographically constrained, has one-sided or two-sided dynamics, or involves multiple stakeholders.
How does a marketplace prevent multi-tenancy issues?
-To prevent multi-tenancy, a marketplace can focus on fulfilling all the needs of participants so they have no reason to use multiple platforms. This may involve exclusive contracts or creating a more comprehensive service offering.
What strategies can a marketplace use to prevent disintermediation?
-Marketplaces can prevent disintermediation by owning the payment flow, creating strong relationships with both sides of the market, and implementing features that discourage direct deals outside the platform.
Why is the frequency of customer transactions important for a marketplace?
-Frequency is important because it helps build customer loyalty and provides a solid foundation for the marketplace to expand into other services or products. High-frequency transactions can also lead to a larger market share.
How does a high average sales price (ASP) benefit a marketplace?
-A high ASP can lead to a more profitable marketplace, as it requires fewer transactions to reach significant revenue milestones. It also indicates that the marketplace is dealing in high-value goods or services.
What is the significance of market fragmentation in a marketplace?
-Market fragmentation is important because it can indicate the potential for a marketplace to consolidate supply or demand, creating a more efficient and profitable platform. However, too much concentration can lead to less leverage for the marketplace.
Why is solving the complete need of one side of the marketplace important?
-Solving the complete need of one side can lead to increased loyalty and retention, reducing the likelihood of multi-tenancy and disintermediation. It also positions the marketplace as an indispensable tool for that side of the market.
How does the size of the market impact the potential success of a marketplace?
-A larger market size offers more opportunities for growth and revenue. However, the script also suggests that even in smaller markets, if a marketplace can capture a 'white-hot center' and expand into adjacent markets, it can still be successful.
What can a marketplace do to enhance the network effect?
-A marketplace can enhance the network effect by showing participants the activity happening within the platform, designing products that encourage interaction, and creating features that retain and strengthen the network effects.
Outlines
🚀 Introduction to Marketplace Dynamics
The speaker, a managing partner at nfx, a seed stage venture capital firm, introduces the topic of marketplace dynamics. They have experience investing in over 60 marketplaces and building several. The focus is on the 12 essential factors for creating a successful marketplace. The speaker emphasizes the importance of network effects, explaining how they are the core of a marketplace's success. They illustrate the concept with examples like Lyft, where the presence of drivers attracts more drivers and riders, creating a self-sustaining cycle. The speaker also discusses the importance of enhancing network effects through product design and retaining users to build a robust marketplace.
🌐 Understanding Marketplace Types and Asymmetries
The speaker delves into the different types of marketplaces, such as two-sided, one-sided, and three-sided marketplaces, using examples like Uber, Craigslist, and Match.com to illustrate the differences in their dynamics and network effects. They also introduce the concept of asymmetries within a marketplace, explaining how identifying and leveraging these imbalances between supply and demand can be crucial for a marketplace's success. The speaker advises on the importance of focusing on either the supply or demand side, depending on the type of asymmetry present in the marketplace.
💰 Providing Economic Advantages and Frequency of Transactions
The speaker discusses the necessity of offering economic advantages to one or both sides of a marketplace to ensure sustainability. Examples such as Square and Craigslist demonstrate how providing such advantages can boost revenues and user engagement. The concept of transaction frequency is also explored, with the speaker highlighting how high-frequency transactions, like in food delivery or fashion marketplaces, can build loyalty and expand into other services. The speaker warns against marketplaces with low-frequency transactions, suggesting that they require different strategies to succeed.
💎 High Average Sales Price and Multi-Tenancy Risks
The speaker emphasizes the importance of a high average sales price (ASP) in marketplaces, using Airbnb and outdoorsy as examples to show how high ASP can lead to significant business valuations. They also introduce the concept of multi-tenancy, where service providers can operate on multiple platforms simultaneously, and discuss the challenges it poses to marketplace profitability. The speaker suggests strategies to mitigate multi-tenancy, such as fulfilling all user needs within a single platform to discourage users from spreading across multiple services.
⚠️ Disintermediation and Payment Flow Ownership
The speaker addresses the issue of disintermediation, where direct relationships are formed outside of the marketplace, using Homejoy as a cautionary example. They suggest techniques to prevent this, such as offering unique value within the platform to keep users engaged. The importance of owning the payment flow is also highlighted, as it provides better opportunities for revenue generation and service expansion. The speaker advises marketplaces to ensure that payments are processed through their platform to maintain control and add value.
🏪 Market Fragmentation and Complete Need Satisfaction
The speaker discusses the impact of market fragmentation on the success of a marketplace, noting that high fragmentation can be advantageous by reducing the leverage of concentrated players. They use examples to illustrate the challenges faced when dealing with a few powerful buyers or suppliers. The speaker also introduces the concept of solving the complete need of one side of the marketplace, suggesting that providing essential tools or services can increase loyalty and prevent users from seeking alternatives.
🌟 Market Size and Potential for Growth
The speaker concludes with a discussion on the size of the market and the potential for growth. While investors typically prefer large markets, the speaker argues that smaller markets can be advantageous if they can 'bleed' into adjacent markets or if the marketplace itself can significantly expand the market size. Examples like Lyft and Uber are used to demonstrate how the existence of a marketplace can increase overall market activity. The speaker encourages considering the potential for market expansion when evaluating the size of the market opportunity.
Mindmap
Keywords
💡Network effect
💡Marketplace types
💡Asymmetries
💡Economic advantage
💡Frequency
💡Average Sales Price (ASP)
💡Multi-tenancy
💡Disintermediation
💡Ownership of payment flow
💡Market fragmentation
💡Solving complete need
💡Market size
Highlights
The importance of network effects in marketplace businesses and how they are essential for driving growth and competition.
The necessity of having both supply and demand sides in a marketplace to create a network effect and sustain the business.
Different marketplace types, including two-sided, one-sided, three-sided, and multi-sided marketplaces, and their unique dynamics.
The significance of identifying asymmetries in supply and demand within a marketplace to leverage them for business advantage.
Providing economic advantages to one or both sides of a marketplace to ensure sustainability and growth.
The role of frequency in marketplace success, with high frequency activities leading to better customer loyalty and business growth.
The impact of Average Sales Price (ASP) on marketplace valuation, with higher ASPs often correlating with higher market caps.
The challenge of multi-tenancy in marketplaces and strategies to prevent it from eroding profits and market share.
Disintermediation as a risk in marketplaces and creative solutions to prevent users from bypassing the platform.
The critical role of owning the payment flow in a marketplace for added control, revenue, and service opportunities.
The benefits of high market fragmentation for a marketplace, allowing for more opportunities and less competition.
The risks of a marketplace with few powerful buyers or suppliers and strategies to mitigate the challenges they pose.
The potential for a marketplace to solve the complete need of one side, increasing loyalty and preventing multi-tenancy.
The importance of market size in evaluating a marketplace, with small markets offering opportunities for rapid growth and expansion.
The potential for marketplaces to expand the size of the market they operate in, creating new opportunities and growth.
The comprehensive list of 12 key factors to consider when building a successful marketplace business.
The speaker's experience and insights from investing in over 60 marketplaces and building several himself.
Transcripts
I'm the managing partner at nfx which is
a seed stage venture capital firm we got
an office in San Francisco Tel Aviv and
Palo Alto I've invested in over 60
marketplaces over the last 15 years
built several myself and today what
we're gonna go through is the 12 things
that you need to look for to make sure
you've got the best market place you can
have and I think as time has evolved
about marketplaces what these things are
have changed so let me walk through the
12 with you let's get right to it so the
first of the 12 we've got a funny
blockage here I've been told about reach
over like that was that working for him
before okay okay there we go I don't
know who's got metal on their body but
something's happening okay so look guys
this is our basic Market Place idea
right you've got your supply side you've
got your demand side of some kind and
there's money moving between these guys
all right this is a network effect this
is the core of what makes your business
work some people in the past have said
this is a nice to have this is not a
nice to have this is the only thing to
have okay and to get this thing going
you know you get let's say you get a
supply person on there like a lyft
driver right and nobody is using the
lyft app other than a lyft driver a
second lyft driver comes along second
lyft driver comes along and it doesn't
really help the other person right so in
order for there to actually be a market
place you've got to get some demand to
come now there's some action now this
person is gone why did this person come
along this person came along because the
other two drivers were there so even
though the drivers compete with each
other for revenue they helped create the
marketplace by having there be enough so
that someone even shows up at all all
right so that's how you start
to build these marketplaces and that's
where the network effect kicks in when
the next person comes okay and the more
people on both sides then things start
to really cook this is the network
effect once you get this going it's hard
for others to potentially get it going
and why would people go elsewhere okay
so this is the core of what you need to
see building now there are many ways to
actually enhance this and I know we
understand this basic fundamental
principle but there's ways to enhance
this by showing the other drivers that
other drivers are there by showing these
people what activity is happening
between the others to give a people a
sense that the network effect is adding
value to them you can design the product
to enhance this activity to enhance
these retaining network effects that you
want to build in your marketplace okay
so you need to constantly think about
how that's done the second thing you
should be looking for in your
marketplace is to have the right
playbooks for your market type okay so
what's your marketplace type and most
people don't think about this for some
reason but let me walk through it can
you move it forward
there we go okay ignore this I'm not
sure where that's there next let's see
let's go to this place okay so one thing
you want to think about is are you
geographically constrained or not right
are you do you graphically constrained
or not and then what type of network
effect are you trying to build what type
of business do you have so for instance
uber is a and lyft are a two sided
marketplace this is what we typically
think of is what we just discussed
uber and Craigslist are both
geographically constrained monster a
little bit less so okay because people
can move from city to city to take jobs
about 20% of people move every seven
years so it's it's geographically seen
but not as do you golf games constraint
oh this is so stupid
so eBay not at all geographically
constrained people just sent to
each other all over the place right so
when you look at these two sided
marketplaces you can see that they're
actually very different in the mechanics
of what's going to make the marketplace
work all right
all right so then there's also these
one-sided marketplaces for instance
match.com now I put it right on the line
because it's kind of a two sided
marketplace because men and women are
actually quite different right we all
know that you try to get the women there
then the men will come okay they're
quite different but it's still a
one-sided marketplace everyone's there
for the same thing
they're both a buyer and a seller so we
call that a one-sided marketplace it's
also the case that Etsy and Poshmark who
are not geographically constrained have
dynamics that look like a one-sided
marketplace where a huge percentage a
majority of the people who are selling
on Etsy and on Poshmark are actually
buying on it so those are actually the
same people okay so this is what we
think of as a one sided marketplace to
the extent that you can create a
marketplace that feels one sided or
behaves one sided it's a good thing
because every new person you bring on
you get both a buyer and a seller all
right you then have that King you got
the three sided marketplaces now this is
not for the faint of heart it's hard
enough to do the two sided marketplaces
but a company like a fit mob or an
honour you know so a fit mob they
thought they had a two sided marketplace
between the teachers of the fitness
classes and the people taking the
fitness classes but they got into it and
realized oh it's actually a three
starter market list because those people
need a place to meet so you so the third
part of that market place was the venues
all right not good hard to manage honor
the same thing not only do you have the
nurse who has to take care of the old
person in their home but you also need
the children of the old people who are
generally involved in their care so it's
a three sided mark like complicated to
manage all right
and so both companies have had to figure
out ways to shrink it down to a two
sided marketplace in order to grow and
be successful I'll just tell you to
click how's that that'll be great
and then we've got these incited
marketplaces click so honey book is a an
insider marketplace around the events
businesses that's where they've started
and now they're expanding from that but
you have n sides meeting you had the
event planner you have the photographer
you have the florist you have the
caterer this is a network
of professionals who are all buying and
selling services with and from each
other in the service of one piece of the
demand side click how this is the same
situation with the contractor the
architect the interior designer these
people are all on that platform
click and then angellist as well you've
got the investors you've got the
founders you've got the employee you
know the the customers these these are
now non-geographic constrained whereas
these are more geographically distinct
click and then you've got to further
your thinking you've got a one sided
network like next door geographically
constrained or you've got the big boys
which are the non geographically
constrained one sided networks
ok so as you think about your
marketplace type figure out which sector
you're in because there's different
playbooks for different businesses all
right the third thing click third click
asymmetries look for asymmetries in your
marketplaces ok click some people say
that so first you have to have them in
your marketplace alright look at your
marketplace see what asymmetries there
might be you have to find them identify
them measure them and then you have to
figure out how to actually use them
alright so for instance this is a
situation where you obviously have a lot
of supply and smaller demand realize
that that's the that's the type of
marketplace you have because click you
know companies like Lending Club and
upwork so upwork has plenty of supply of
Engineers around the world to help but
they're constantly trying to work on
getting more demand right Lending Club
same thing plenty of people willing to
loan money to people who want loans hard
time getting people to take the loans
alright Catalan which is a consulting
marketplace out in New York these guys
have a lot of supply of consultants they
work really hard on getting the buyers
all right click this is the opposite you
might have a market place click like
uber where they spend most of their time
working on the demand side that's to me
the supply side constantly working to
try to get more drivers because there's
plenty of people who want the rides
opentable took them seven years of
building up the supply side
before they opened up the marketplace to
the the man that they had outdoors you
the same thing with the RV rentals
marketplace they've focused much more on
the supply side because the demand is so
overwhelming so different big market
places can be either and now what you'll
see in the literature often is that you
got to focus on supply that's not true
you can focus on either side it depends
on what type of marketplace you have
click if you have a situation like this
where you can't see an asymmetry on
demand or supply often what you need to
then find is the asymmetry in terms of
what types of supply there are ok not
all supply is the same so think about
the differences the asymmetry is in the
types of supply you have identified the
white-hot center on your supply side
look for the same types of asymmetry on
your demand side and then try to connect
those two and that's where you're gonna
find asymmetry this way not this way
ok next slide clear good so the fourth
thing is to try to give the economic
advantage to one or both sides if your
marketplace doesn't give an economic
advantage to one or both sides it's not
going to be sustainable flat out you
can't just say oh it's simpler but the
price is the same for both sides those
marketplaces don't work if you look at
square right if you're a vendor and
you're trying to sell more stuff it
gives you an economic advantage because
now you can have you can take credit
cards by putting in that little dongle
right that gave you a huge economic
advantage 20-30 percent bump in revenues
instantly does it give an advantage to
the buyers no but it did to one side and
that was to the to the supply side okay
and that was enough to get them going
Craigslist gives economic advantages to
both I get it cheaper I get to sell
something at all otherwise I would've
thrown it out right
Airbnb I've got this apartment suddenly
I have a huge economic advantage I'm
making six thousand dollars a year Oh
wasn't making before that's gonna keep
me on there over and over again and on
the other side the demand side
getting a cheaper experience than I
would have buying a hotel so when you
look at successful businesses make sure
you're you're really adding to the
economic value if you aren't then figure
out how to and if you can't figure it
out then get out of that business and
get into a marketplace where you can
next slide the fifth thing frequency
okay look to see how rapidly your
customers come back and do it again next
slide for instance why do you think
everyone got into the food delivery
business when they were looking at
marketplaces it's because of frequency
it was the thing that consumers eat
three times a day they might order food
twice a day that's a really high
frequency it's a good basis on which to
build loyalty to actually own that
demand side and then you can expand out
into other sorts of deliveries so why
when uber went into delivery do they go
to goober eats frequency you're looking
for frequency same thing with Poshmark
like this is this used clothing
marketplace which is now doing 600
million in gmv it's a huge company but
they're doing it because the people who
are buying this stuff and the people who
are selling the stuff are doing it very
frequently every day the people using
Poshmark are getting on seven times a
day to look at the different fashion
that they can buy because buying fashion
is something that people do on a weekly
basis okay
alternatively you've got companies like
indeed which created a jobs marketplace
where people are only changing jobs
every year and a half three years five
years right well some of you probably
every six months because you're getting
fired I'm just kidding but you you know
this is not a super frequent activity
they were still able to build a big
marketplace but they had to really
develop Play Books and approaches that
allowed them to make a business with
such infrequent purchases Helix this is
a marketplace for people to put in your
your DNA typing you know your your 23
meat type of thing and then buy things
because of that how often do you
actually type your DNA once maybe twice
because your wife or husband doesn't
believe you you know 12 years later but
you're not doing it very frequently
they're still trying to build a
marketplace in that space with really
infrequent activity but in general
frequencies better than in frequency
okay be clear about that next slide the
sixth thing
looking for high ASP average sales price
high ASP right so next slide so if you
look at air B&B you know what 600 bucks
average order size you look at outdoorsy
right more than $1,000 order size per
order if you could hire $10,000 every
time they make a placement it's $10,000
that's a high ASP right that's right up
there with diamond rings right which is
what Blue Nile was built on so if you've
got high as Pete how many if you if
you're selling something for $10,000 how
many do you need to sell before you have
a hundred million dollar business it's
like nothing you can do in a month hey
I'm kidding but it's a lot easier if
you're selling big-ticket items okay and
so when you look at marketplaces why do
you think so many people are sitting in
real estate market places because it's
the biggest ticket item
it's the biggest ASP alternatively again
Poshmark you know they were down around
40 bucks per purchase opentable one buck
opentable makes one dollar every time
someone makes a purchase right so they
better they better have high frequency
at $1 again different playbooks multiple
billion dollar companies but understand
where you are infrequent on ASP and all
things being equal higher ASP is better
and so when you take high frequency or
relatively high frequency and high ASP
you get something like Airbnb right 20
30 40 billion dollar market cap alright
next level okay the seventh thing out of
12 watch out for multi tenant
what's multi tenant Multi tending next
slide is this every driver can multi
tenant if they want to they are a tenant
on uber they are a tenant on lift I am a
tenant on lyft and uber as well I favor
lift when I can't use lift I switch over
to Hoover alright there's a problem for
both of these companies these companies
are losing money in every trip when will
they turn a profit it'll be interesting
to see it's gonna be a real challenge
for them think about this with your
market what can you do to keep people
from multi tending on your marketplace
how can you fulfill all their needs so
that they will stop multi tailing watch
out for this
because this can really erode your
profits all right it'll it'll put you in
a fundraising cycle which will road your
equity and maybe kill you if you can't
get that B and C and D round all right
be careful multi timing next the age
thing disintermediation
what's that homejoy all right this is a
marketplace for people to come in and
clean your home
they were disintermediated because the
person would come into your home they'd
find the person on your on the home
joint marketplace they'd meet the person
they'd like the person they would then
hire the person full-time because they
met them in person and they liked them
this is a marketplace which naturally
tends to monogamy it naturally tends to
monogamous relationships and they didn't
look at the unit economics and they
didn't block the dis remediation before
they ran out of the 50 million dollars
that they raised famous crash-and-burn
marketplace scenario pretty basic
reasons for them crashing okay didn't
have to happen all right next one be
hired these guys have they get paid ten
thousand bucks so if I'm a company and
I'm hiring someone I have a pretty big
incentive not to tell hired that I hired
the person because I can save ten
thousand bucks if hired doesn't know so
what is hire do famously they send a
they send a message to the the person
who's been on their platform and says
hey we want to send you a bottle of
champagne for 150 bucks where should we
send it let us know when you've been
hired and who you who hired you right
that's really gosh sweet that's really
nice of them and you type it in and
they're like and then they know who to
call hey we hear you hired so-and-so no
I guess what I did okay so I'm in my ten
thousand dollars so that's how they've
been closing the loop on
disintermediation all right and so think
of techniques to close these loops and
these loops will take place if you can
have about 10% disre mediation or below
that'll be okay anything above that you
should start to panic and really start
working on features to block it
tutor.com same thing this tends to
monogamy once I find a good tutor for my
math or for my piano or whatever I'm
gonna want to stay with them I'm gonna
go around the platform and not pay the
10% 20% fee all right the other thing
that we do with the
Marketplace's as well often will say for
the first one we get 50% of the revenue
from your first visit subsequent ones we
get 5% or something like that so that
you still have a robust marketplace but
you disincentivize the supply from going
around you and getting the payment
directly you work on their calendars you
would there's lots of techniques you can
use to stop the disintermediation next
slide 9 thinks out of 10 owning the
payment flow for me this seemed kind of
obvious I've been surprised at how many
marketplaces don't intuitively
understand that if the payment comes
through them they're gonna have a much
better opportunity to take their
percentage to take their rate to add on
extra services to do upsells to increase
the ASP all those things are true if you
control the payment you want to be the
place where the payment comes through if
you're not currently moved to model
where you're putting that payment wall
up in front of them take the money in
your possession and then hand it out to
whoever needs to get it in that process
but you've got to own the payment flow
if you can number 10 look for a high
fragmentation some of these markets are
too concentrated on either supply or the
demand side for you to make a real
marketplace right an example if you've
got a broad fragmentation on both sides
that tends to be pretty good
next next this is less good because
you've only got a few demand side people
that you can go after and they're gonna
have more leverage over you to
disintermediate you to multi-tenant to
do all those things example with hired
they're going after engineers there's
only a few big hires like Google
Facebook but it's impossible for hired
to tell their demand side do all of your
hiring through hired
so there's multi tending like crazy on
this side it's really easy for them to
disintermediate because of their
communication with the whole ecosystem
because they have 800 recruiters on
staff and so that's an example where
this is less good it's possible but it's
less good okay next slide
you've got the this is really hard when
you get down to a market where you've
got you know tens of powerful buyers
maybe even
a few per geography it starts to get
pretty hard okay and the next slide this
is almost impossible when you've got two
big players on one side and I have a lot
of people come to me with the
marketplace saying hey we've got a
relationship with that person now I'm
like yeah but you're gonna have no
economic leverage it's gonna be really
hard for you to build a significant
business and as soon as they change
their policy or make an announcement in
the Wall Street Journal that they're
switching off of you to an internal
system even if they don't like your
ability to raise money's gonna go to
hell your ability to hire people go to
hell and so this is this is nearly
impossible to do so if you see yourself
in a marketplace we've got two three big
oolagah
all of got ballistic players it's really
hard this is a reason why we haven't
invested in some of the things trying to
work on uber and lyft platforms because
it's just long-term once you start to be
relevant they're gonna try to smash you
down if you start to take too many rents
out of the system all right next slide
eleven solving the complete need of one
side of the marketplace or not so for
instance you could build SAS software so
that some some sub partier supply you
know uses you all day to run their whole
business or to interact with all of
their customers so for instance IV which
is a company that just was purchased by
house they built software for that
interior designers would use their
software six-and-a-half hours a day to
manage all of their clients okay and
that allowed them to be in the payment
flow that allowed them to keep them from
multi tailing that it allowed them to
get all the other things okay so this
eleventh one is really important if you
can do it think how can I do this for
one side or both next last one size of
the market okay so this is the first
thing everyone tells you so the the
basic rule of thumb for investors is I
got to love the management and I they
have to be oh go after big market I
agree with that but with some caveats
which is why I've got the star there
next slide in marketplaces smallish
markets tend to bleed really quickly if
you find that white-hot center so if you
start selling books you might be able to
bleed from books into other things over
time right if you start helping college
students share photos you might be able
to bleed and
other things over time like Facebook tip
so I personally as an investor I'm not
so worried about the exact team you're
going after today as long as I can see
that there's gonna be adjacent markets
that with a white-hot center and a
really intense community a lot of
liquidity in one area you're gonna have
the capital and the brand affiliation to
move into adjacent markets pretty
quickly the other caveat I'd put on this
next slide is that in rare cases the
fact that your marketplace exists you're
actually going to be able to double
triple quadruple the size of the market
again lyft and uber are good examples of
that you know more people are taking
rides now than they were five ten years
ago simply because these platforms exist
if you can prove that this is true early
on this should give you a lot of
enthusiasm because now you're going
after market that's much bigger than
everyone else knows because the
existence of your marketplace is gonna
help it grow better
okay last slide that's it so we've got a
lot of content that we're producing
around marketplaces and network effect
businesses at that URL so go sign up for
the email if you want some more stuff
directly from us and I'm gonna be around
the rest of the day and I've got another
talk later thanks guys
[Applause]
Посмотреть больше похожих видео
Multi-sided Platform Strategy - Part 1
🛢️ Crude Oil Trading | शाम को रोज़ करो Tension Free Trading | Basic to Advanced | MCX Crude Trade
Master Institutional Supply and Demand Trading (ULTIMATE STRATEGY GUIDE)
HR Basics: Workforce Planning
Identifying Business opportunities (Entrepreneurship Lecture - 11
Supply and Demand: Crash Course Economics #4
5.0 / 5 (0 votes)