Infrastructure for Marketplaces: The Shovels and Picks of the End-to-End Marketplace Gold Rush!

September 8, 2014

by Guimar Vaca Sittic

Building marketplaces is really hard. The hardest nut to crack is building liquidity: having a critical mass of buyers and sellers. One of the main reasons marketplaces fail is that they don’t live up to the expectations of their buyers, and consequently, of their sellers. Buyers typically not only expect the type of quality of service to be comparable to that of an Amazon or Zappos, but also, they are unaware that the service in a marketplace is provided by a third party rather than by the company itself.

Given these high expectations, marketplaces work hard to improve the quality of their suppliers.  Many marketplaces have regular training seasons to do so. Airbnb teaches its hosts how to treat their guests upon arrival, how to promote their home on their website, and how to optimize prices depending on the season, etc. Skillshare trains their teachers how to manage student expectations, how to choose the right venue and select the right schedule for the class, etc. Marketplaces make their suppliers do a lot of work!

People tend to mimic each other. If there are a few sub-par sellers who write lousy descriptions and take low quality photos, then often the supply quality of the marketplace as a whole starts declining as other suppliers think it’s ok to do the same (which is less work than doing a good job). Airbnb realized hosts were really bad at taking high quality photographs of their homes, so they hired professional photographers to raise the bar. Although any user can request to use the photography service for free, even hosts who take pictures by themselves improved their quality significantly by mimicking the work of the pros. It’s crucial to provide guidance to sellers in a marketplace. Airbnb competes against Booking.com and hotel experiences; as such they need to provide a superb experience for renters pre-booking and during their stay.

Building an infrastructure around marketplaces is crucial since it enables new markets to arise. OpenTable and Mindbody created the marketplace at the same time as they created its infrastructure. OpenTable could not operate their marketplace efficiently if restaurants did not have a proper reservation management system, so they created one alongside with the marketplace itself. These are concrete examples in which the infrastructure the marketplace needed was very Read More →

One Step Closer To Streamlining the Car Buying and Selling Process

As an entrepreneur and investor, I am fortunate enough to collaborate with startups on a regular basis, learning about their ambitions and plans to shake up their respective industries. In my previous blog post, The used car buying and selling process is broken and we are going to fix it!, I discussed how one of the startups I work with, Beepi, is streamlining the process of buying and selling cars by removing the labor and hassle for the consumer – with the click of a mouse.

Less than five months since launching, Beepi has surpassed all our expectations ten-fold. We recently integrated with bitcoin, becoming the first peer-to-peer marketplace allowing people to buy cars with the crypto currency and notably and we are set to hit $10 million annualized sales run rate by the end of this year. Today, I’m pleased to share that we have just expanded operations to the Los Angeles region in conjunction with launching Beepi Prime!

It should come as no surprise that residents in L.A., one of the biggest driving cities in the nation, are hungry for new ways to purchase and sell cars easily. A direct response to consumer demand, the new regional expansion coupled with Beepi Prime, a new personalized service that guarantees vehicle delivery within five business days or less for $999, are the next phases in eliminating pain at every step of the car buying and selling process. The service is currently available within 140 U.S. cities including Phoenix, Scottsdale, Las Vegas, Portland and every city within California. To celebrate the launch, buyers in California will even receive the Beepi Prime experience for free!

Extending upon our commitment of offering the best car buying experience possible, Beepi cars come with all the fixings – including a fully-detailed vehicle upon delivery, a 10-day money back guarantee, and a 3 month/3,000 mile warranty. Beepi Prime buyers also receive daily updates on the whereabouts of their car during delivery and a personal car tour from a Beepi inspector upon arrival. Should a buyer for any reason have the need to return their Beepi car, they pay zero fees – not even the shipping.

Beepi has no plans of slowing down and I can’t wait to share what we’re up to next.

Check out the video below to get a sense of the full Beepi experience:

  • Farewell Harvard!

    August 28, 2014

    Even when I was little I knew I wanted a dog, preferably a Labrador. I remember begging my parents to get one. They finally saw the wisdom of my request and Ucla joined our family. For 16 years, he was a constant fixture in my life with his wonderful almond eyes and insatiable thirst for life. Despite lacking proper training, he always instinctively knew what to do. He always ran to the right of my bicycle on open roads going exactly at my speed. We played a game where I had to steal a ball from him through whatever means possible for us to play fetch. Should I fail in my attempts, he would start putting the ball on the side of his mouth to make it easier for me to steal it from him. We had a blast!

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    Once you have been blessed by the love and companionship of a dog, you can’t quite imagine living life without it. I pined for a new Labrador for years. However, I knew it would be unfair to the dog and to me should I get him while living in a tiny apartment in NY while completely overworked from McKinsey or whatever startup I was running. I bided my time. Finally, post selling Zingy I could afford to have a country house with a big garden and could indulge my childhood dream!

    My girlfriend wanted a Rottweiler so we wisely compromised and got both! She looked for breeders, read books on how to select amongst all the puppies, while I was tasked with rolling around the mud and playing with them. I can’t tell you how adorable Rottweiler and Labrador puppies are. It’s a miracle we ended up with only two dogs! Harvard was born on March 2, 2005 and I first met him 5 weeks after that. He was so white he had been nicknamed “snowball”. I have to admit that he was not the puppy we picked. When we came back 2 weeks later to get our dog, he was the only one left. We had driven all this way and he was just too cute not to take home. And thus Harvard entered my life.

    Pic2

    My father had named my first Labrador Ucla because it was supposedly the year of the “U” in Read More →

    My friends are the best!

    August 4, 2014

    40 of my best friends and family prepared a wonderful and very touching video for my 40th birthday.

    Special thanks to Anne Hamilton for directing and producing it.

    The Case for New York

    I was recently invited to give a keynote at the French Touch conference in New York. Using some of the analysis provided by my friend Nick Beim at Venrock, I showed that New York is now the second largest Internet ecosystem in the US. I explained how that came to be and why it’s sustainable.

    Think Like a Freak

    July 2, 2014

    book-TLaF

    Freakonomics and Superfreaknomics – the bestselling books of Steven Levitt and Stephen Dubner are no longer news to the readers of this blog. However, their new work – Think Like a Freak is worth a shout-out. In Think Like a Freak, Levitt and Dubner use their famed unconventional analysis in explaining the hidden side of things. The readers of Freakonomics will recognize the authors’ thinking process and their unorthodox approach. But their compelling story telling and the new topics covered make this work a page-turner for anyone interested in behavioral economics, or in simply thinking outside of the box.

    In less than three hundred pages, the book covers topics from politics, business, and medicine to food eating contests and magic. My favorite part remains the story of Takeru Kobayashi, a slim Japanese man who becomes famous after eating fifty hot dogs in a hot-dog eating contest, and essentially doubling the world record. Kobayashi is what Levitt and Dubner define as a Freak. However, it is not an abnormal stomach – the obvious explanation that came through my mind – that makes Kobayashi a Freak, but his thinking and the way he approaches the hot-dog-eating problem.

    On the other hand, the obvious can also be our friend. For instance, you will find out why it is harder for magicians to fool children than adults. It is simply because children are more curious than adults and they don’t overthink magic tricks. If you want to think like a Freak it is imperative to stay curious and realize that sometimes the solution to what looks like an impossible puzzle is in fact the obvious.

    Think like a Freak is about refusing to accept conventional wisdom as fact, and daring to look at the world around you from a different perspective.

    The used car buying and selling process is broken and we are going to fix it!

    The used car industry is massive. There are 40 million used cars sold per year in the US representing $320 billion in value and $70 billion in industry revenues. The average household buys a $8,000 used car every 3 years. This is the second largest household expenditure after housing.

    Given how massive the industry is, it’s shocking how awful the used car buying and selling process is. To sell a car online, owners have to endure the pain of taking pictures, describing their car and posting them on Craigslist, eBay Motors or Auto Trader. They have to receive people at their home with all the security risks this entails, especially for women. After showing the the car to buyers, sellers have to organize getting paid and deal with the paperwork to transfer possession. This is a huge pain especially if there is a lien on the car. Alternatively if they deal with dealers, sellers get 10 to 20% less than the KBB trade-in price (which is already very low) and have to spend hours in the process. Dealers rarely give offers on the phone forcing them to visit 3 or 4 dealers to get a reasonable price. Let’s be honest, no one ever said they looked forward to spending 5 hours with a car salesman!

    For buyers it’s even worse. There is no real way to buy a car online. After doing an average of 9 hours of research, buyers have to reach out to sellers to organize a test drive. This entails further safety concerns, especially if the payment is in cash. Buyers also have to deal with registration and financing. If they are buying offline, they spend an average of another 9 hours at the dealer. They  go through a lengthy negotiation process. If they good negotiators they end up paying the KBB retail price, which on average is 54% more than what the dealer bought the car for. Worse buying a used car is fraught with risk given that sellers have more information about the car than buyers, and it’s very possible that the car is a lemon. Most states don’t have cool off periods and used cars are not returnable once purchased.

    As I mentioned in my article The Evolution of Marketplaces, a new generation of marketplaces is emerging that focuses on providing delightful consumer experiences in categories that were essentially broken. This is best exemplified by Uber’s massive improvement of the taxi Read More →

    My first interview in Spanish!

    June 4, 2014

    I had the pleasure of being interviewed by Emprendedor Universal … in Spanish! They asked me to relate my entrepreneurial journey, focusing on the challenges I faced along the way. I also shared what I have been up to since leaving OLX along with advice for budding entrepreneurs.

    If you want to hear me embarrassing myself in Spanish, you can listen to the interview at: http://emprendedoruniversal.com/fabricegrinda/

    It’s also available on iTunes at: https://itunes.apple.com/us/podcast/12-fabrice-grinda-angel-inversionista/id865252986?i=313805747&mt=2

    Why I bought a Samsung Galaxy S5 instead of a HTC One M8

    May 5, 2014

    HTC_ONE_M8_versus_Samsung_Galaxy_s5

    For the past year I have been the proud owner of a HTC One. As the new generation of phones emerged, it became time to re-evaluate my decision. I almost picked the HTC One M8. It’s clearly the better looking phone with a finely brushed aluminum body (vs. a generic plastic body for the S5). It has much better speakers. The HTC Sense interface is more streamlined and the HTC One M8 comes in a Google Play edition.

    The Samsung Galaxy S5 has much better battery life, camera and is water resistant. Some might also point out that the battery on the S5 is swappable and that the screen is marginally better looking. However, I would never carry an extra battery in my pocket and both screens are gorgeous, so I felt those advantageous were de minimis.

    I ended up weighing the pros and cons based on what matters more to me on a day to day basis. Based on my personal use, better battery life is paramount. With my old HTC One I could never finish the day without running out of battery. At the same time I take more photos with my smartphone than I listen to music without a headset. The waterproof feature is also a clear plus given my notorious clumsiness. Two years ago I broke 9 iPhones in 1 year (4 of which from water damage)!

    Both are great phones and you can’t really go wrong with either, but the practical benefits of the S5 tipped the scale in its favor. I will revisit next year with the next generation of phones including the long awaited larger screen iPhone.

    Larry Page’s story is fascinating

    April 29, 2014

    Nicholas Carlson just published a fascinating in depth article about Larry Page. It covers his evolution over the last 15 years. When he started out at Google, he was an immature CEO who fostered conflict and micromanaged. He resisted the idea of giving up the CEO role to Eric Schmidt and over the years disengaged himself from the product role at Google.

    Android fostered his renaissance. He had the vision to buy the company without permission (which was not blocked because the $50 million made no difference to Google’s bottom line) and to foster its development. He learned to delegate and improved his management skills.

    At the same time, despite all of Eric Schmidt’s success at Google the company, the company became slower and more risk averse, loth to go for moonshots. Having built up his management experience during his wilderness years, Larry Page had become just the person required to take the company forward with the proper combination of vision, ambition and experience.

    Read the full story at: http://www.businessinsider.com/larry-page-the-untold-story-2014-4