Dan Martell - January 26, 2015


How To Build A Two-Sided Marketplace

Hosted by
Dan Martell
Mentioned
Uber
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Episode Stats


Length

6 minutes

Words per minute

194.98

Word count

1,260

Sentence count

72

Harmful content

Hate speech

1

sentences flagged


Summary

Summaries generated with gmurro/bart-large-finetuned-filtered-spotify-podcast-summ .

In this episode of the Startup Spotlight podcast, I sit down with founder of Clarity, a marketplace that allows you to connect buyers and sellers across the world. We talk about what a marketplace is, what it s like to build one, and how to get it up and running.

Transcript

Transcript generated with Whisper (turbo).
Hate speech classifications generated with facebook/roberta-hate-speech-dynabench-r4-target .
00:00:00.360 Building a two-sided market is probably the hardest thing you can do.
00:00:05.440 You know, a few weeks ago I organized a marketplace founders dinner because I felt like there
00:00:10.800 needs to be almost like a, you know, an AA meeting type for those founders that have
00:00:15.160 decided to build marketplaces, you know, like, and I don't know if you know what a marketplace
00:00:18.920 is but like an Etsy or an eBay or a Clarity, my startup, it's a, it's where you build
00:00:24.480 a platform and you hope that people on the supply side and on the demand side come together
00:00:29.280 to complete a transaction and get a lot of value from that.
00:00:33.480 And the reason why it's so challenging is you've got both sides of the market to figure out.
00:00:36.980 When you build a normal technology company or you build any business,
00:00:40.100 you have a customer and you have a service and you deliver it.
00:00:42.540 But with any marketplace, you have that same concept times two.
00:00:46.620 So what I want to talk about is how do you do that effectively.
00:00:49.580 You know, I can only speak from my experience.
00:00:51.780 I don't know if you've checked out Clarity,
00:00:53.300 but Clarity.fm, we're a marketplace for entrepreneurs to get advice from experts,
00:00:57.100 real-world experts with experience over the phone to grow their dreams and businesses forward.
00:01:02.180 And, you know, we've completed over 250,000 calls in the last 18 months.
00:01:06.700 It's been growing 30% month over month.
00:01:09.380 It's really taken on.
00:01:11.100 And the challenge, though, is in the beginning is getting the flywheel going, right?
00:01:15.080 I mean, everybody that's tried to start, they always say, like, in the beginning, how do you start?
00:01:19.520 Here's my suggestions to you.
00:01:21.400 Number one, focus on one use case, right?
00:01:24.520 So for us, it was marketing as a topic, but also within marketing, SEO, right?
00:01:30.580 So if you're doing a vacation rental site, like an Airbnb or VRBO or HomeAway, maybe you would start with tree houses.
00:01:39.440 Now that sounds crazy, but you might even start with tree houses in Europe or even within a specific city in Europe.
00:01:45.700 But really focusing on a very focused use case and even a product set helps you streamline the experience.
00:01:54.340 Because if you're trying to do too many things within a broader market and something's kind of taken off, it's really hard to understand what is working.
00:02:02.020 Once you know what's working, then you can add on or stack on, as I like to say, stack on these different tangential markets.
00:02:08.940 So we started off with SEO and marketing, then we added other types of marketing like Facebook marketing, growth hacking, online marketing, content marketing.
00:02:18.240 And then from that, from a marketing bucket, we then tacked on business development, then sales.
00:02:23.260 And we just kept expanding, expanding, whereas two years into it almost, we have 4,000 categories and a bunch of different topics.
00:02:32.040 And that's the way, I believe, to start by building a very focused use case focused on doing one thing really well and making it niche.
00:02:41.160 Sometimes people call it uncomfortably narrow as a niche.
00:02:44.840 So try to think, am I really uncomfortably narrow as how specific this marketplace deliverable is?
00:02:50.740 The other thing I would say is focus on the demand side.
00:02:53.720 You know, a lot of people, they think, okay, well, I want to do this kind of marketplace.
00:02:57.780 I need a bunch of supply.
00:02:58.780 And supply is the people delivering the service.
00:03:01.060 If it's buyers and sellers, it's the sellers.
00:03:03.440 And I would argue that it's better and easier if you focus on a narrow offering to fake the supply or essentially pay the supply to be there.
00:03:11.440 I mean, Uber was famous for, you know, when they started their black car service, they didn't have 10,000 black cars signed up day one.
00:03:18.440 They went to a company and said, look, you've got 12 cars.
00:03:21.220 How about I pay you to just have them respond to these messages on this iPhone app that they gave them?
00:03:26.680 And then that black car service would just tally up all the drives and send them one invoice. 0.52
00:03:32.380 And that was the beginning of Uber.
00:03:34.020 Now a multi-billion, I think they just raised that $16 billion valuation.
00:03:40.020 Companies started with that same concept.
00:03:42.220 So fake the supply or restrict it to a very specific use case where you can control and deliver on that promise.
00:03:48.760 And focus on the demand.
00:03:50.020 Focus on finding the ideal customer that has that use case, that need for your marketplace.
00:03:56.680 You know, those are the two big things and then the third thing I'm going to say is I believe the world has gone from a
00:04:03.880 1.0 version of a marketplace to a 2.0 to now where we're in a 3.0 and a 3.0
00:04:08.800 Well, I'll start with the one one was eBay one was Craigslist where it was kind of a free-for-all a 2.0 is more like a
00:04:17.560 curated
00:04:19.480 very focused marketplace with identity and privacy and
00:04:23.180 and trust, which would be more like an Airbnb or an Etsy or kind of like where they're leveraging
00:04:29.400 social trust to build liquidity in their marketplace. The third kind is what we're
00:04:34.060 seeing now where essentially they're fixing the supply or the supply side of what you get, right?
00:04:40.340 And that would be, you know, Homejoy for home cleaning services, Uber and Lyft for delivering
00:04:46.060 where, you know, I guess the way to look at it is they set the price, right? Whereas, you know,
00:04:50.580 in TaskRabbit would be a 2.0 example, but a three is where you say, look, this is the offering,
00:04:57.720 this is what we deliver on, we own that brand, that consistency, those people might be contractors
00:05:03.580 to us on the supply side, but we will own the experience, we will be responsible for that,
00:05:09.020 and the price is fixed, so there's this consistent ever going. I mean, another example would be
00:05:13.040 Fiverr, right? When you go to Fiverr, it's like the name says it, how much is it going to cost?
00:05:16.600 It's five bucks.
00:05:17.540 Whatever you want.
00:05:18.520 So Fiverr is an example of a 3.0.
00:05:20.820 If you haven't checked out Fiverr, you got to do it.
00:05:22.480 I mean, you're going to probably spend the next three.
00:05:23.980 If you haven't been there, start watching some of the crazy videos.
00:05:27.080 But Fiverr is an example of, here's an example.
00:05:30.580 A 2.0 version of Fiverr would be like, oh, desk.
00:05:32.480 But what they said is, look, no, we want to reduce the friction and build liquidity.
00:05:37.280 And they said, look, everything's five bucks.
00:05:38.840 Everything's bought in this format.
00:05:40.220 You know what you get.
00:05:41.420 The person's offering is exactly that thing.
00:05:44.600 And when you take the first, you know, all these strategies put together,
00:05:48.380 it really helps you build a marketplace with liquidity.
00:05:51.320 One, focus on a very narrow, uncomfortably narrow niche offering.
00:05:57.220 Two, focus on the demand side versus the supply.
00:06:00.100 And then third, figure out are you a 2.0 or a 3.0 offering?
00:06:04.860 And it's even easier sometimes to go 3 and maybe backfill to a 2.0.
00:06:08.920 Anyways, those are my ideas on how to build liquidity in a marketplace.
00:06:12.400 It's a challenge that a lot of entrepreneurs and founders are facing right now, and I hope that brought value to you.
00:06:17.500 Leave a comment below with one of the number one takeaways you got from this video,
00:06:21.160 and I hope that you continue to growth stack your success and you live a passionate life.
00:06:26.820 Have an amazing day.