[S1E12] Looking Back !NEW!
When I look back, the biggest theme running through my work is looking for opportunities where what I am doing is creating an environment for others to identify what they really care about so that they can give back.
[S1E12] Looking Back
Sjoerd: [00:00:18] Hi, I'm Sjoerd CMO at Sharetribe and I'm your host. Welcome to the final episode of Two-Sided. This is also an experimental episode because we are going to try to do something a little bit different today, a summary, uh, sort of, "too long, didn't listen" version of what I thought were the five most interesting take aways from the entire season. Feel free to also use this as a guide to maybe check out episodes that you haven't listened to before. I will introduce the different topics, so you'll have to listen to a little bit more to me talking today than usually, and then for each point we'll listen to some anecdotes and outtakes form the different episodes that illustrate the point, hopefully very well. But before we go in to this content, since this is the final episode and I'm recording this here by myself from my home studio, also known as the garage, I'd love to hear from you if you have feedback, ideas, or especially if you happen to know some awesome marketplace entrepreneurs I should talk to, reach out to me. You can email me to email@example.com. I'll spell that out so that is S-J-O-E-R-D@sharetribe.com or you can tweet to @sharetribe and I'll read it and react. I'd really love to hear from you. Let's get started with the five biggest takeaways of the first season of Two-Sided. So, the first one is also straight but it's the most important one. If you are in the early stages of building an online marketplace, if you are to take away one thing from this entire season, let it be this: constrain your marketplace, make it small. This is something that already came up in the very first episode with [Lenny Risicsky 00:02:03]. So just for context, Lenny, he worked at Airbnb for seven years and then after that while trying to get better at advising marketplace startups, he interviewed a whole bunch of folks at 17 of today's biggest marketplaces, including Airbnb, DoorDash, SunTec, [SE Huber 00:02:17] and a whole bunch more. Out of his research came the follow...
Sjoerd: [00:04:17] Sure as an entrepreneur, you should dream big and you should set goals but don't the mistake with the marketplace of casting too big a net early on. So this last outtake also takes us to why you should constrain. So we discussed how you should constrain but category, but why? So, you should try to create the smallest circumstances in which the following can occur: so number one, supply is meeting demand, two, there are enough transactions, three, people are happy and they are coming back. Lenny, basically spells out here a sort of hierarchy of needs for your marketplace to be successful. So, let unpack that a little bit. So, supply needs to meet demand. So usually this is phrased as "liquidity". So let's go into that for a second. So liquidity is basically the situation where there is enough relevant math on both sides of the platform, so supply on the one side and demand on the other side. That transactions are likely to take place. Now, that sounds very simple but it actually requires a load of work to achieve. For example, if you are a local marketplace, and with that I mean supply and demand need to be in the same geographical location, so best example is like a car sharing marketplace where if you own a car you can rent it out there and if you don't own a car you can find a car to rent there. So if I'm renting a car, I need to be in the same physical geographical location as the car and since this one is about private cars, probably also, the owner of the car needs to be in a reasonable physical vicinity. So let's say we launch this in Helsinki, Finland where Sharetribe is from, If we want any transactions to happen on our fictional car sharing marketplace, we need to have a significant amount of cars in Helsinki on the one side as well as a significant amount of interest through people who would like to rent in Helsinki, Finland. So, just getting those two sides onboard through one GO and one category of product is already a lot of work. Now, imagine if you would add another category of product in this marketplace, motorcycles, bicycles, helicopters, whatever, if you were in only one location, you need to then add supply and demand once for that new category. But if you are and 10 locations, suddenly adding one new category becomes a lot of work because you need to fill that hole on the other side 10x or times whatever you perceive as the amount of locations that you have. Sophie Adelman, shared some terrific insight in episode six on that or how she saw that and how she works for Hired, which is a marketplace for recruiting technical talent.
Sjoerd: [00:08:40] Now, once we get the first transactions, the next step is of course to get enough transactions. You need to achieve high liquidity in order to figure out if this is a scalable business idea. If you only get, you know, you can only imagine, coming back to the car sharing marketplace example, if you only get a couple of transactions in Helsinki per month and scaling to a new city takes you another two months then likely something is missing in your marketplace idea. And then of course the last step, if you get enough transactions, you want to make sure that people that are having them are having them are happy so that they come back for this repeat transactions, this repeat purchase ratio which is very important. Now, only once you figure these out should you start to think about expanding. And so the point is with this first takeaway that these objectives are much simpler to achieve on a smaller scale. And so this topic of constrain is something that came back throughout the season. Of course, because I asked her about it, but we saw evidence in every conversation. For example, Ruthie Amaru from Freightos, a marketplace for freight, told us in episode three.
Charles A.: [00:21:10] I remember we had a little bit of cash to start off, not very much at all and neither of us really knew anything about how to build a product, how to talk to users, anything like that so we kind of thought, "Well, there's this problem and we need this platform to do a hundred things." You know, we need to manage the whole life cycle to do all these different things and we need it done in the next two weeks and we want to spend this amount of money from it, and so, you know, you go to the internet and ask the internet if someone can do that for you and someone somewhere puts up their hand and says they can and you know, we ended up spending few months quite a lot of money to get not even anything approaching an MVP that worked, and that was a bit stressful. But it was a really good point because what we then did is in that process you obviously start speaking to users and you know, I went and sat in a care home for a few months and drove the nurses to share some things like that and you know, you speak to people and you kind of come to the realization yourself that actually, what I need to do here really to solve 80% the problem is a very, very simple product and actually we ended up conforming back to just Google sheets where the nursing homes would go into Google sheets and put in their shifts and then 10 nurses would be found, [inaudible 00:22:16] which they, "Yeah, interested in that, that one, that one and that one." And then that was it, there you go you got a platform there.
Michael: [00:23:17] And then, you know, another kind of based upon is all really simple, which I think was part of the beauty of it. On like a Friday, you'd then go take all those notes and summarize it and send it to you client and say, "Hey, this is all the marketing I've done. These are the people I've spoken with, this is who I know is interested in it, this is the feedback I'm getting." And it's then these all like, overview reports for all the deals you are trying to sell. Every Friday. And I figured, you know, let's make that a click of the mouse. So, not only do you know real time who's looking at your property, but you can also supply them with information and a lot of the document signing and the process of like, signing a confidentiality agreement and exchanging documents to get the buyer to know more about the property, who that buyer was, all the notes you had, literally, all the marketing you've done, you literally had a button at the end and it spits out that report for you to send over to your seller or client so they know exactly how defective, you know, the sale is going.
Brian: [00:26:19] So, as a service provide, let's say typically somebody calls you off of your Yelp page, "Hey, I need a quote. I live at you know, 1532 Main Street, can you come out and look at it?" You have to drive out there, look at it, walk around, maybe meet with the person, write them a written quote, leave it in the mailbox, hand it to them, hope they call you back. "Can you come out Thursday?" "No, I can not come out Thursday, maybe Friday." "Oh, I really need it done it by Thur-" You got to go through all this for every single person that tries to hire you. When you use GreenPal, you get 30 of these opportunities a day, it's right here and you know, you're presented with all of this information, okay? It's like here is the aerial imagery of this person's property. Here is the street view of this person's property. Here is how many square foot their lot size is, here is the average winning prize on the platform for that zip code. They want their lawn mowed very two weeks, not every week, they are actually expecting a perfect job, they've indicated that and they've also indicated that they want to hire somebody for the rest of the season. And so, we give the service provider all of this rich data around the service request, that by the way, the home owner was able to pop in less than a minute and we're able to make this thing so much smoother than just doing it the traditional sense on both sides of the transaction. 041b061a72