← Success Story with Scott D. Clary
Success Story with Scott D. Clary
Lessons - The Blueprint for Building Two-Sided Marketplaces | David Ciccarelli - Voices.com Founder
00:14:03
Loading summary
Transcript9 lines
- [00:00]
A
In this Lessons episode, explore what makes marketplaces succeed and how platforms differ from traditional business models. Discover the key elements that drive engagement and trust. Understand how balancing supply and demand prevents negative network effects, and uncover why focusing on one niche can outperform even the biggest competitors. Okay, so we talked, okay, so we spoke about, okay, so how you got your first, first thousand customers growth after the acquisition with, with voices.com. any other, any other tips for how you scaled and marketed the business? Anything innovative or different that you tried, failed at? Learned lessons from that you want to talk about?
- [00:48]
B
Yeah, I mean there's, you know, maybe just kind of breaking apart some of the marketplace dynamics. Cause, you know, I, I often, you know, will speak about this even like get the questions like why I actually have an idea for a marketplace in like X category. You know, often they're like uber for X and it's like, okay, well you need to understand how these things kind of work and what are those critical components. And there's, and there's four of them. And the, I mean this is really inspired to give credit where it's due is from a great book called Platform Revolution. I highly recommend it by a number of like Boston College MIT professors. It's really well done. And they describe the difference between kind of the old traditional world pipeline business where it's very much along a value chain and everyone's trying to take their piece of the pie and control the information and who does what and what kind of moves through because they're incentivized to keep it a closed system and control their part of that value chain. So the complement to that or the modern day equivalent, that is not a pipeline but a platform. And a platform has four components. You have the participants, we talked about this, the buyers and sellers, the creators and the consumers. So even on YouTube or podcasts, there are people creating and then there are people listening and, or on Twitter, it's like 99.999% of the people are just consuming or reading content there versus the creators who are actually posting. Um, so who are the participants? And then those participants need to actually second, you know, critical factor here would be sharing of information. You know, different than again that pipeline where you're kind of all those participants are holding and trying to, you know, control the information. They actually want to. You want to enable as a platform, you know, owner or entrepreneur, you want to enable the sharing of information. Hence you can go on and look at a profile of a creative talent on voices and actually see all their historical information, you know, jobs that they've done their ratings, you know, ratings, you know, what's in their studio. All of that's, you know, there for the taking. Then there's the exchange of services. And so it could be a product or a service. It might be purely online, but like, like an upwork or a fiverr. It's a digital service or a voices or it might be what's sometimes called O2O online to offline. I start online with, with Lyft, I call for my ride and then it shows up offline, right? Or I start online for. With Grubhub or Seamless. And then the meal actually shows up offline. And then the last one would be the exchange of currency. And I use the term currency specific. I'm not saying money, although that could be that it's. Most people think of and as a true platform, you actually have to enable commerce to happen. And that might be capturing the payment upfront, processing the payment and paying out that service provider or that, you know, that that supplier, if you will, on for work well done. If it's one of these kind of creative, let's call it content platforms, YouTube or Twitter even then the currency is actually more social currency. And that would be gathering likes and, you know, favorites and even kind of ratings and reviews. And so it's these four components that make a platform successful. And the absence of any one of those almost devolves into just purely a directory. You know, you're not really facilitating interactions. It's just to kind of go glean information. But the actual transaction or interaction happens, happens elsewhere. It's like the platform covers all of that. So, you know, again, that, that's, that's a, I think a great way to think about how to structure the key components of a business, especially a lot of services businesses are trying to move into reinventing themselves as a platform. That's how I would think about it. And having kind of built it and stumbled upon those and then reading about it in a book and over a weekend, I'm like, oh my goodness, that could have saved me a decade right there. And then.
- [05:07]
A
What do you think is the number one thing when somebody's building a platform that people don't get right out of those four items, is there one that stands out more than others?
- [05:18]
B
You probably don't appreciate the need to have supply and demand, all marketplaces, and I use that term platform marketplace a little interchangeably. Again, they're going to be either supply constrained or demand constrained. And if you don't know which one it is for you, you're probably going to be, you know, you know, servicing and building up the wrong side for too long. And so, you know, case in point, you know, actually had a friend who was one of Uber's first 50 employees. And I mean, there's tens of thousands of full time employees and all that's.
- [05:58]
A
Early on, very early on.
- [06:00]
B
And he, his job was to actually go city to city to get drivers. And once they got enough driver, he basically launched new cities. And once they got just enough drivers that they immediately changed gears to, he would place these cards, it was almost like business cards in hotel, like front desks. And it would just say like your first ride, free up to 50 bucks or whatever it was. And that's just to get this flywheel going, the flywheel of network effects. And you know, you have to know when, when do you have enough supply in order to, to change. And then you got to go all in on the other side. So knowing what side's constrained, I couldn't. It's not prescriptive. It's different for every, it's not to say, oh well, it's always the demand that's constrained, sometimes it's the supply. I mean, Airbnb for a long time had a hard time having enough people willing to open up their doors and welcome in strangers, right, welcome in new guests. And so, you know, it will, it will vary depending what businesses. But if, if you don't get the people in the marketplace using it and both supply and demand, you actually can have negative network effects. Not words self reinforcing upwards where you're getting more and more and more people. You know, an example might be, you know, the installation of the first fax machine, you know, not useful, the second fax machine useful, and third and fourth and fifth. But at some point people started throwing these fax machines out because, like, why do I need a fax machine? So that's now negative network effects where, you know, every time someone gets rid of one, the remaining people who have fax machines, it's less valuable than it once was. So you have to be constantly investing in that positive network effects where you're growing your base and doing so in that kind of equilibrium fashion.
- [08:03]
A
One last point I wanted to bring out because this was an interesting, an interesting point that I thought we should touch on. You said that you can easily, not easily, you can compete with larger players by simplifying. Now this is not just platform specific, but I mean, this is a great lesson. So talk to me about that.
- [08:21]
B
Well, you know, I mean, the, let's, let's, let's talk about, you know, the definition of strategy. Right. And which is this might sound incredibly academic. I've had the great experience of doing some executive education as well over the last couple years and this definition's kind of stuck with me of strategy, which is arguably one of the most, you know, used overused terms. And it's, it's not a vision, it's not your values, it's, it's, it's not employing best practice because that's what everyone else is doing. Strategy in short is choice. And it's the, it's the interaction of the, you know, the integrated choices that a firm makes like a business is going to make that differentiate it from other players in the industry to deliver long term financial results. So the integrated set of choices, what are the choices that you're going to make as a business that are different than someone else and that can, you know, we talk, we're talking about simplification. If the big brand co in your space is really over complicated, they serve the high end of the market well, you go and carve out some other end of the market. Maybe it's a specific vertical, maybe it's a sub segment of the customer base. And so again for us at Voices, early on it was, I mean Upwork and elance and oDesk, two big freelance sites combined become Upwork, this massive $5 billion market cap business that's now publicly traded. But they do every category right. You know, you can hire and listen, we totally admire what they're doing, they're crushing it. But you can hire a, you know, a musician to an electrician to a graphic designer to a virtual assistant and a web developer and so on and so forth. They have, you know, 70, 80 categories and like 8,000 skills that are all represented so huge breadth. So how do you look at that and go well what aren't they doing right? Or what isn't my big competitor doing that maybe I can take that slice and own it. And for us that was, that was Voice, you know, and voiceover. Now I, you know, at risk of sounding like it was completely calculated and so forth, I think what we've discovered over time is that that's held up to be true. We can, you know, I would much prefer to go really deep on in one vertical area and own it as much as possible. Becoming the, you know, domain expert, expert in this area again, kind of like the thought leader again term, probably overused. But owning that space before you go like go deep before you Go wide is probably the simplest way to describe it. And so that's, it's like, you know, do something different and then cut out all of the non value added, you know, activities that if you talk to your customers like, do you appreciate that we do this? You know, have you run any surveys to understand what's working and what isn't? And we do those like quite periodically, both, let's call them quantitative surveys to new customers, long standing customers, and then follow that up with the qualitative interviews. We always ask at the end of the survey, do you want somebody to contact you to quickly talk through? And you probably get about 5 or 10% of people are like, yeah, actually I'd like to talk to you about this and share more, more in depth feedback. So and then those kind of, it's those kind of key findings that you can do that, that differentiate and figure out those places where you can get your business to be a little bit simpler.
- [12:14]
C
Thanks for tuning in. If you found this valuable, don't forget to hit that subscribe button so you never miss an episode. And if you want to dive deeper into this conversation, check out the links in the description to watch the full episode. See you in the next one.