Solving marketplaces’ -common- chicken and egg problem?

There is a new start-up you might have come across when you search for vacation rentals, holiday homes or short lets, Plumguide.com. On the surface, it’s just another marketplace targeting the high-end segment. However, there is magic behind it.
- Their algorithm monitors the top 25 booking sites to identify the top 1% of properties with ratings above 4.8 stars.
- They also remove the ones that are not beautifully designed and centrally located.
- For the remaining ones, they send local experts to each of them to conduct 500-datapoints tests -ie the wifi speed to shower pressure-. They also evaluate whether the host offers a superior guest experience.
- In the end, 1/100 of potential hosts are welcomed to the platform
As someone coming from a marketplace business, I know how hard it is to create the snowball at the very early stage. The“empty market shelf” dilemma is the hardest meaning you need to have enough supply while you bring the demand. When one comes to your supermarket with no item in place they won’t come back. It’s relatively easier to create demand online via paid channels. Securing well-balanced supply requires profound time, $$, meetings and negotiations. We know Airbnb targeted hosts on Craiglist with personalized emails. Zingat invited brokerage networks to list their portfolio right before they launch their platform.
What I like about Plumguide’s business model is that they made the chicken and eggs problem obsolete -if not made the chickens available from other farms at least-.
- Endless supply within reach. They rely on other platforms who already have the supply. Whether it’s the global platforms or the local -mostly used- ones, they sit on top of them. If there is a platform they missed or think they’re valuable, no problem. Just add it to the database. They grow along with the others. There are other companies whose business model Firefly
- Not just the quantity but the quality. Since they only pick the “best” ones in a hybrid way -identify algorithmically and select manually- they associate themselves with “quality”, “curation” and own these keywords. Perfect positioning by default. What else could a company want? : )
- Data. Since the company manually examine all the properties on their list (or the ones that cannot make it) they’re in a position to collect a substantial amount of data. What could they do with it? Well, that’s up to the company.
- Grow with the others. There are other companies whose business model is to surf on other platforms. Firefly, for instance, delivers full screen, engaging media and measurement on rideshare vehicles -and taxis-. As soon Plumguide gets traction, new hosts come directly to their platform.
- Switching cost is relatively lower. Because of their value proposition and positioning, users might give Plumguide more chance than just another marketplace. At the end of the day, they carefully picked the “best” ones from all other marketplaces. How bad could it be?
- A model for other proptech companies. This could be a model for other proptech companies who create marketplaces on other verticals. The easier/cheaper to solve the supply side, the faster/heavier you focus the demand side.
- Lead generation for experience designers and interior designers. For hosts who failed to be part of the marketplace, Plumguide could offer -free or paid- consultancy. They could even partner with Havenly in the future.
However, please do not get me wrong. I’m not suggesting this model is a secret sauce that solves all the problems marketplaces encounter along their journey. Like any other startup or marketplace, there are zillion problems/challenges to be solved. I just found the model is smart and pragmatic. If there are other aspects -of the business model- that you think is worth mentioning, please add.
