What goes on behind the scenes that the general public or entrepreneurs don’t see?

Whatever you want to call “the sharing economy” or “marketplace startups,” peer-to-peer marketplaces continue to gain popularity, with a flurry of startups growing rapidly to keep up with all of this “on-demand” demand.



While the top runners in the space are Uber, valued at $18 billion and Airbnb valued at $10 billion, one thing that all of these startups have in common is early-stage growth and traction with a specific target market. The underlying trend here is the demand for marketplaces under the realm of a sharing economy.

But what is going on behind the scenes that the general public or entrepreneurs (thinking about launching their own venture) don’t often see? What experiences have operating marketplaces encountered over the past few years?

Challenges of Marketplace Startups

How many of us are faced with the legal battles that Uber has had to triumph over time and time again? Not many, but Uber continues to find a way to push forward. Not only are marketplaces challenged with pioneering culture shifts within consumers’ everyday lives, they are also quite difficult to operate, as the main attraction to consumers and/or businesses often isn’t technology but access.

Take Airbnb; what are consumers paying for? Is it the company’s algorithms, its website, its mobile app? No, they’re paying for access to opportunities they didn’t have before. And Airbnb customer satisfaction depends on humans delivering on a promise within a community of shared vision.

Ask any manager what the most challenging aspect of their job is, and 9 times out of 10 they’ll say “people.” Managing people is hard, probably the hardest element of running a company. Think about it, how many people do you manage? 5? 10? 50? 100? Imagine managing 800,000 across 190 countries and holding them accountable to adhere to your standards of responsibility. Sounds overwhelming at best.

But ask any manager what the most rewarding part of their job is, and the most common answer amongst elite leaders is also “people.” That’s why marketplaces do what they do and believe what they believe. They’re fueled by people, access, and offerings.

Learnings from Marketplace Startups

When it comes to building, managing, and operating marketplaces, what have been some of the key learnings and takeaways over the past few years? For those thoughts, we turn to the industry’s finest:


“The most important thing to remember when creating a marketplace style business is that there are two distinct sides of the market. You have to focus on balancing supply and demand because if either side is even slightly off, your model can fall down. You have to ensure both the buyer and seller have a great experience in all aspects of their interaction with the site. And, last but not least, it is incredibly important to put a layer between the buyer and seller that improves the transaction experience that might have been created if the parties were exchanging goods or services outside of the marketplace.” — Stephanie Leffler, CEO, CrowdSource


“The key to success is actually applying the values that are inherent to the new- or sharing economy to our businesses as well as our personal lives. The new economy is all about authenticity, integrity, collaboration, and transparency while maintaining good business sense, professionalism, and a sustainable business model. To be successful, we will have to embody the change that we believe in: “What’s in the heart is in the business.” — Kim Tjoa, Co-Founder and Strategy/Operations, Floow2


“We first launched (back in business school) as a service for small businesses to locate MBAs to do small projects. Once we launched our public platform, we started seeing a ton of inbound interest from major enterprises. For small businesses, we gave them access to something they literally could not afford. For massive enterprises, we were blowing up the existing 100-year-old consulting business model. Our key insight: Build a marketplace as flexibly as you can, because your users will tell you what they want to do with it.” — Rob Biederman, CEO and Co-Founder, HourlyNerd


“The sharing economy has traditionally been marketed as ‘money saving’ and therefore not considered appealing to the luxury sector. But we’ve found there is a huge opportunity for collaborative consumption in the luxury market as long as your brand is trusted and you provide a world-class experience. Affluent consumers appreciate the benefits of the sharing economy — more variety without the burden of ownership — but they won’t compromise on quality. That means thinking of the consumer first in everything that you do, because certainty and service are paramount for them.

Companies that recognize and capitalize on this are in a prime position to make a huge impact. The key way that has come through in our brand is by providing high-end service — like pre-arrival grocery shopping, onsite concierge services, and trip planning — in addition to providing a great vacation home.” — Brent Handler, Founder and CEO, Inspirato


“Trust is the currency of a thriving marketplace. More and more niche marketplaces are launching, and soon we’ll see a user’s reputation shared across marketplace platforms, ensuring that both guests and hosts, suppliers and buyers, givers and takers thrive across the peer-to-peer landscape in both B2B and P2P markets.

Instead of leaving it up to the Wild West (think eBay and Craigslist, where trust is a major issue), domain experts, industry associations, and global brands can now power up their own marketplace. Brand loyalty, stronger community, and deeper customer analytics are a critical part of closing the loop on a brand’s product and services life cycle. In the same way content management, e-commerce, email marketing, and social media tools have been commoditized, marketplace technology is also, but trust and strategic thinking never will be.“ — Michelle Regner, CEO, Near Me


“We’ve learned a few things over the years! First, give people choice. We found that when our users are looking to select someone for a job, providing 3-5 professionals that they can select from is best. Second, we found that building out our community horizontally rather than vertically is both feasible and much more scalable from a revenue perspective.

Staying flexible, especially in the early days, is key. Finally, one thing that we’ve found interesting is “trust” within our community. Our users aren’t so much worried about letting people they’ve never met before into their home (which speaks to the impact that quality of professionals can have on a marketplace) but rather about getting a good deal and realizing the value they’re receiving.” — Marco Zappacosta, CEO and Co-Founder, Thumbtack


In speaking to the team at Uber (and visiting their SF office recently), it was clear that a huge differentiation is believing and being dedicated to the mission unequivocally. That may seem obvious, but it rarely percolates throughout a company like it does at Uber.

David Plouffe, who recently joined the company echoed that sentiment. “As Uber succeeds like I believe it can, it will spur the creation of hundreds of thousands of small businesses and directly create millions of jobs; deliver rapid, easy and affordable transportation alternatives to workers, parents, businesses, and people out having a good time; make our roads safer, drastically cutting down on drunk and distracted driving; and give those who choose not to purchase an automobile a more viable way to live their lives day to day.” — David Plouffe & the Uber Team

5 Takeaways from the Marketplaces

There are a few core lessons we can all learn from peer-to-peer marketplaces:

  1. Flexibility — Especially important in the early days, find that balance between “focus” and “testing” your total addressable market.
  2. Expectations — Set expectations early and often. Users may be more than willing to sacrifice on luxury to save on cost, for instance. Or they may be willing to pay more for an added layer of trust. But they need to be able to realize those tradeoffs.
  3. On-demand — Intent has a climax and a plateau. Marketplaces thrive on their ability to capture user intent at its climactic level on a recurring basis.
  4. Value — Ensure users understand and appreciate the value of your business but also know value means different things to different people (it’s not always financial).
  5. Guidance — While providing a flexible solution is important, leaving the user experience too “open ended” will lead to paralysis.

Each of these five elements is imperative when building, maintaining, and scaling a successful marketplace. As marketplaces continue to grow and evolve, the one thing we can all agree on is that they will continue to impact how we operate across our personal and professional lives.

Photo credit: John Scott

Via Venture Beat