Let's get the record straight. The marketplace is an umbrella term for many business models. The core idea of the marketplace is to connect two entities. Those entities can be individuals, industries or different business models.
In the era of social media and communities, connecting people is the number one priority. Especially now, when we all stay at home for an unknown amount of time, we all feel that need for human connection. The best example is the winner of the recent Makers Festival. It was an app that is connecting isolated seniors and children for bedtime stories.
Creating bridges between the two worlds is pushing forward the entrepreneurs of the digital age.
What can is a marketplace? Well, it doesn't have to be a complicated booking system or fintech application. The simple automation that is helping two different users in the same enterprise can also be a marketplace. Automation, in of itself, is a massive part of creating a thriving marketplace.
In this guide we'll explore the marketplace the umbrella terms for connecting entities.
With this guide I will share:
If we look at many platforms that we use day to day are marketplaces. YouTube (or any social media platform these days) is a marketplace where people discover content creators. At the time, it's a marketplace for advertisers to find content creators. Etsy is a marketplace connecting sellers with their potential buyers, and of course, the whale in the sea - Amazon.
So there's the most challenging question: how to understand what to build? It's a tricky question not only for marketplaces but for startups as well. Getting to the idea that is worth working on is challenging; however, for marketplaces, few things can be done to ease the pain.
You can spot a marketplace opportunity in:
Communities are reshaping the communication world. As you may (or may not) know, I'm kind of obsessed with them. Being a part of an online community is an especially good idea if you are scouting for a new startup idea. How can communities help you find inspiration and identify the marketplace? Well, in this setting, people are collecting around a common theme/industry. Without any heavy curation by the big brother like on social media platforms, all the communication is on our hands. Here you can see what people are asking? Who answers their questions? What kind of questions are people asking the most? By being active in a few crucial communities, you should be able to get the sense of the circulating problems everyone is facing.
Let's face it; we're in 2020, and still, not every industry is fully automated. Let's take financial institutions; a lot of them still are manually reviewing and processing loan offers, the beauty industry is mainly automating the booking process, leaving out the inventory management part, etc. Automation is not equivalent to the marketplace. However, it leads to the idea of the marketplace. For example, what was the process of finding real estate before Zillow was created? The simple automation of putting all of the rent space in one place and letting the general public access has changed the industry. It seems like nothing special, just an announcement board that we all have on the first floor of our building, and online, not a big deal, not a massive marketplace. It would be best if you did not underestimate the power of simple automation. One good automation can lift a considerable weight from the shoulders of a whole market.
I'll turn to my favourite passion economy to show you an example of this kind of product. Just a few years ago, when you wanted to start a blog, podcast or host a personal course, you'd be able to do that without any problem. However, in this equation, one big stakeholder was missing: the potential sponsorship opportunities/monetization of the content creator. Now it's hard to choose from the services that help to create a membership platform. When key stakeholders' interests are missing in any industry, it creates a space for a marketplace.
The moment you understood what kind of marketplace you are building, it's time to find out who are the key players in your game. Of course, as a founder, you don't have to solve everyone's problems at ones, from the beginning. Frankly, during the process of development, you'll waste much time trying to create a platform for each one of them, which will inevitably create a monstrosity of a big product but not a simple ready to iterate MVP.
So how to identify key stakeholders and understand which one of them to prioritize. A million-dollar question if you ask me. The basic strategy I'd recommend to use if to get for a user interview anyone who is related to the industry. Hopefully, you are building a product for a market that you are familiar with yourself, so identifying the first person to interview would not be a problem.
The most important part of the moment you found your first interviewee is to come up with a set of questions that will set you to the right path.
User Interviews are a different and complicated theme; however, in the realm of marketplaces here are the strategies you need to use:
- understand everything about the daily business processes they have (e.g. sending emails, getting payments, driving to places, etc)
- understand what people are involved in those processes.
As a former business process manager I can't stress enough how much understanding the underlying processes are important for creating any kind of plan or project. Getting to know the business processes is the same as collecting important data points. Each of these data points have potential to become:
- milestones for your product,
- features that you need to implement,
- people you need to speak about your product,
- optimization and automation points
There are a few methods of mapping the processes. User-based approach, is when you're going through the daily activities of each user, and map their processes and intersections of their processes. Process based approach, is when you're looking for similar processes in these users activities and start to desructure these processes.
The both at the end of the day are answering the two main questions:
What are you users doing?
Why are they doing it?
For clarity, let's see how can a typical interview go down. Here are the questions that each interviewer should ask to debunk the processes.
1) What are you doing the first thing when your day starts?
2) How often are you doing X activity?
3) How much time does it task to do the X activity?
4) What is the most time-consuming task of your day?
5) How many people are involved in your most time-consuming task?
6) Does another user review your activities?
7) Is the review process mandatory?
8) How much time it typically takes to review a task?
9) What happens if the task is not approved during the review?
10) How many people are involved in the review process?
11) Is the review process simultaneous for all reviewers?
12) Do you store your documentation (if any) digitally or physically?
13) How often do you archive your documents?
14) Which parts of the process are regulated by the law?
15) How many laws are regulating this process?
16) Is the government involved in the process?
17) Do you have any periodical reports?
18) Who is receiving these reports?
19) Are these reports mandatory?
These are just examples of questions that can help you in the mapping process. The error I see many founders are doing is that they are ignoring or underestimating is the involvement of laws and regulations. Many industries are heavily regulated, and some are still not automated enough to take much weight from the shoulders of entrepreneurs (that's a marketplace idea in itself).
Also, one stakeholder, the founders/product creators, are often missing is themselves! I remember when I was working as a software developer with startups, during the discussion when we were talking about users, founders are passionately talking about their potential customers, and how many people are involved in the process. And the argument I was making every time is not just X it's X + you because you, as a founder, need to be on top of your data.
So we've covered the identification of the marketplaces and stakeholders. Now it's time to talk about building the actual thing. Although it's the most time-consuming part of the process, I'll keep this chapter in the shortest. Right off the bat, creating any (even two-sided) marketplace from scratch is a long process in terms of development. But wait, how can you validate your idea and see if you are building the right thing?
Well, the first version (and the old school one) is to create a landing page with a form, send it to everyone, and share it all over the social media. Put an ad on that thing and see how many people are subscribing to that waiting list, and if you get a substantial amount of people, then yeah, you can say that your idea is validated.
It was a good idea (and right not it is too). However, to continue having just a list of 100 (hopefully more) people is not the ultimate goal. The trick is to get those people on your alpha or beta release. So when you are collecting potential users for your marketplace, the essential part is to keep them in the loop. Let them know what you are working on, ask them what features they would love to see in the MVP.
The trick I like to use is to create a survey, where I have listed all the features that I want to build and ask the users to select two top features they would pay for.
Don't be afraid to ask. Create a manageable schedule for your communication and stick to it.
Long gone are the days when you had to hire a software engineer to build your product. As the no-code movement is evolving, you don't need to have a software engineer as the first hire.
When before people were making landing pages to see how people react to the product, now you can create the product.
Here are some quick action plan, on how to create a marketplace:
As I mentioned in the previous section: when you have a list of people that are your potential customers, create a communication loop with them. The best and easiest way to do it is to start a newsletter. You don't need to call it a newsletter in a traditional sense; it's just a way to keep touch regularly. The first thing is to let the people on the list know what frequency they can expect to hear from you (weekly, bi-weekly, monthly, etc.). The next is to come up with educational content on your industry and your topic mainly. Finally, expect not to have 100% read and click rate on those emails. You should expect people to drop out of your list, and that's okay. Frankly, it would be best if you were happy that people are dropping out because the ones that stay are the ones likely to try your product during alpha/beta testing. Also, ASK THEIR OPINION. This serves two purposes 1) you see how engaged they are with your content, 2) you get their opinion, duh :).
I will be super short here and a bit repetitive. I guess some of you already know this tools.
Revue - easy newsletter setup, with email automation, with option to make it paid.
Substack - easy newsletter setup, with email automation, with option to make it paid.
Convertkit - easy setup with landing page for your newsletter and automation of emails.
Mailchimp - easy setup with landing page for your newsletter and automation of emails.
Why, why on earth would you need to create a paid community? Because it's trendy? Because it's easier to setup? Yes, yes and yes! Also, one more valid point of starting a paid community is to filter your list of users once more. This helps to see how many users are ready to pay, and it's easy to test your pricing plan. I'm ready to write this on all walls:
Don't be afraid to put a pricetag on your product!
I hear a lot that "It's to soon to think about pricing" and bla bla bla, but no, unless you don't wanna make profit purposefully, no it's never too soon. If you're running a business first and foremost, you need to come up with a pricing strategy sooner rather than later. That's why creating a paid community is a great way to test the waters of how much your users are ready to pay.
The most common way of setting up a community is to use a messaging platform. A lot of people are using Slack, Telegram, Discord, just because these are very familiar platforms.
However currently there's a big market for membership platforms forming. Here are just few of them:
I'm using Webflow for my websites, and as I know at least Memberstack is beautifully integrating with it.
Not to mention that Makerpad is fully created and maintained on no code tools. So if you have enough time on your hands it's not that hard to create a full on functioning product.
Bot curation and creation of content is highly beneficial for community growth. This step is helping to create a valuable (hopefully) news source for your community members. This step also includes creating community events, calls and meetings.
I think I will not reinvent the wheel, so Zoom would be the first and easiest choice for this step. Not because it's the best known, but also because it is integrating with any tool you'll use with Zapier.
During the stakeholder discovery process, I'm sure you had some notes done. Now it's time to see which of the feature requests you can automate using handy tools like Zapier.
Again, Zapier is your best friend here.
Many people think of analytics as just a tool that you need to integrate with your platform. And yes, for sure it is maybe 60% of the job. However, it's not just about the numbers, and counting the metrics, but also about qualitative analysis.
I'm not going to recommend any analytics process because it's highly dependent on your metrics, which we will discuss in the next section. I want to recommend to have regular surveys and talk to people who leave your community. Surveys can help you understand what your users need right now, and exit interviews with ex-members are highly useful to see why they decided to leave you early on.
Fathom analytics - a privacy centric analytics tool.
Doopoll - a survey tool that I liked, because I can embed the survey into my emails.
Let's say you already build your product (code or no-code doesn't matter). Now you need to understand how to measure it. I already have touched lightly this subject in my Ditch the vanity post.
Metrics should identify and show you how close are you to reaching your goal, and it also should be tied to your intial purpose. So in case of marketplace and connecting people it should be related to your connections.
Think of it as a contract that you are creating between two entities.
The metrics that are most effective to track are:
- number of connections made - to track the usability of your platform and is it actually connecting the entities.
- number of cancelled connections - to track the unsuccesfull
-number of transactions.
I think this is one of the most useful sections of this guide. How to grow a product in the era of oversaturation in every industry? There's no one recipe for growth. However, I think there are a few tricks that will help with initial traction. Here in Engineering Growth, I'm want to share the growth strategy that will not be tied around targetted advertising.
Content marketing is the best and most effective way of communication with the customer. This approach often leads to creating educational content for your customers to point out the problem you are trying to solve.
The good news is that no it doesn't matter what kind of content: blog, video, podcast etc.
How to create a content that will help you to grow your product? This will be my unpopular opinion however, the best strategies I saw is to extract the main problem you are trying to solve, and share the your personal approach to solving that problem. This will help you differentiate your product form others.
Working on your content discovery will be the No. 1 task in your priority list.
Things you can do to push your discovery:
- Create content plan,
- Improve the SEO,
- Utilize Reddit,
An actionable plan will be your starting point to setup your content creation loop. Few decisions that you need to make on this point is
a) what content creation methods you're going to use,
b) how much time per week you are going to dedicate to the content creation process,
c) what will be your content creation frequency.
After you got the answers to this questions you need to setup the production process. For example I have a separate day for content creation for the whole week.
How to come up with content ideas. Also an approach of mine for this step is
a) write/create content that I personally would be interested in,
b) write/create content that answers a question that I had.
In this step the crucial part is consistency. If you already have a consistent communication loop with your potential customers, integrating the content sharing with certainly help you.
I'm by no means a SEO expert. I know very little about the nitty gritty things of SEO, and all I do is the usuall easy staff. Like put the titles in H1, H2 tags or add meta tags, or connect the website to Google Search Console to get discovered.
However as a person who likes to analyse everything, one thing that I'm good at with SEO is the keyword research.
First of all I'm doing a keyword research by reviewing my competitors or people that are writing in the same niche. I'm using Ubersuggest tool for that, it's free for 1 project.
Although I always have a list of potential blog post ideas, I try to put some research in that as well.
For example if I want to write about "online communities", I'll try to see what people are searching for about that topic. For that purpose the best tools are:
1) Ask the public - where you literally can see what people are searching for in relation to that topic.
2) Text optimizer - helps you optimize your copy for search queries. I especially like this resource as it is working for Bing as well.
While working on SEO, don't forget about other search engines: q
Reddit is a thing that you either love, or hate, there's no middle ground. For startuppers it's always this mistirous place, that no one know how to handle but if you get lucky than you hit a jackpot.
It's really hard to rank there, because virtually anything you say or post can be taken down under the "No self promotion" rule that every subreddit has. The only trick that can work somehow, is not say anything about your product, but to share a simple story not attached to anything.
The thing that worked for me a couple times is to shrink the blog post and it as a simple post to a subreddit. After I got some feedback I shared also the link to my product in the comments.
If you already have good karma points, you and a following there, it's a sin not to use this channel.
I'm a person who view's youtube for news. So I'm quite used to watch much high-quality production. However, as a content creator myself, that quality always gave me anxiety. That meant I need to invest in tech to get the same level of quality. With remote work on the rise, the heavily filtered content is less attractive, because we literally moved our day-to-day life online. Zoom is the tool that we all have installed on our laptops, and going live is just one button away. Livestreaming with your customers is nother way to introduce yourself and show your personality. Which creates another level of connection with your customers.
Userlist is doing monthly livestreams and check ins, for example.
Now that you have a MVP, you can't wait to share it with a large audience. This can help you to engage a big audience of people with the same interest, also the same problems. So finding the right community to get to know is pretty good. I have a few blogposts on that:
Also I created product for people who want to find communities based on their needs: Community Finder
A great way to introduce yourself to the community is to host an AMA. With this way you'll be able to share some expertise to the community members and at the same time you can show off your product.
If you have a budget set aside than you can use it to sponsor a community. This will not only give you instant exposure to the community members, but also with this you'll support the community itself.
You can discover some communities that have sponsorships on:
- Intravert marketpalce - here are mainly indie communities,
- Carbon ads - carbon helps you run a campaign to their audience of designers and developers,
- Paved - on paved you can run a campaign on relevant newsletters.
- By sell ads - helps you run a campaign on niche content creators.
When you gained some momentum, you'll start to get holly grail of the marketing - word of mouth referrals. If you get a loyal customer base that gives positive feedback, this could be the sign that it's time to set up a referral program. Creating incentives for customers is a great way to give back to your community and also spread the word about your product.
Affiliate programs or affiliate links are one of the most popular ways of incentivisation. Giving back to your customers a percentage of the lifetime earnings of each customer they help to onboard is one of the most common way to do an affiliation program.
- Rewardful - a tool to setup your custom affiliate program.
- Magic links - a tool that gives a large audience of people access to make small income from getting your product.
- Growly - a referral tool specifically for newsletters (yet to be launched)