How to kickstart a two-sided marketplace.
Our investment in Special Guest.
It’s not unusual to see two companies with very similar ideas pitch at similar times. Sometimes external events conspire to precipitate the same insight from multiple teams. It happened with calculus, so it isn’t surprising that it happens with startups as well.
This weeks episode of Planet of the Apps shows one such example. Both Special Guest and Subway Talent pitched essentially the same idea to us at Lightspeed — a marketplace for performers to find gigs, and for venue owners or party planners to find entertainment. We were intrigued by the concept. This isn’t a new idea, but the mobile angle created a new opportunity.
A two-sided marketplace is one of the most powerful and resilient business models that exists. Ebay, AirBnB and Uber are all examples. When they grow to scale, they have very strong network effects that tend to lead towards a single player becoming a dominant market share leader. But getting to scale is the tricky part. Most companies need to figure out a way to “cheat,” to do things that don’t scale, or to exploit a unique advantage that the founders have in order to kickstart the marketplace liquidity. Usually this involves picking one side of the market to focus on first, whether supply or demand.
Special Guest convinced us that they had just such a plan to juice the supply side of their talent marketplace. A well-connected founder like Damon Wayans Jr. can bring his unique relationships to bear to bring talent to their marketplace who might otherwise hesitate, and thereby differentiate itself in terms of quality of supply. That’s why you see people like Kevin Hart on the Special Guest marketplace.
When you combine Damon’s relationships with talent with Kristopher Jones’ operating expertise — Jones previously founded and ran a tech startup with 100s of employees — you get a compelling story. That is why we chose to invest in Damon, Kris, and Special Guest.
You can watch the founder journeys of both Special Guest and Subway Talent on this week’s episode of Planet of the Apps exclusively on Apple Music. (New episodes of Planet of the Apps air on Tuesdays at 6pm pst / 9pm est).
Will.i.am mentored both companies, and I promise some exciting twists and turns!
I recently asked Damon and Kris a few questions about their story…
Jeremy: What’s your background and how did it uniquely inform your idea for Special Guest?
Damon: As an actor and comedian, I know how challenging it is for all types of emerging artists to get discovered and generate paid gigs. I grew up in LA and have been in and around entertainment my entire life. My father and uncles were behind the hit TV show “In Living Color”. And I got my start in the industry early-on, making my film debut at age 11. My experience with how hard it is to get discovered in Hollywood was the basis for Special Guest App. However, I had no idea how to break into the tech space — that’s where my friend and cofounder Kris Jones came in.
Kris is a serial entrepreneur and developer. Kris launched his first business — a gourmet food business based on his grandma’s recipe for “Pepper Jam” — when he was in grad school. He later founded a separate business of the same name (Pepperjam) focused on helping businesses leverage Internet marketing (SEO, pay per click) to acquire new customers and make money online. Pepperjam was acquired in 2009 by eBay Enterprise. Kris’ expertise as a developer and serial entrepreneur made him uniquely positioned to cofound Special Guest alongside me.
Jeremy: What was your “a-ha” moment when you first had the idea for Special Guest?
Damon: I came up with the idea during an open mic in LA about a year ago. I witnessed a young female singer captivate the crowd with an extraordinary acoustic performance. A light bulb went off and I wondered why there wasn’t an easier solution for emerging artists to get discovered, and get paid. After developing the idea a bit further, I was introduced to Kris who helped me begin the process of further developing the idea and turning it into an actual business.
Jeremy: As an actor and comedian, you obviously have a personal perspective that this idea addressed.
Damon: Absolutely. Hundreds of thousands of LIVE entertainers struggle to secure work on a regular basis because the process of getting gigs is brutally difficult. I believe the traditional booking process favors managed talent, yet most incredibly talented people don’t have management and struggle to get paid doing what they are most passionate about. The process of discovering and booking talent is elitist and riddled with friction that disproportionally favors managed talent.
Most LIVE entertainment is hosted in traditional settings like bars, nightclubs, and restaurants resulting in limited demand for new, up and coming talent. No on-demand mobile technology exists at scale for ordinary people to seamlessly host LIVE entertainment in their home, backyard, or similar non-traditional venues with the push of a button. We developed Special Guest to make it extremely simple and affordable for anyone, anywhere, to hire LIVE entertainment on demand.
Jeremy: What’s the main benefit on both sides of the marketplace you’ve created?
Kris: Special Guest removes the friction for entertainers of getting discovered and generating paid gigs, while making it easy for any type of venue to book LIVE entertainment. We developed the app for LIVE entertainers, actors / actresses, artists, bands & ensembles, circus acts, comedians, cultural entertainment, dancers, DJs, impersonators, magicians, musicians, photographers & videographers, speakers and officiants, specialty acts, and kid’s entertainment. And on the other side of the market, we made this for traditional venues like restaurants, clubs, and bars, and non-traditional venues for anyone, anywhere, who is interested in experiencing LIVE entertainment in less formal settings like someone’s backyard, office party, or home.
Jeremy: What was it like to work with will.i.am?
Kris: Working with will.i.am was incredible. Will has spent his entire career as a LIVE entertainer so he was able to offer special insights into how Special Guest can solve many of the problems he’s experienced throughout his career.