Originally posted on TechCrunch:
Editor’s note: Anand Iyer is the Head of Product at Threadflip. Previously, he was co-founder and CTO of Hitpost, acquired by Yahoo, and managed product at IGN Entertainment and Microsoft. This post also ran on First Round Review. Follow him on Twitter.
In 2009, Airbnb was close to going bust with revenue flatlining at $200 a week. Since then, over 9 million people have used it to find temporary housing. Etsy was founded almost a decade ago, but doubled its valuation with its last two rounds of funding.
The gradual but ultimately huge success of these entrants to the marketplace space has paved the way for Uber and Lyft’s breakout growth, and the explosion in startups with marketplace models: Postmates, Getaround, TaskRabbit, and more — quickly eclipsing the old guard represented by Craigslist.
Marketplace startups are unique because they aren’t just serving one base of customers. They connect buyers and sellers, service providers and consumers. They have to make sure users are having a good experience with each other as well as their company. As head of product for fashion marketplace Threadflip, it’s clear to me how much of this is based on our ability to inspire and maintain trust. And while “trust” sounds like a subjective term, building it is highly tactical.
Create A Managed Environment
Let’s take a closer look at Craigslist. As a consumer, you conduct a search, you email sellers or providers, you keep track of who you email, you schedule pickups and oversee transactions yourself. You do all of this despite a high degree of anonymity, a poor mobile interface — despite the spike in mobile engagement — and no guarantees. How much more would you be willing to pay to save time and gain assurance? This is where marketplace startups are finding opportunity.
However, for a marketplace startup to win, it needs to hit liquidity as fast as it can. Liquidity is such a powerful force; it’s the reason most marketplaces and, more generally, network effect businesses like Craigslist, aren’t easily disrupted. That said, it’s increasingly clear that buyers and sellers are looking for better structure.
More users want platforms to do all the work for them. This is why highly verticalized plays are becoming compelling for investors. When you focus on a very specific area, like Homejoy focuses on house cleaning, you have a better chance of serving all of that market’s needs and differentiating. As a startup leader, your job is to make sure your customers trust you to meet and constantly exceed these needs.
To do this, well-managed marketplaces prioritize the following features.
Actionable rating systems
Most have star-rating systems built somewhere into the process for both buyers and sellers. For example, Uber, Flywheel and Lyft ask both drivers and passengers to rate their experiences at the end of a ride. To actually make this data valuable, however, companies have to use ratings almost imperceptibly to filter out bad users and continually improve service.
[tc_writerquote]Users expect service to be fast, infallible and continually improving — much like software — but they don’t want the brand to be robotic….[/tc_writerquote]
Uber users don’t want to spend the time reading through drivers’ ratings and reviews. You expect that the company has already removed poorly rated drivers from the system. You’ll never see a driver with lower than a 3-star rating on Uber, and as a result, very few riders worry about having a bad experience. The corollary is that drivers can depend on the system to weed out abusive or fraudulent passengers. On both sides, ratings help people trust that they will get what they are expecting.
Carefully curated content
With so many choices, users don’t have the patience for any questionable content. For us, this means damaged or overly used clothing on Threadflip, but also includes crummy apartments on Airbnb — or even a clunky checkout flow on a website. Customers will go elsewhere, and fast.
As a marketplace curator, you have to do two things to prevent this from happening: You need to hire people to continually find and feature your best content and downgrade or eliminate the bad content. And you need to create community-facing tools so your users can do the same thing.
Airbnb is a prime example. While shady apartments in San Francisco may get listed, they are extremely hard to find. Generally, the best listings are surfaced first as a result of both manual and algorithmic curation. As a marketplace company, manual or editorial license is a big lever to retain users.
Airbnb discovered this when it replaced user-generated apartment photos with beautiful, professional-quality photos. Even though this strategy didn’t scale, and now most photos are in fact user-generated, it helped them to create guidelines for people listing apartments, which gave them the lift-off they needed.
A human system that learns like a machine
All of these marketplaces may be enabled by technology but are powered by people. This means two things: Users expect service to be fast, infallible and continually improving — much like software — but they don’t want the brand to be robotic; they want to know that real humans work there and care.
At Threadflip, our team learned that people don’t want to wait more than 10 days for a product that they’ve ordered from someone. This is a threshold we defined by looking at natural human patterns. People generally don’t have the time to ship something during the week when they’re working, so they wait till the weekend. This gives the seller a 7-day grace period to get the package in the mail. But once 10 days have gone by, buyers start to report bad experiences.
After collecting this data, we took quick, precise action to enforce short ship times. Now we not only send emails to both buyers and sellers with the 7 to 10-day expectation clearly outlined. We also mail shipping labels to sellers so they only have to slap them on flat-rate boxes to send their products, and are encouraged to do so within the 10-day window.
Lyft is another company that has taken action to craft a more human experience. While ride-sharing has become more automated and, one might argue, increasingly robotic, Lyft has responded by equipping drivers with phone chargers so they can give riders a chance to juice up while in transit. They also recommend that drivers make conversation if riders are open to it, and of course offer the signature fist bump. This effort to make customers feel like part of a community is a pillar of the company’s initiative to build trust.
Most importantly, when expectations are violated on either side — a buyer is left hanging, or a seller never receives payment — a company should deploy a very human-centric customer-service strategy, heavily reliant on phone calls and personal communications from employees. Homejoy, the marketplace for house cleaners, does something very similar, following up when poor experiences are reported with phone calls and discounts.
Personally, I will always remember the one time I gave a ride-share driver a 3-star rating. Almost immediately, I received an email from a named customer service rep asking for more information about the experience and making it clear that she would pass along all the feedback to the driver operations team to make a difference. As a result of this humanizing experience, I am still a happy and retained user today.
Focus on supply
To be successful, marketplace companies need to focus on their suppliers — the sellers and service providers on the platform that make their offering possible. This can be counterintuitive for a lot of startup leaders who are focused on pleasing traditional end users. But for buyers, very little is actually out of the ordinary. Most people are used to buying or even ordering services online, either from Amazon or eBay. On the flip side, fewer people are used to shipping products, providing taxi service, or turning their homes over to other occupants.
For all these reasons, it’s crucial that marketplaces focus first on providing an elegant, instructive and — above all, easy — experience for suppliers.
Just like Lyft provides its drivers with phone chargers and a playbook for how to be a good and courteous driver, our team at Threadflip will send its sellers shipping supplies like boxes, and even free mannequins to help them display used clothes. (Interesting fact: People are much more likely to buy used clothes they see on a mannequin than on a real person — data that Threadflip collected and distributed to help its seller base.) By creating digestible and inclusive materials for sellers, we have been able to inspire loyalty and turn sellers into evangelists for our brand.
Another best practice is to set up forums or community spaces where sellers or service providers can connect directly to share challenges and best practices. For example, Airbnb hosts feedback forums so that hosts can talk about what has worked best about their listings, and how to be the best hosts possible, including providing fresh towels and a stocked fridge of treats.
“Have the courage to follow your heart and intuition. They somehow already know what you truly want to become. Everything else is secondary.” – Steve Jobs. Here’s to an icon on his birthday. Here’s to the entrepreneurial spirit.
Originally posted on VentureBeat:
Launching today in invite-only beta, Ideapod says it hopes to serve as a platform ”for sharing, discovering and taking action upon world-changing ideas.” It’s a social network for sharing Things That Matter™.
As you may know, Upworthy’s virality originates within its obnoxious title formula. On Upworthy, you’ll find clickable stories such as “If This Video Makes You Uncomfortable, Then You Make Me Uncomfortable. On Ideapod, you’ll find posts like “This is not a call for wealth redistribution” and “Finally, we have the truth about unique benign human sexuality. But will that truth set us free?“ Ideapod, in its defense, exhibits restraint with the famed curiosity gap — the gap of information which makes you click for more.