MAKING A MARKETPLACEA C H E C K L I S T F O R O N L I N E D I S R U P T I O N

inspired by @bgurleyby @nireyal and @sanguit

On November 13, 2012, Bill Gurley, a partner at Benchmark Capital, posted a remarkable essay on his blog. In it, he described the, “10 factors to consider when evaluating digital marketplaces.” Given the tremendous value marketplaces are known to create and how hard they are to get right, we found this essay to be a goldmine of insight. We wanted to digest Bill’s post into a more memorable format.The result is this brief checklist we hope will help take some of the luck out of evaluating marketplace businesses. As Bill wrote, “It is unlikely that you will !nd a marketplace opportunity that would score ten out of ten with respect to this list.” But according to Bill, the odds of success improve the more of these characteristics the business exhibits.

- Nir and Sangeet

Read Bill Gurley’s original post here: http://goo.gl/xoAUw

1. Does your marketplace make a behavior dramatically easier and more e"cient?

Alibaba Made transactions between US importers and Chinese manufacturers dramatically easier than the previous methods of !nding suppliers.

2. Does your marketplace produce more value than current markets?

AirBnB Allows anyone to run their own hotel. Room owners pro!t from renting out unused rooms while guests bene!ts from lower prices.

3. Does your marketplace utilize a new technology to create e"ciencies?

OpenTable Leveraged adoption of high-speed internet access by both restaurants and consumers to create a web-based reservation platform.

4. Does your marketplace consolidate a fragmented market?

Kickstarter Connects entrepreneurs with !nancial backers who want to see projects succeed. Both sides of the market are fragmented with no dominant players.

5. Does your marketplace make it easy for suppliers to sign-up?

EtsyMakes it very simple to sell handcrafted goods in minutes.

6. Does your marketplace serve a large market?

eBay Serves a very large market of online buyers and sellers for just about anything.

7. Can your marketplace bring in unserved customers and expand the market?

oDeskExpanded the market for software outsourcing by making it simple enough for anyone to use.

Photo Credit: racheocity

8. Does your marketplace serve a frequent need?

GrubHub Serves a frequent need for many o"ce workers, ordering daily food delivery.

9. Does your marketplace control the transaction?

Uber Is at the center of the payment #ow when it coordinates a ride between a driver and rider.

10. Does your marketplace leverage a network e#ect?

YouTube Is more valuable with each new video published to the site. The more videos posted, the more important the site becomes to viewers.

Good luck We wish you success making your marketplace.

// @nireyal blogging at: nirandfar.com // @sanguit blogging at: platformed.info

Read Bill Gurley’s original post here: http://goo.gl/xoAUw