Benjamin Lauzier: belief

Transcript context

…Most ideas period fail, same. Coming back to most of the things you're going to struggle with are the same things that every company struggles with outside of marketplace. So, let me just ask, is maybe specifically within marketplaces or even just broadly, what are the biggest reasons that marketplaces fail? I think a few things come to mind. One is this concept of liquidity that we've talked about. So, you need to kick off this flywheel, you need to build enough of that density within your marketplace. And depending on the business, you can take a lot of time or money, and without the right diagnostic framework you can end up running out of both. And so it's like, that's the same one, and I felt this at Lyft, I've seen this at other companies, this rush like, "Wow, we have to get to this point, otherwise we know it's a losing battle until we have enough density for both sides to have a good enough experience." The other one that I see is ignoring one side. So, we talked about doing that when you're early on, but I see a lot of larger companies operating for too long as one-sided businesses. Many large marketplaces only thinking about their demand side funnel. So they run ads, they get clicks, they turn those clicks into dollars, and they try to get enough supplies that intuitively the experience is good enough for users. And my advice is, if you're doing this you're missing out on half of your business. And the trick is marketplaces are very laggy, so once your network effects start to die down it turns into this moment of panic of, "Oh shoot, we forgot about half of our users. We forgot that sellers are people too, and they're all leaving, and now we need to completely transform our product to save the ship, and to create a compelling value proposition on their side." So, that's the other thing that I see is businesses realizing that they are marketplaces with true marketplace needs too late in the game. And the last one is quality. I think we talked a little bit about the quality before, but it doesn't mean that you always need to have the best quality in your marketplace, but being a marketplace implies a level of curation. You need to be intentional about the quality that you aim to provide, and I think a lot of companies don't have necessarily that intentionality and you have this constant push of supply, "If only we'd lower our bar a little bit, we could get more supply. " And so until you end up, we've all experienced this at some point, you found some e-commerce website, you look for something and there is also like, "Oh my god, this looks super shady," because all the sellers don't look that great. That's a quality problem. And so, you need to be intentional about your quality and I think that's another area where companies fail. This episode is brought to you by Vanta. When it comes to ensuring your company has top-notch security practices, things get complicated fast. Now you can assess risk, secure the trust of your customers, and automate compliance for SOC II, ISO 27,001, HIPAA and more with a single platform, Vanta. Vanta's market-leading trust management platform helps you continuously monitor compliance alongside reporting and tracking risk. Plus, you can save hours by completing security questionnaires with Vanta AI. Join thousands of global companies that use Vanta to automate evidence collection, unify risk management, and streamline security reviews. Get $1,000 off Vanta when you go to vanta.com/lenny. That's V-A-N-T-A dot com slash Lenny. Kind of as a segue from that idea of quality, I want to talk about managed marketplaces, managed supply. So, I think the reason quality is such an issue for marketplaces is because you do not own the supply and control the supply your marketplace, you're not just selling something, quality is innately going to be a challenge. Airbnb doesn't own homes, Uber doesn't employee drivers. They can't even legally tell them exactly what to do because their contractors, so quality is always this ongoing challenge with marketplaces. So, there's always this push towards making it more of a managed marketplace. We give people a lot more instruction, maybe they own some of the supply, maybe they invest a lot in training, all that kind of stuff. And in a perfect world, not unlike an idealized world, quality will be best if you own it. But then you're no longer marketplace, your business model sucks. I guess just any thoughts on marketplaces that are considering becoming more managed? Any advice on when it makes sense to move towards that spectrum, and how far to go?…

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