A Framework For Attracting & Keeping Marketplace Demand

What are some of your key product and marketplace learnings that you find yourself sharing with founders and teams today? Yeah, I was reflecting on it a couple of years ago when I was working with Reforge. We, we would do these really fun jam sessions to think about hard questions. And one of the hardest questions for marketplaces is how do you generate demand? Because if you have demand, oftentimes supply will follow. And so demand is often the harder side of the market than supply is. There are definitely exceptions. To that, but that's a general rule. And for marketplaces, the question is, how do we capture demand? And how do we keep customer demand? Because once a person has met a supplier on our platform, what's gonna actually keep them using our platform versus just wanting to transact directly with the supplier? And I think if you just boil it down to 5 things, especially for early marketplaces, there's 5 elements that I think really help drive demand. The first one is a price advantage. So that's having the best price or at least price parity with other marketplaces. If you are the best price to get a service or get a product, that will naturally help you aggregate and keep demand because customers will want to come back simply for the price advantage alone. Amazon is a fantastic example of this. You know, as we'll talk about with Sesame, Sesame is also leaning on price advantage as a key differentiator. The second thing is to have exclusive supply. So if you have supply available on your marketplace that is not available on other marketplaces, then that's a reason for people to come to your marketplace because they want access to that supply. Really good examples of that are Etsy has a lot of exclusive supply. Turo has a lot of really good exclusive supply, especially if you're comparing it to the traditional rental car. Market. The third advantage is having some sort of discoverability advantage, which is making it easier to find relevant supply on your marketplace. And an interesting like corollary to that is making it hard to cross-shop supply against other marketplaces. So for example, on Amazon, if you're looking at a product, they might have the best price, but you know what product you're looking at. And oftentimes you can look at it in other marketplaces to see if they have a better price. And so for that reason, a price advantage is even more important. It's the same with hotels as I'll talk about with TripAdvisor. You know, if I find a particular hotel, I can shop around for what is the best price per night. But that's very different than, for example, Airbnb, where when you're looking at a vacation rental, it's hard to search for that vacation rental on another network and compare prices. So if you have a discoverability advantage, including both finding supply as well as not being able to cross-shop supply, that can be a really significant advantage. Airbnb is a good example of that. Farah is another good example. You can do some cross-shopping, but it is, it is more challenging. The 4th element is to have a trust advantage. You know, people will often prefer to do business with a marketplace that they trust, that's willing to offer some guarantees in terms of fulfillment and delivery and things of that sort. Versus going directly to a supplier who they may not know, especially if they might be going to different suppliers for different products. And so if you can be a safer place for people to transact, people will come to you initially and on a repeated basis. I think the very best example of that is Uber and Lyft. There's no way I would hop into a stranger's car and let them drive me from one place to another, but I do it, you know, multiple times a month using Uber and Lyft, and that's because they've created a trust advantage both by vetting their drivers as well as by offering insurance and things of that sort. You know, StockX and RealReal are really good examples as well where they have an authentication layer which helps you know that if you're buying a product on their platform, they are willing to guarantee that that product is authentic, which you don't get when you're buying peer-to-peer. And then the last advantage is a fulfillment advantage. If you can offer a better purchasing experience, and a better delivery experience of that service or product, that's a way to both capture demand and keep demand. I think 2 really interesting examples of this are Upwork. So Upwork has built a lot of really interesting tools to be able to talk to freelancers, to be able to structure projects, to be able to have milestones that you pay. So the experience of working with a freelancer on Upwork is actually much better than going peer-to-peer. Another really interesting example for the gamers in the audience is Steam. So Steam is a platform where you can go, you can purchase games to play, you can play those games on your PC, but increasingly Steam has been getting into hardware. And so some of the, you know, they have this new hardware device called the Steam Deck, and it's a portable gaming device similar to a Nintendo Switch, and it's one of the very best places to play your Steam games. And so they're creating an advantage both in terms of how you purchase the games, but also how those games are experienced. And so those are 5 things that I think are really helpful as a way for marketplace founders to think about how to create and sustain an advantage, focusing on having the best price, focusing on having exclusive supply, having a discoverability advantage so that supply is easier to find on your platform than other platforms, having a trust advantage so that customers want to come directly to you, and trust that they'll get what they want and need from your platform, and then having a fulfillment advantage, making the experience of buying and using whatever the person discovers through your marketplace better through your marketplace than through other places they may transact.