![5 myths about the marketplace that mobile strategies busted](https://img-cdn.tnwcdn.com/image?fit=1280%2C720&url=https%3A%2F%2Fcdn0.tnwcdn.com%2Fwp-content%2Fblogs.dir%2F1%2Ffiles%2F2013%2F11%2Fmobile.jpg&signature=8cf0cf3c7f87c0b58de024f9599de552)
Navin Chaddha and Tim Chang are Managing Directors at Mayfield.
In the era of mobile, social, and the sharing economy, we’re seeing the emergence of next-gen mobile-enabled marketplaces in every ecommerce category, from fashion (Poshmark), to health (Brighter and HealthTap), lodging (Airbnb and HotelTonight), transportation (Uber and Lyft), and real estate (Zillow).
However, we have noticed that several conventional wisdoms surrounding marketplaces are getting disrupted. It’s important to constantly question traditional assumptions whenever new platforms arise, as it’s these disruptions which incumbents often fail to adopt, leaving room for innovative startups to spring ahead in new land-grab opportunities.
Mayfield recently hosted a Mobile Marketplaces dinner with leading entrepreneurs, which yielded several insights.
Myth #1: Online marketplaces have no offline component
Many of the newer service marketplaces feel more like “movements” rather than “businesses,” and actually require very careful architecture of the end-to-end experience both online and offline, including areas such as culture and workflow.
“Mobile is a foundational part of the Airbnb experience. When you travel, you are constantly on the go, so being connected to your mobile device might be your only digital lens into the world,” says Shaun Modi, designer at Airbnb. “How do we design and build a world-class mobile experience that not only satisfies the needs of our users, but fuels growth and inspires more people to join the Airbnb global community? It all starts with culture.
“By focusing on designing our internal culture, it seamlessly translates to the experience we create, both online and offline. Everything from the layout of our office, design principles, team structures, and interview process definitively reflects who we are.”
Modi also says startups should invest internally to inspire employees to have empathy for each other and for their customers.
Myth #2: You can bolt on community, once the commerce engine is going
Communities are incredibly hard to create and curate so they cannot simply be bolted on.
A simple way to think of it: a community is a hangout – a place you want to go back to because you have a specific personal identity, and set of friends there. A marketplace is not often a natural hangout, and relies on a barrage of emails, offers and marketing campaigns to get you to remember to go back to check out the site or app.
“In the early days of e-commerce, sales were typically the most important metric for success. But now that we’ve entered a mobile, social era, commerce companies have to find engaging ways to keep customers involved and coming back to get the most bang for their buck,” says Manish Chandra, founder and CEO of Poshmark. “So many commerce startups get it wrong – focusing on customers before community.”
Chandra says Poshmark does this by zoning in on individuals, their relationship to fashion, and their natural instinct to be social. “By prioritizing community over commerce, we built a scalable platform on the foundation of real human connections to create an addictive social experience that encouraged users to come backm” he says.
“Because the community came first, Poshmark generated an unprecedented level of support and engagement between users, and the selling and commerce became a result of their dedication to each other.”
Myth #3: Money is the only motivator for sellers/service providers
Multiple currencies, beyond money, are at work nowadays: reputation capital, value of time, karma and goodwill, to name a few. These can all be as valid as money in terms of what can motivate someone, and are more measurable and transactable than ever. The non-monetary motivator can be especially significant in expert networks, where one’s professional reputation is at stake.
HealthTap is a great example of a company creating an “impossible” highly active network of medical experts. HealthTap has built up a network of over 50,000 U.S. licensed doctors in good standing – who participate on the service by answering user questions within 24 hours, and creating other health content (like tips) for free.
Motivators include altruism (helping patients and growing the knowledge database); professional pride (doctors actively rate and rank each other through endorsements and peer review); and only secondary income or new patient acquisition (patients pay for more detailed answers or video consultations).
“This kind of large-scale expert participation is creating amazing new data about health questions, answers, and care, while at the same time transforming the experience of accessing doctors,” says Ron Gutman, founder & CEO of HealthTap.
Myth #4: It’s all about the technology, not the service
It’s easy, especially in Silicon Valley, to get hung up on all the whizbang new technologies available to developers. The simple truth is that first and foremost, a services marketplace has to build upon an offline behavior or service that users find valuable.
“A successful mobile marketplace is not about the technology, but rather about the unique experience or service that the technology enables,” says Jake Winebaum, founder and CEO of Brighter.com. “In tackling the healthcare industry (dental care specifically), the quality of our member’s experience in choosing and going to a dentist is paramount.”
Without a mobile experience that tends to individual customers 24/7, the service would do little to help customers.
“Take Uber as another example—if they only had the mobile dispatch technology but didn’t provide great and reliable drivers, the company would not succeed,” Winebaum says. “It is easy to attribute too much value to the technology itself, but it is critical to remember the ultimate service that your technology is actually enabling—that is what will drive the success and longevity of your company.”
Myth #5: You should explore all types of growth hacking to get big fast
“Growth hacking” or the mentality of “try every viral trick, every channel as quickly as possible in order to get ahead in the land grab” is a hot topic. However, we think engagement hacking is more important, so that you can keep users around and make them repeat customers, rather than simply growth hacking.
“Growth is critical to marketplaces, because they have network effects… whoever gets biggest first wins, and becomes very hard to dislodge,” says James Currier, co-founder and CEO of Tickle, Ooga Labs, WonderHill and IronPearl and investor in Lyft, Poshmark, & Wanelo.
Currier notes that even Craigslist, eBay and Monster.com – companies that do not necessarily have the best products – still manage nearly $1B in revenue.
“After working with tens of companies on growth, we’ve seen there are generally three ways of growing: SEO, word of mouth/ viral, and buying traffic,” he says. “Further, we’ve seen it’s very hard for companies to be good at more than one of these three types of growth. So our advice is to choose one, and get really good at it.”
In addition to the three types of growth, companies must be skilled in all assets of social outreach as needs will constantly change. “Build your company so that you can find and exploit channel after channel over time, because the channel that’s working for you now will stop working soon enough,” he says.
It’s an exciting time to be launching and investing in next-gen marketplaces, and it’s worthwhile to study conventional playbooks of the past, while also questioning old assumptions and rewriting the rulebook!
Disclosure: Brighter, HealthTap & Poshmark are Mayfield investments.
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