understanding liquidiy for marketplaces - toa 13
DESCRIPTION
These slides were originally presented at Tech Open Air Berlin 2013. The presentation is intended to help founders understand their marketplace. www.kinderfee.deTRANSCRIPT
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@daan_kinderfee
„Liquidity isn’t the most important thing. It’s the only thing. “ Simon Rothmann – Greylock Partners
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@daan_kinderfee
About myself
• Mathematician
• Technical background
• Co-founder @ Kinderfee
• Worked in Investment Banking for 3 years before founding Kinderfee
• Work at Kinderfee and as a startup mentor
To get in touch:
• @daan_kinderfee
• daanlo.tumblr.com
Daan
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@daan_kinderfee
Liquidity disected
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@daan_kinderfee
Liquidity disected – the exponential curve
Liquidity
Bus
ines
s vo
lum
e
Frustrating waste land
First handful of transactions
Things start to happen
BOOM!
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@daan_kinderfee
Magic formula for estimating your market liquidity
N = total number of potential needs
A = number of different demand
offers
B = number of different supply offers
(A * B)/N2
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@daan_kinderfee
Liquidity disected
No match
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@daan_kinderfee
Liquidity disected
Demand Supply One match
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@daan_kinderfee
Liquidity disected
Many matches start happening
Demand Supply
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@daan_kinderfee
Magic formula for estimating your market liquidity
N = total number of potential needs
A = number of different demand
offers
B = number of different supply offers
(A * B)/N2
![Page 10: Understanding liquidiy for marketplaces - toa 13](https://reader033.vdocument.in/reader033/viewer/2022060118/558a4b44d8b42a0b698b4646/html5/thumbnails/10.jpg)
@daan_kinderfee
Understanding YOUR marketplace
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@daan_kinderfee
Where on the marketplace value chain are you?
Online
Classifieds Auction / Reverse
Auction Marketplaces Community
Marketplaces
Prevalent from 1990+ Prevalent from 2000+ Prevalent from 2010+
Much higher CLTV
Particularly good for marketplaces that require a large element of trust
Slightly higher CLTV
More trust & services than online classifieds
Low CLTV
Monetisation either through Ads or Subscription
Known counterparty
Handling of payment
Transactional knowledge
Additional services
Transaction made on platform
Enables user ratings
Searchable list of available offers
Low trust & low convenience
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@daan_kinderfee
BCG – product life cycle matrix
Online Classifieds
Auction / Reverse Auction Marketplaces
Market share %
Gro
wth
%
Community Marketplaces
Cash cows Low investment requirements High margins / cash flows Slowing growth (imminent)
In early growth phase Rising stars & questions marks Showing huge growth
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@daan_kinderfee
Number of sides on your marketplace?
Hard to get liquid Impossible to get liquid
One-sided marketplace
1.7-sided marketplace
2-sided marketplace
3-sided marketplace
Easier to build Easier to defend
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@daan_kinderfee
What type of geographical liquidity is required?
Hard to get liquid Impossible to get liquid
Location independent
Local Postal Global
Easier to build Easier to defend
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@daan_kinderfee
What factor does time play?
Hard to get liquid Impossible to get liquid
Time independent
12-24 hours Days Real time
Easier to build Easier to defend
Typically mobile first
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@daan_kinderfee
10 second breather
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@daan_kinderfee
Who is paying on your marketplace (and in what currency)?
Babysitter / Supply Parent / Demand
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@daan_kinderfee
Who is paying on your marketplace (and in what currency)?
Host / Supply Guest / Demand
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@daan_kinderfee
Who is paying on your marketplace (and in what currency)?
Car owner / Supply Driver / Demand
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@daan_kinderfee
Who is paying on your marketplace (and in what currency)?
User
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@daan_kinderfee
< <
In general...
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@daan_kinderfee
< <
In general...
The side that is paying in trust is always harder to get liquid.
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@daan_kinderfee
< <
In general...
The side that is paying in trust is always harder to get liquid.
Money is plentiful – trust isn‘t!
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@daan_kinderfee
5 second breather
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@daan_kinderfee
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@daan_kinderfee
Typical transaction USD 80 per night 4 nights = USD 320 15% fee = USD 48
Guest Will do 1-3 trips per year
Host Can host up to 365 days per year
Please note: this example is my estimate. The data is entirely made up.
If this says USD 2 you are in
trouble
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@daan_kinderfee
11 tips for creating liquidity
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@daan_kinderfee
Design your site to create an appearance of activity
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@daan_kinderfee
Focus on the side that takes longer to delete their account
-> this is often the supply or content creating side
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@daan_kinderfee
Provide one sided utility
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@daan_kinderfee
Find aggregators for supply or demand
Think adjacent
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@daan_kinderfee
Think BIG, but START small!
Hustle! – in exponential growth every seed customer counts
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@daan_kinderfee
Make your community work for you
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@daan_kinderfee
[Scrape online listings and auto publish]
I don‘t recommend this, because it will kill your community
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@daan_kinderfee
Understand YOUR marketplace
Be resourceful
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@daan_kinderfee
Focus! Control N!
(A * B)/N2
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@daan_kinderfee
Curate curate curate
“Force“ matches manually – even if it won‘t scale
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@daan_kinderfee
Iterate around your customer
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@daan_kinderfee
Hang in there!!!
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@daan_kinderfee
Thank you