Pitfalls For Marketplaces

1 Nov 2023 · 2 min

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This content was created by Max Brun. This content was uploaded by Max Brun. This is a YouTube video titled "Pitfalls For Marketplaces" (created 2023-11-01) containing a spoken monologue about common pitfalls for early-stage marketplace founders. The unidentified speaker outlines three main issues: having the right team and skills, choosing the right market (referencing an NFX rubric that classifies opportunities as "fertile soil", "I don't know", or "will waste your life's energies"), and ensuring sufficient capitalization and patience because marketplaces often take many years to succeed (examples cited: Poshmark and OpenTable). The excerpt reads like advice or a talk aimed at startup founders.

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Are there maybe any, you know, specific kind of pitfalls that you see kind of early stage marketplace founders? Pitfalls. I mean, the pitfalls for marketplace founders are the same as everyone else and then some because they're difficult to fly, right? So, you know, the first thing is you gotta make sure you got the right team and that the biggest problem that founders have is that they don't have the right team. or that they aren't being the right team member or that they don't have the right skills. That's the first thing. I think the second thing is, again, picking the right market. I think that, you know, if you, we have this rubric, if you go to sort of NFX sort of patterns of startup ideas, it sort of lays this out that, you know, after looking at tens of thousands of companies over 30 years, I can tell you whether I can put your business into one of 3 buckets. It's going to waste your life's energies. I don't know. And fertile soil. And the fertile soil is about 10%. The I don't know is about 30%. And the will waste your— I can definitely tell you this is going to waste your life's energies is 60%. And so the goal is try to move yourself from one to the next to the next until you're in the fertile soil. So the second thing is just picking the right hill to go after is sort of the second thing. And then the third thing is making sure you're properly capitalized because these things always take longer than you think. I think I started working on Poshmark and I think he was writing the business plan on my floor at my house in 2011. That's 12 years ago. You know, these things take a long time and in a lot of marketplaces you don't see, start to see a lot of success until year 6 or 7. I think OpenTable was selling SaaS software for 7 years before they opened the marketplace. So you have to be patient with these things and it takes a lot longer than you think. And so you have to make sure that it's properly capitalized.