Building a Marketplace: A Checklist for Online Disruption


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Bill Gurley had written a fantastic post on building marketplaces. This is a topic that I have myself been very passionate about. My friend Nir Eyal and I teamed up to make this a digestible checklist for entrepreneurs.

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Building a Marketplace: A Checklist for Online Disruption

  1. 1. MAKING A MARKETPLACEA CHECKLIST FOR ONLINE DISRUPTION inspired by @bgurley by @nireyal and @sanguit
  2. 2. On November 13, 2012, Bill Gurley, a partner at Benchmark Capital, posted a remarkable essayon his blog. In it, he described the, “10 factors to consider when evaluating digitalmarketplaces.” Given the tremendous value marketplaces create and how hard they are to getright, we found this essay to be a goldmine of insight. We wanted to digest Bill’s post into a morememorable format.The result is this brief checklist we hope will help take some of the luck out of evaluatingmarketplace businesses. As Bill wrote, “It is unlikely that you will find a marketplaceopportunity that would score ten out of ten with respect to this list.” But according to Bill, theodds of success improve the more of these characteristics the business exhibits. - Nir and Sangeet Read Bill Gurley’s original post here:
  3. 3. 1. Does your marketplacemake a behavior dramaticallyeasier and more efficient?
  4. 4. AlibabaMade transactions between US importers andChinese manufacturers dramatically easier than theprevious methods of finding suppliers.
  5. 5. 2. Does your marketplaceproduce more value thancurrent markets?
  6. 6. AirBnBAllows anyone to run their own hotel. Roomowners profit from renting out unused roomswhile guests benefits from lower prices.
  7. 7. 3. Does your marketplaceutilize a new technology tocreate efficiencies?
  8. 8. OpenTableLeveraged adoption of high-speed internet access byboth restaurants and consumers to create a web-based reservation platform.
  9. 9. 4. Does your marketplaceconsolidate a fragmentedmarket?
  10. 10. KickstarterConnects entrepreneurs with financial backers whowant to see projects succeed. Both sides of the marketare fragmented with no dominant players.
  11. 11. 5. Does your marketplacemake it easy for suppliers tosign-up?
  12. 12. EtsyMakes it very simple to sell handcrafted goods inminutes.
  13. 13. 6. Does your marketplaceserve a large market?
  14. 14. eBayServes a very large market of online buyers andsellers for just about anything.
  15. 15. 7. Can your marketplacebring in unserved customers andexpand the market?
  16. 16. oDesk Expanded the market for software outsourcing by making it simple enough for anyone to use.Photo Credit: racheocity
  17. 17. 8. Does your marketplaceserve a frequent need?
  18. 18. GrubHubServes a frequent need for many office workers,ordering daily food delivery.
  19. 19. 9. Does your marketplacecontrol the transaction?
  20. 20. UberIs at the center of the payment flow when itcoordinates a ride between a driver and rider.
  21. 21. 10. Does your marketplaceleverage a network effect?
  22. 22. YouTubeIs more valuable with each new video published tothe site. The more videos posted, the more importantthe site becomes to viewers.
  23. 23. For other essays onMarketplaces and Platforms,
  24. 24. For more on creating user habits,
  25. 25. Good luckWe wish you success making your marketplace. // @nireyal blogging at: // @sanguit blogging at: