Carmel Market

Purpose-driven Communities

Can we create communities that enable people to accomplish meaningful things like find love, discover a song that moves them, share their knowledge, help them sell their photos and locate a new fishing hole via the two-way marketplace (matching, exchanges or crowdsourcing) model? Can we do this in a sustainable, profitable and proliferating manner?

I think so…

I oversaw a purpose-driven community first-hand at Thumb (aka Opinionaided). As we grew from our very first opinion to our 3 billionth opinion, you could see the magic of people coming together under a common purpose. While we sold to a market research company (maybe a future post), there was definitely enough evidence that when provided with the right tools, people can move mountains.

Next, there is guarded chatter coming from leading product folks and venture capitalists about two-way marketplaces, the best of which are a function of mobile communities, because of three major reasons:

1. Early — It’s still really early, the multipliers exist here and lots of people don’t yet realize how big the opportunity is. Greylock makes a bet.
2. High-Margin with Defensibility — Marketplaces are extremely cheap to run with massive scalability, network effects and barriers to entry (if you’re in the lead). Post by Fred Wilson.
3. Lots of Remaining Opportunity in Mobile — There are lots of newly unsolved use cases because of mobile (think Uber) with massive liquidity available because people are now on demand. The ability to match artist/curator, buyer/seller, renter/owner, knowledge/seeker, etc. today is unparalleled because of mobile access. Always on, fully connected, and the realtime nature (essentially, on demand) that mobile facilitates makes this a massive opportunity.

If that’s not enough, there are proven successes in Web 1.0, Web 2.0 and some new ones in mobile. Think StubHub, eBay, Craigslist, Uber, Match.com. For examples and inspiration check out these maps from RRE and Trinity Ventures:

Lots of Marketplaces in this graphic, many of which are not listed in the actual Marketplaces section. Credit Trinity Ventures

From @schlaf at RRE, lots of marketplaces

Don’t know who this is from (please lmk if you know), but shows the power of niches as Web 1.0 shifted to 2.0; graphic could be helpful in predicting what may happen in mobile, albeit with altered use cases

Lastly, it’s happening on the ground organically… talking to other entrepreneurs, I regularly see the semblance of community driving liquidity within two-way marketplaces in various forms and stages at a bunch of, primarily mobile, startups. While there is still much to be improved on in existing user experiences, hiccups in business models, ghost-towns, half-markets, etc. there are lots of matched markets that just need some routing tweaks.

So how does a VC place the right bets or an entrepreneur attack the marketplace space via a community-driven approach?

First, define a purpose that keeps the community and team going if the financial model shows cracks. What is your impact on humanity?

· Collective intelligence — passing down knowledge (Wikipedia)

· Solve societal problems

· Wealth creation—put tools for revenue in individual producers (CustomMade)

· Improving health

· Lessening waste or saving money

· Deeper connections between people—match people based on deeper meaning

· Discovering experiences and beauty

· Inspiration and personal growth

· Etc.

Second, know what you’re matching and facilitating the transfer of… Goods are hard, logistics are hard, digital goods, people and information are easier. Take advantage of lowest friction/infrastructure = highest margin paths first. There are opportunities to source and rank existing information, leverage user generated content, etc. for even higher margins.

Third, what use case are you solving for? Know your niche, persona and value prop to that audience. What is your core value? Can it be a high frequency use case that solves a persistent problem?

Fourth, stand behind a set of product principles that yield great products and communities. These are my principles for creating communities that drive liquid marketplaces, but they don’t need to be yours…

1. Community must have soul, a purpose and a brand promise that people can get behind. The brand should increase self-worth while being bigger than any one individual. The brand must have emotion and create aspiration.
2. Value must be greater for the user in the user experience than taken or found elsewhere. In other words, the experience must not be hard, it should be fun, entertaining, empowering, or other, and it must delight. Users should be able to extract value before you ask them to give it, 90% get everything (literally everything) else right, but fail on this single item. User value first, resulting data/behavior/transactions only meet business goals secondarily. If people don’t want to instantly tell other people about it, you’ve failed.
3. Win the liquidity game before you start. No user should ever have an unfulfilled match, request or be delayed. You’ve failed if you do this wrong. The whole value is the exchange. There are dozens of variables within this principle for your product to work and they are different for most niches, know what they are before you start.

Don’t know where to start? Here are a few niche areas worth exploring with some new entrants. I’ve purposely left out the entrenched players to get the creative juices flowing…

Stock Photography — Foap

Niche Jobs — Underdog

Designers & Projects — 99Designs

GiftCard Exchanges — Raise

Art Exchange — Society6

Sentiment/Opinions — 3Cents

Boating Charters —BoatBound

Fishing Spots & Catches — FishBrain

Blogger Matching Platforms—Sverve

Influencer/Download Matching —Instafluence

Home Services — Handybook

Expertise — Clarity.fm

Fashion — Threadless

Funding — Kickstarter

Mental Health

Fresh Drink Water Maps

Traffic — Waze

Surf Breaks

Ad Exchanges/DSP/RTB

Taste — Wanelo

Interior Design—Houzz

Tickets

Rental Network

Lesson Network

Translation—Blincken

Author Publishing & Reading Platform

Delivery Logistics/Messenger

Car Pooling

Need a Mate/Empty Spots

Coupons (Local Discovery)

Jobs by Vertical

Business Founders/Partners

Furniture—LoveSeat

Surfboards — The Quiver

Personal Dishes

Open Tables

3D Printing Capacity

Legal Advice

Hotels — Hotel Tonight

Reviews

Gambling one on one

Knowledge — Quora

Migrant Labor

Repeatable Tasks

Storage

Question Ad Network

Companies Exiting — ExitRound

Fitness Training/Trainers

Celeb demand for visit, talk, email

Micro-Advertising

Temp Equipment

Charity Matching

Capital diversification

Scooter and bike networks

Skill Matching — languages

Music Discovery — SoundCloud

Dating — Facefeed

Personality Matching

Doctors/Advice —First Opinion

Vet Advice

Casting/Modeling

Home Inspection

Marinas/Dock&Dine

Hotel Finder

App Curation & Discovery

Goal Setting —Everest

Temp space — Breather

Person to person games — Quiz Up

Niche content, communities — Inertia

Ideas — Betterific

Homework help — Brainly

Q&A — Jelly

Skate park locations

Stock market movement

Site discovery

Excess capacity collaboration by agencies

User Testing

Peer to peer lending — Prosper

I left a few out purposely for opportunistic reasons, but there are many more…

Personally, I have a goal to build equity in marketplaces that can be driven by communities that exchange digital goods, information, sentiment, excess capacity or human resources. Ideally, these properties provide sustainable enrichment to both sides and contribute to a collective whole with a representing community that has soul.

If you want to chat about this space, ping me.