@daan_kinderfee
„Liquidity isn’t the most
important thing. It’s the only
thing. “
Simon Rothmann – Greylock Partners
@daan_kinderfee
About myself
• Mathematician
• Technical background
• Co-founder @ Kinderfee
• Worked in Investment Bankin...
@daan_kinderfee
Liquidity disected
@daan_kinderfee
Liquidity disected – the exponential curve
Liquidity
Businessvolume
Frustrating
waste land
First handful o...
@daan_kinderfee
Magic formula for estimating your market liquidity
N = total number of
potential needs
A = number of
diffe...
@daan_kinderfee
Liquidity disected
No match
@daan_kinderfee
Liquidity disected
Demand Supply
One match
@daan_kinderfee
Liquidity disected
Many matches start happening
Demand Supply
@daan_kinderfee
Magic formula for estimating your market liquidity
N = total number of
potential needs
A = number of
diffe...
@daan_kinderfee
Understanding YOUR marketplace
@daan_kinderfee
Where on the marketplace value chain are you?
Online
Classifieds
Auction / Reverse
Auction Marketplaces
Co...
@daan_kinderfee
BCG – product life cycle matrix
Online
Classifieds
Auction / Reverse
Auction Marketplaces
Market share %
G...
@daan_kinderfee
Number of sides on your marketplace?
Hard to get liquid Impossible to get liquid
One-sided
marketplace
1.7...
@daan_kinderfee
What type of geographical liquidity is required?
Hard to get liquid Impossible to get liquid
Location
inde...
@daan_kinderfee
What factor does time play?
Hard to get liquid Impossible to get liquid
Time
independent
12-24 hoursDays R...
@daan_kinderfee
10 second breather
@daan_kinderfee
Who is paying on your marketplace (and in what currency)?
Babysitter / SupplyParent / Demand
@daan_kinderfee
Who is paying on your marketplace (and in what currency)?
Host / SupplyGuest / Demand
@daan_kinderfee
Who is paying on your marketplace (and in what currency)?
Car owner / SupplyDriver / Demand
@daan_kinderfee
Who is paying on your marketplace (and in what currency)?
User
@daan_kinderfee
< <
In general...
@daan_kinderfee
< <
In general...
The side that is paying in trust is always harder to get liquid.
@daan_kinderfee
< <
In general...
The side that is paying in trust is always harder to get liquid.
Money is plentiful – tr...
@daan_kinderfee
5 second breather
@daan_kinderfee
@daan_kinderfee
Typical transaction
USD 80 per night
4 nights = USD 320
15% fee = USD 48
Guest
Will do 1-3 trips per year
...
@daan_kinderfee
11 tips for creating liquidity
@daan_kinderfee
Design your site to create an appearance of activity
@daan_kinderfee
Focus on the side that takes longer to delete their account
-> this is often the supply or content creatin...
@daan_kinderfee
Provide one sided utility
@daan_kinderfee
Find aggregators for supply or demand
Think adjacent
@daan_kinderfee
Think BIG, but START small!
Hustle! – in exponential growth every seed customer counts
@daan_kinderfee
Make your community work for you
@daan_kinderfee
[Scrape online listings and auto publish]
I don‘t recommend this, because it will kill your community
@daan_kinderfee
Understand YOUR marketplace
Be resourceful
@daan_kinderfee
Focus! Control N!
(A * B)/N2
@daan_kinderfee
Curate curate curate
“Force“ matches manually – even if it won‘t scale
@daan_kinderfee
Iterate around your customer
@daan_kinderfee
Hang in there!!!
@daan_kinderfee
Thank you
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Understanding liquidiy for marketplaces - toa 13

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These slides were originally presented at Tech Open Air Berlin 2013.
The presentation is intended to help founders understand their marketplace.
www.kinderfee.de

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Understanding liquidiy for marketplaces - toa 13

  1. 1. @daan_kinderfee „Liquidity isn’t the most important thing. It’s the only thing. “ Simon Rothmann – Greylock Partners
  2. 2. @daan_kinderfee About myself • Mathematician • Technical background • Co-founder @ Kinderfee • Worked in Investment Banking for 3 years before founding Kinderfee • Work at Kinderfee and as a startup mentor To get in touch: • @daan_kinderfee • daanlo.tumblr.com Daan
  3. 3. @daan_kinderfee Liquidity disected
  4. 4. @daan_kinderfee Liquidity disected – the exponential curve Liquidity Businessvolume Frustrating waste land First handful of transactions Things start to happen BOOM!
  5. 5. @daan_kinderfee Magic formula for estimating your market liquidity N = total number of potential needs A = number of different demand offers B = number of different supply offers (A * B)/ N2
  6. 6. @daan_kinderfee Liquidity disected No match
  7. 7. @daan_kinderfee Liquidity disected Demand Supply One match
  8. 8. @daan_kinderfee Liquidity disected Many matches start happening Demand Supply
  9. 9. @daan_kinderfee Magic formula for estimating your market liquidity N = total number of potential needs A = number of different demand offers B = number of different supply offers (A * B)/ N2
  10. 10. @daan_kinderfee Understanding YOUR marketplace
  11. 11. @daan_kinderfee Where on the marketplace value chain are you? Online Classifieds Auction / Reverse Auction Marketplaces Community Marketplaces Prevalent from 1990+ Prevalent from 2000+ Prevalent from 2010+ Much higher CLTV Particularly good for marketplaces that require a large element of trust Slightly higher CLTV More trust & services than online classifieds Low CLTV Monetisation either through Ads or Subscription Known counterparty Handling of payment Transactional knowledge Additional services Transaction made on platform Enables user ratings Searchable list of available offers Low trust & low convenience
  12. 12. @daan_kinderfee BCG – product life cycle matrix Online Classifieds Auction / Reverse Auction Marketplaces Market share % Growth% Community Marketplaces Cash cows Low investment requirements High margins / cash flows Slowing growth (imminent) In early growth phase Rising stars & questions marks Showing huge growth
  13. 13. @daan_kinderfee Number of sides on your marketplace? Hard to get liquid Impossible to get liquid One-sided marketplace 1.7-sided marketplace 2-sided marketplace 3-sided marketplace Easier to build Easier to defend
  14. 14. @daan_kinderfee What type of geographical liquidity is required? Hard to get liquid Impossible to get liquid Location independent LocalPostal Global Easier to build Easier to defend
  15. 15. @daan_kinderfee What factor does time play? Hard to get liquid Impossible to get liquid Time independent 12-24 hoursDays Real time Easier to build Easier to defend Typically mobile first
  16. 16. @daan_kinderfee 10 second breather
  17. 17. @daan_kinderfee Who is paying on your marketplace (and in what currency)? Babysitter / SupplyParent / Demand
  18. 18. @daan_kinderfee Who is paying on your marketplace (and in what currency)? Host / SupplyGuest / Demand
  19. 19. @daan_kinderfee Who is paying on your marketplace (and in what currency)? Car owner / SupplyDriver / Demand
  20. 20. @daan_kinderfee Who is paying on your marketplace (and in what currency)? User
  21. 21. @daan_kinderfee < < In general...
  22. 22. @daan_kinderfee < < In general... The side that is paying in trust is always harder to get liquid.
  23. 23. @daan_kinderfee < < In general... The side that is paying in trust is always harder to get liquid. Money is plentiful – trust isn‘t!
  24. 24. @daan_kinderfee 5 second breather
  25. 25. @daan_kinderfee
  26. 26. @daan_kinderfee Typical transaction USD 80 per night 4 nights = USD 320 15% fee = USD 48 Guest Will do 1-3 trips per year Host Can host up to 365 days per year Please note: this example is my estimate. The data is entirely made up. If this says USD 2 you are in trouble
  27. 27. @daan_kinderfee 11 tips for creating liquidity
  28. 28. @daan_kinderfee Design your site to create an appearance of activity
  29. 29. @daan_kinderfee Focus on the side that takes longer to delete their account -> this is often the supply or content creating side
  30. 30. @daan_kinderfee Provide one sided utility
  31. 31. @daan_kinderfee Find aggregators for supply or demand Think adjacent
  32. 32. @daan_kinderfee Think BIG, but START small! Hustle! – in exponential growth every seed customer counts
  33. 33. @daan_kinderfee Make your community work for you
  34. 34. @daan_kinderfee [Scrape online listings and auto publish] I don‘t recommend this, because it will kill your community
  35. 35. @daan_kinderfee Understand YOUR marketplace Be resourceful
  36. 36. @daan_kinderfee Focus! Control N! (A * B)/N2
  37. 37. @daan_kinderfee Curate curate curate “Force“ matches manually – even if it won‘t scale
  38. 38. @daan_kinderfee Iterate around your customer
  39. 39. @daan_kinderfee Hang in there!!!
  40. 40. @daan_kinderfee Thank you

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