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Fundamentals of consumer marketplacebusiness models[ 11 factors to identify and execute successful consumer marketplaces ]...
Outline Background + economic underpinnings Select an industry Execute the model Protect & grow the platform Opportun...
My JourneyStarted /Ground FloorAdvise /VolunteerCurrently3Rishi Dean – www.rishidean.com
Marketplaces arethe foundation ofthe internet4Rishi Dean – www.rishidean.com
Pipes vs. Platforms?*Inspired by: @sanguithttp://platformed.info/why-business-models-fail-pipes-vs-platforms/5Rishi Dean –...
Your best bet to make $1 billion~20 years of consumer internet24 public companies >$1B, 2x acquisitions~2 multi-billion do...
7Rishi Dean – www.rishidean.comKey variantsTransaction initiatorBuy-side? Sell-side? Combo?Transacted itemProduct? Service...
The internet makes markets efficient8Rishi Dean – www.rishidean.comCommerce eBay, Craigslist,Amazon Marketplace, …Auto Ube...
But first…Platform economics9Rishi Dean – www.rishidean.com
2-sided network incentives10Rishi Dean – www.rishidean.comDemand Supply1) InitialAdoption1) InitialAdoption2) Same-sideEff...
Consumer marketplaces are aspecial case of these platformsStrategies for Two-Sided MarketsHBR ARTICLES | Thomas R. Eisenma...
…almost every successfultech business is aplatform, many of thoseare marketplaces12Rishi Dean – www.rishidean.com
IndustrySelection13Rishi Dean – www.rishidean.com
14Rishi Dean – www.rishidean.comCharacteristics of good industriesBigRipePlentiful
15Rishi Dean – www.rishidean.comAddressable customersFrequency of transactionTransaction sizePotential amount transacted v...
16Rishi Dean – www.rishidean.comConsolidate fragmentedmarketsEconomic empowermentDeliver new enhancedexperiencesMarkets pr...
17Rishi Dean – www.rishidean.com“Ownable” network effectsGroups who interactMore users = more valueScale mattersCan own it
Service DesignGaining traction18Rishi Dean – www.rishidean.com
3 keys of gaining initial traction19Rishi Dean – www.rishidean.com Adoption Liquidity Pricing
20Rishi Dean – www.rishidean.com10x value proposition“Prime the pump”Lock in scarce supplyAttract users and provide instan...
21Rishi Dean – www.rishidean.comLiquidity: users can find whatthey’re looking forSubstitutesPrice dispersionMarket segment...
22Rishi Dean – www.rishidean.comCapture value commensurate withwhat you createSources of revenueSide of subsidyPayment sch...
Service DesignSustainability23Rishi Dean – www.rishidean.com
3 levers of sustainability24Rishi Dean – www.rishidean.com Control Scale Competition
25Rishi Dean – www.rishidean.comControl of the customer lifecycleIntermediate thetransactionAvoid defectionRepeat behavior...
26Rishi Dean – www.rishidean.comScaling up within and acrosssegmentsMarkets & segmentsNew market setupLow friction vs.leve...
27Rishi Dean – www.rishidean.comCreating long-term advantageWinner take all?Share or fight forcontrol?Threat of envelopmen...
OpportunitiesAhead28Rishi Dean – www.rishidean.com
29Rishi Dean – www.rishidean.comMobileFollow the customerLocation / ProximityImmediacy“Moment of truth”
30Rishi Dean – www.rishidean.comHigh-consideration P2P servicesTrust firstOffline firstReputationSocial graph
Takeaway: “Ownable NetworkEffects” Backbone of the internet & the most lucrative consumer biz model Select an attractive...
“There is nosecretingredient”32Rishi Dean – www.rishidean.com
Additional Resources33Rishi Dean – www.rishidean.com HBRArticle: Strategies forTwo-SidedMarkets (Oct 1, 2006) BillGurley...
I’m here to help34Rishi Dean – www.rishidean.com Email: rishi@rishidean.com Blog: rishidean.com Twitter: @rishidean
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Fundamentals of Consumer Marketplaces - Rishi Dean

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11 factors to identify and execute successful consumer marketplaces

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Fundamentals of Consumer Marketplaces - Rishi Dean

  1. 1. Fundamentals of consumer marketplacebusiness models[ 11 factors to identify and execute successful consumer marketplaces ]rishi@rishidean.comwww.rishidean.comPresentation to CustomMadeJun 20, 2013
  2. 2. Outline Background + economic underpinnings Select an industry Execute the model Protect & grow the platform Opportunities ahead2Rishi Dean – www.rishidean.com
  3. 3. My JourneyStarted /Ground FloorAdvise /VolunteerCurrently3Rishi Dean – www.rishidean.com
  4. 4. Marketplaces arethe foundation ofthe internet4Rishi Dean – www.rishidean.com
  5. 5. Pipes vs. Platforms?*Inspired by: @sanguithttp://platformed.info/why-business-models-fail-pipes-vs-platforms/5Rishi Dean – www.rishidean.comDominant Offline“Create & push”B2B / B2CDominant Online“Facilitate interactions”P2P / B2B
  6. 6. Your best bet to make $1 billion~20 years of consumer internet24 public companies >$1B, 2x acquisitions~2 multi-billion dollar companies / year2/3 are “marketplace” businesses Source: James Slavet,Greylock6Rishi Dean – www.rishidean.com
  7. 7. 7Rishi Dean – www.rishidean.comKey variantsTransaction initiatorBuy-side? Sell-side? Combo?Transacted itemProduct? Service? Commodity?Market scopeHorizontal?Vertical? Niche?Revenue modelSubscription?Transaction?
  8. 8. The internet makes markets efficient8Rishi Dean – www.rishidean.comCommerce eBay, Craigslist,Amazon Marketplace, …Auto Uber, Lyft, RelayRides, …Child Care Sittercity,Care, …Dating Match.com, eHarmony, okCupid, …Custom Goods CustomMade, Etsy, …ExamplesErrands TaskRabbit, Zaarly, Exec, …Travel Airbnb, Expedia, Priceline, …Skills oDesk, Skillshare, …
  9. 9. But first…Platform economics9Rishi Dean – www.rishidean.com
  10. 10. 2-sided network incentives10Rishi Dean – www.rishidean.comDemand Supply1) InitialAdoption1) InitialAdoption2) Same-sideEffects2) Same-sideEffects3) Cross-Network Effects Why do buyers initiallyadopt?Phase 1: Initial Adoption Why do sellers initiallyadopt? How do more buyers helpone another?Phase 2:Same-side Effects How do more sellers helpone another? Increase in liquidityPhase 3:Cross-side Effects  Increased liquidityStrategies forTwo-Sided MarketsHBRARTICLES |Thomas R. Eisenmann, Geoffrey Parker, MarshallW.Van Alstyne | Oct 1, 2006Platform
  11. 11. Consumer marketplaces are aspecial case of these platformsStrategies for Two-Sided MarketsHBR ARTICLES | Thomas R. Eisenmann, Geoffrey Parker, Marshall W. Van Alstyne | Oct 1, 200611Rishi Dean – www.rishidean.com
  12. 12. …almost every successfultech business is aplatform, many of thoseare marketplaces12Rishi Dean – www.rishidean.com
  13. 13. IndustrySelection13Rishi Dean – www.rishidean.com
  14. 14. 14Rishi Dean – www.rishidean.comCharacteristics of good industriesBigRipePlentiful
  15. 15. 15Rishi Dean – www.rishidean.comAddressable customersFrequency of transactionTransaction sizePotential amount transacted via theplatform is large
  16. 16. 16Rishi Dean – www.rishidean.comConsolidate fragmentedmarketsEconomic empowermentDeliver new enhancedexperiencesMarkets primed for disruption
  17. 17. 17Rishi Dean – www.rishidean.com“Ownable” network effectsGroups who interactMore users = more valueScale mattersCan own it
  18. 18. Service DesignGaining traction18Rishi Dean – www.rishidean.com
  19. 19. 3 keys of gaining initial traction19Rishi Dean – www.rishidean.com Adoption Liquidity Pricing
  20. 20. 20Rishi Dean – www.rishidean.com10x value proposition“Prime the pump”Lock in scarce supplyAttract users and provide instant utilityOnboarding +Activation
  21. 21. 21Rishi Dean – www.rishidean.comLiquidity: users can find whatthey’re looking forSubstitutesPrice dispersionMarket segmentationPricing
  22. 22. 22Rishi Dean – www.rishidean.comCapture value commensurate withwhat you createSources of revenueSide of subsidyPayment schemeOutput costs
  23. 23. Service DesignSustainability23Rishi Dean – www.rishidean.com
  24. 24. 3 levers of sustainability24Rishi Dean – www.rishidean.com Control Scale Competition
  25. 25. 25Rishi Dean – www.rishidean.comControl of the customer lifecycleIntermediate thetransactionAvoid defectionRepeat behaviorData cycle
  26. 26. 26Rishi Dean – www.rishidean.comScaling up within and acrosssegmentsMarkets & segmentsNew market setupLow friction vs.leverageCommunity-driven
  27. 27. 27Rishi Dean – www.rishidean.comCreating long-term advantageWinner take all?Share or fight forcontrol?Threat of envelopmentSwitching costs
  28. 28. OpportunitiesAhead28Rishi Dean – www.rishidean.com
  29. 29. 29Rishi Dean – www.rishidean.comMobileFollow the customerLocation / ProximityImmediacy“Moment of truth”
  30. 30. 30Rishi Dean – www.rishidean.comHigh-consideration P2P servicesTrust firstOffline firstReputationSocial graph
  31. 31. Takeaway: “Ownable NetworkEffects” Backbone of the internet & the most lucrative consumer biz model Select an attractive industry Big market by expected total transaction volume Ripe for technology-enabled consolidation Plentiful to attain and own the network effect Gain initial traction Adoption: overcome “chicken & egg” Liquidity: expectation you can find what you’re looking for Pricing: capture value commensurate with what you create, but allow for growth Sustainability Control: ensure value across all touchpoints of customer lifecycle Scale: Cost-effective expansion into new markets / segments / verticals Competition: Create a “moat” around the castle with high switching costs and lockout Opportunities ahead Mobile: Always on systems for ad-hoc marketplaces based on proximity & affinity Social /Trust: Unlock high consideration P2P verticals31Rishi Dean – www.rishidean.com
  32. 32. “There is nosecretingredient”32Rishi Dean – www.rishidean.com
  33. 33. Additional Resources33Rishi Dean – www.rishidean.com HBRArticle: Strategies forTwo-SidedMarkets (Oct 1, 2006) BillGurley’s “Above the Crowd” Blog Sangeet Paul Choudary’s “PlatformThinking“Blog
  34. 34. I’m here to help34Rishi Dean – www.rishidean.com Email: rishi@rishidean.com Blog: rishidean.com Twitter: @rishidean

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