Catering to multiple audiences
In my current startup, we cater to two different audiences – student renters and property managers. Anytime you are creating a marketplace for two or more parties to transact business you are looking at a multi-sided market.
Here’s what I’ve learned about how to win in multi-sided markets over the last two years as a startup founder:
One of the typical problems that multi-sided markets face is the problem of balance between the consumer and the vendor. If you bring shoppers (consumers) into a beautiful mall (marketplace), and all the stores (vendors) are empty, then your consumers won’t come back.
Conversely, if you build a wonderful mall and invite tons of top vendors to be a part of your marketplace, you’ll probably get the question “Well, how many shoppers do you have?”
It’s tough to get one without the other, so what should you do?
The theories of multi-sided markets tell us that in a multi-sided market, there is usually one side of the market that is subsidized, meaning they get access to the market at little or no cost. These are generally your consumers – what the vendors want access to. The other side of the market generally bears the burden of the market financially. These are the vendors that want to get access to the consumers through the marketplace.
If you get consumers to come to your marketplace, but don’t have products to offer, they’ll instantly be frustrated that you wasted their time. In general, businesses looking to create a marketplace must focus their early efforts on building the vendor side of their business so consumers see something when they come in.
Here’s a list of marketplace companies and what their vendor side looks like:
- Ebay – anyone that wants to sell something online – including individuals, small, medium, and large businesses
- Airbnb – anyone that has a room or home they’d like to rent out for short periods of time
- Comfy – student housing property management companies or individuals that own rentals for college students
- Visa – merchants to receive credit cards
- Elance – freelancers that want to sell their services online
- Homejoy – companies that clean homes
How do you get those vendors into your marketplace? This is much more difficult, but here are a few tips for you based on a few industries I’ve consulted for and worked in.
- Networking – if you already have a network in a given industry, this is a great opportunity. The goal here is to get enough people onboard that the consumers that come to your marketplace find what they need.
- APIs – for those who don’t know, an API is a way to communicate with a website or app. If I were looking to create a marketplace for solar panels, I would look into every website currently selling solar panels. I’d then find out whether or not they have an API or a reselling program – I know you want all the profits yourself, but let me finish! You may be able to use those APIs to pull product into your new website. Your product may be physical solar panels, or digital information like apartment listings. This gives you a base to start with – once you turn some heads you can do some better things.
- Conferences – attend industry conferences talk with the right people and find who you would need in a marketplace.
- Cost – you have to make it worthwhile for the vendor to take a chance on your marketplace. Especially in the beginning, be very careful about how you charge the vendors, and how much. See below for additional details.
As mentioned before, the consumer in a marketplace will normally not be charged, or will only be charged a small amount. This is because the consumers are an essential part of the product you are offering. As the company that creates the marketplace, you generally make your money from the vendors that want access to your consumers. Depending on your business model, charging the vendors can be either dead simple or very hard.
Let’s start with the easier pricing models. Amazon operates a marketplace. Amazon knows whenever something is purchased. They actually facilitate the transaction. Last summer, I put my first ebook for sale on Amazon. It was great! No up front costs for me as the vendor, and I only pay Amazon when I make money on my book. This “pay for performance” model is ideal because you are involved in the actual transaction. The friction associated with bringing customers onboard is reduced significantly by only charging when they make a sale, instead of a monthly fee for access to a platform that may not even bring them any sales.
Things start getting more difficult when you aren’t actually tied into the transaction that occurs. Maybe you provide leads, but there’s no guarantee that they close. Just providing leads – especially with large transactions – may work for you, but it leaves you open for disruption. If someone can come in and figure out how to get closer to the actual transaction, then they could potentially offer a more viable solution to your vendors.
If you can’t tie into the actual transaction, you may want to try one of these other options:
- Cash back incentive to consumer for reporting the transaction. Rent.com has done this by offering a cash back reward to renters that report their lease signing to the company.
- If you are going to charge a monthly fee, make it based on some sort of performance. If you don’t send at least 10 leads in a month, the customer doesn’t have to pay. Just be wary of the definition of a lead!
- Integrate with vendor software packages to find out about the sale. This is a great option in industries that use widely adopted tools available through the internet.
Creating these marketplaces can be time consuming and extremely difficult, but people do it because the potential reward can be huge! Disagree? Think Uber, Airbnb, Visa, and a whole lot more. When you have the consumers, the vendors are willing to pay to get access to them.
Serial procrastinator? Check your mental energy, not time management
(EDITORIAL) Need a hack for your time management? Try focusing on your mental energy management.
Your author has a confession to make; as a “type B” personality who has always struggled with procrastination, I am endlessly fascinated by the topic of productivity and “hacking your time.”
I’ve tried most of the tricks you’ve read about, with varying degrees of success.
Recently, publishers like BBC have begun to approach productivity from a different perspective; rather than packing days full of to-do items as a way to maximize time, the key is to maximize your mental energy through a different brand of time management.
So, why doesn’t time management work?
For starters, not all work time is quality time by nature. According to a study published at ScienceDirect, your average worker is interrupted 87 times a day on the job. For an 8-hour day, that’s almost 11 times per hour. No wonder it’s so hard to stay focused!
Second, time management implies a need to fill time in order to maximize it.
It’s the difference between “being busy” and “being productive.”
It also doesn’t impress your boss; a Boston University study concluded that “managers could not tell the difference between employees who actually worked 80 hours a week and those who just pretended to.” By contrast, managing your energy lets you maximize your time based on how it fits with your mental state.
Now, how do you manage your energy?
First, understand and protect the time that should actually go into deep, focused work. Studies continually show that just a few hours of focused worked yield the greatest results; try to put in longer hours behind that, and you’ll see diminishing returns. There’s a couple ways you can accomplish this.
You can block off time in your day dedicated to focused work, and guard the time as if it were a meeting. You could also physically retreat to a private space in order to work on a task.
Building in flexibility is another key to managing your energy. The BBC article references a 1980s study that divided students into two groups; one group planned out monthly goals, while the other group planned out daily goals and activities. The study found the monthly planners accomplished more of their goals, because the students focusing on detailed daily plans often found them foiled by the unexpected.
Moral of the story?
Don’t lock in your schedule too tightly; leave space for the unexpected.
Finally, you should consider making time for rest, a fact reiterated often by the BBC article. You’ve probably heard the advice before that taking 17 minute breaks for every 52 minutes worked is important, and studies continue to show that it is. However, rest also includes taking the time to turn your brain off of work mode entirely.
The BBC article quotes associated professor of psychiatry Srini Pillay as saying that, “[people] need to use both the focus ad unfocus circuits in the brain,” in order to be fully productive. High achievers like Serena Williams, Warren Buffet and Bill Gates build this into their mentality and their practice.
Embracing rest and unfocused thinking may be key to “embracing the slumps,” as the BBC article puts it.
In conclusion, by leaving some flexibility in your schedule and listening to your body and mind, you can better tailor your day to your mental state and match your brainpower to the appropriate task. As someone who is tempted to keep a busy to-do list myself, I am excited to reevaluate and improve my own approach. Maybe you should revisit your own systems as well.
6 skills humans have that AI doesn’t… yet
(OPINION / EDITORIAL) It’s not unreasonable to be concerned about the growing power and skill of AI, but here are a few skills where we have the upper hand.
AI is taking over the workforce as we know it. Burgers are already being flipped by robotic arms (and being flipped better), and it’s only a matter of time before commercial trucks and cars will be driven by robots (and, probably, be driven better).
It may feel unnerving to think about the shrinking number of job possibilities for future humans – what jobs will be around for humans when AI can do almost everything better than we can?
To our relief (exhale!), there are a few select skills that humans will (hopefully) always be better at than AI. The strengths that we have over AI fall into 3 general categories: Ability to convey emotion, management over others, and creativity.
Let’s break it down: Here are 6 skills that we as humans should be focusing on right now.
Our ability to undertake non-verbal communication
What does this mean for humans? We need to develop our ability to understand and communicate body language, knowing looks, and other non-verbal cues. Additionally, we need to refine our ability to make others feel warm and heard – if you work in the hospitality industry, mastering these abilities will give you an edge over the AI technologies that might replace you.
Our ability to show deep empathy to customers
Unlike AI, we share experiences with other humans and can therefore show empathy to customers. Never underestimate how powerful your deep understanding of being human will be when you’re pitted against a robot for a job. It might just be the thing that gives you a cutting edge.
Our ability to undertake growth management
As of this moment, humans are superior to AI when it comes to managing others. We are able to support organization members in developing their skillsets and, due to our coaching ability, we are able to help others to grow professionally. Take that, AI!
Our ability to employ mind management
What this essentially means is that we can support others. Humans have counseling skills, which means we are able to help someone in distress, whether that stems from interpersonal relationships or professional problems. Can you imagine an AI therapist?
Our ability to perform collective intelligence management
Human creativity, especially as it relates to putting individual ideas together to form an innovative new one, gives us a leg up when competing against AI. Humans are able to foster group thought, to manage and channel it, to create something bigger and better than what existed before. Like, when we created AI in the first place.
Our ability to realize new ideas in an organization
Think: Elevator pitch. Humans are masters of marketing new ideas and are completely in-tune with how to propose new concepts to an organization because, you guessed it, we too are human. If the manager remains human in the future (fingers crossed!), then we know what to say to them to best sell our point of view.
Using what we know, it’s essential for almost all of us to retrain for an AI-driven economy that is most likely just a few years away. My advice for my fellow humans? Develop the parts of you that make you human. Practice eye contact and listening. Think about big pictures and the best way to manage others. Sharpen your mind with practicing creative processes. And do stay up to date with current trends in AI tech. Sooner or later, these babies are bound to be your co-workers.
Your business model doesn’t have to be a unicorn or a camel to succeed
(OPINION / EDITORIAL) It’s not unusual for people to suggest a new business model analogy, but this latest “camel” suggestion isn’t new or helpful.
This year in 2020 I’ve seen a great deal of unique takes on how our system works. From 45 all the way down to children instructing adults on how to wear masks properly. However, after reading this new article published by the Harvard Business Review, I don’t think I’ve ever seen something so out of touch with the rest of the business world. Here’s a brief synopsis on this article on business model.
The author has decided that now of all times it’s drastically important for startups and entrepreneurs to switch their business tactics. Changing from a heavy front-end investment or “startups worth over a billion dollars” colloquially called “Unicorns” to a more financially reserved business model. One he has tried to coin as the “Camel”, using references to the animal’s ability to survive “long periods of time without sustenance, withstand the scorching desert heat, and adapt to extreme variations in climate.”
The author then goes on to outline best practices for this new business plan: “Balance instead of burn”, “Camels are built for the long haul”, “Breadth and depth for resilience”.
Now I will admit that he’s not wrong on his take. It’s a well thought-out adjustment to a very short-term solution. You want to know why I’m sure of that? Because people figured this out decades ago.
The only place that a “Unicorn” system worked was in something like the Silicon Valley software companies. Where people can start with their billions of dollars and expect “blitzscaling” (a rapid building-up tactic) to actually succeed. The rest of the world knows that a slow and resilient pace is better suited for long term investments and growth. This ‘new’ business realization is almost as outdated as the 2000 Olympics.
The other reason I’m not thrilled with this analogy is that they’ve chosen an animal that doesn’t really work well. Camels are temperamental creatures that actually need a great deal of sustenance to survive those conditions they’ve mentioned. It’s water that they don’t need for long periods, once they stock up. They have to have many other resources up front to survive those harsh conditions the article writer mentioned. So by this analogy, it’s not that different than Silicon Valley’s strongly backed “startups.”
If he wanted to actually use the correct animal for this analogy, then he should call it a tortoise business plan. Actually, any type of reptile or shark would work. It would probably be a better comparison in temperament as well, if we’re talking ‘slow and steady wins the race.’ Whatever you do, consider your angle, and settle in for the long haul.
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