I’m really interested in marketplaces. Having worked in operations at TaskRabbit (primarily on the supply-side), I was fortunate enough to get a unique view into the opportunities and challenges of P2P marketplaces. Here are a few personal observations, from a supply-side perspective.

Opportunities:

1. Find work outside core skill sets

Unlike a traditional job where past work history plays a large part in determining future work opportunity, P2P platforms can provide an easier avenue for folks to explore new skills without having past experience. At TaskRabbit, some of the best workers on the platform never had had formal jobs/careers in their respective fields of interest. P2P marketplaces give workers flexibility in discovering and pursuing new skills, while also giving them a platform to be recognized for the work. One of the most prominent examples — often told at TaskRabbit — is a retail advertiser turned handyman who built up a newfound career in odd jobs. He ended up being featured in San Francisco magazine as a top handyman. This is the opportunity of P2P marketplaces.

2. Expand your network

One of my earliest memories of Lyft is catching a ride with a driver who offered me two types of cookies. During our ride, he asked me to choose between the two. It turns out this driver has a whole persona around the cookies and goes by the name of “CookieWarsLyft” on Twitter. I also learned that the driver was trying to start his own startup. By building up a brand through Lyft, he was able to leverage that same brand to promote his own business. Beyond simply making money, workers in the 1099 economy gain access to an extended network of individuals. The frequency with which workers can network with clients is a huge advantage of the P2P economy.

3. Data, data and more data

With transactions happening day in and day out across P2P platforms, there’s a ton of data points being tracked that can help 1099 workers better perform at their jobs. Many P2P startups have internal dashboards that allow their communities to monitor their performance against key metrics.

In labor marketplaces, imagine having data that tells you what the market-clearing rate is for the type of jobs you perform by area and skill level. This type of data might tell you where demand for the type of work you do is highest, at what time of day demand for your work spikes, and whether you are pricing yourself too high or too low compared to market winners with comparable demographics. Hunter Walk talks about P2P marketplaces as being able to help workers find their demand curves. This is exactly right — and this is the promise of these kinds of marketplaces.

Challenges:

1. Failing to see community as a key stakeholder

Community is so fundamental to P2P marketplaces. Community powers the sharing economy — so we owe it to them to build with their voices as key stakeholders. Organizations like Peers have emerged in recognition of this. In the P2P space, today’s client can be tomorrow’s community provider, and vice versa. Given that the line between the two sides of the marketplace is often blurred, prioritizing one view over the other is flawed. Also important to recognize is that the gig economy thrives on flexibility as a core tenet. Successful platforms will build with this voice in mind.

Marketplace economics also tells us that community input is critical. The switching costs between P2P businesses continue to decrease as the number of sharing economy startups increase. If I’m not happy with Sidecar, I can go to Lyft/Uber and do similar kind of work. Granted, the longer you work for a platform, the more you build up a work history, so switching does have its costs. But to the extent that multiple avenues exist to perform similar type of work — it is in the benefit of P2P marketplaces to listen to the voices of their communities.

2. The changing environment of the algorithm economy

Algorithms power a number of commonly used sharing economy platforms. For example, Airbnb uses a search algorithm to determine how listings get shown. The goal of these algorithms is to make matching as easy, efficient and fair as possible. The challenge for workers is in navigating changes to algorithms — which can potentially impact their ability to get work. Depending on where workers fall on the long tail distribution curve, the impacts of changes can either be positive or negative. To get ahead of this, marketplaces should aim to be as transparent as possible (to the extent that they can). For on-demand workers, expectations can be set upfront about the nature of platforms run by the algorithm economy.

3. Disintermediation

Disintermediation — or taking work off a platform to avoid a service fee — is a challenge many marketplaces face. Some business models inherently prevent this such as that of Uber and Postmates. If you find a Postmates you love, the chances that that person is available and in your location the next time you call them off platform are slim. For those models susceptible to disintermediation, here are a few things to consider:

a. Define a “career” path for your supply-side. The more staying “on-platform” benefits the worker, the more likely work stays on site. An example of building for this might be to create a system whereby doing more tasks on a platform unlocks higher value tasks. Marketplaces like DOZ do this. At TaskRabbit, I helped lead an effort to create a rewards program called the TaskRabbit Elite. Taskers would qualify for this program by meeting a number of performance metrics — including having completed a certain amount of work on the platform. In this way, we started to create initiatives that demonstrated a path to advancement for the community.

b. Find your community advocates. Community advocates who love your business can become your strongest defense against those who abuse the system — often acting as watchdogs for the community. Additionally, they find inherent value in the platform and are less likely to accept offline offers.

c. Consider creating a stake in the business. Giving communities a tangible stake (i.e rewards, increased % take home dependent on performance metrics of the marketplace, etc.) can also help to defend against this kind of gray market.

Managing for the potential challenges — marketplaces have so many obvious benefits for their communities. Understanding how to mitigate potential risks can help in maintaining positive experiences in the sharing economy, not just for P2P workers — but for all of us.