The MVP of all marketplaces is a classifieds mobile app

We all want our startup idea to become either of two things. The first is a platform and the second is a marketplace.

Dropbox was a very popular cloud storage service and then it decided to open up its APIs and persuade developers to build apps on top of its platform. Once that starts happening in larger numbers the core Dropbox service will start to get more and more usage without Dropbox having to drive all traction by itself. That is the power of a platform i.e. if you manage to build one.

Marketplaces are similar to platforms though right from beginning you have to focus on getting both sides of the market on board.

The earliest marketplaces were Ebay and Amazon which dealt primarily with goods. Today there are many other marketplaces for services too like ODesk, Fiverr, Amazon's MTurk allowing outsourcing to happen more easily, online and globally. And 2014 was the year of the shared economy which saw marketplaces for room rentals, cab services, home cleaning services etc boom and become multi billion dollar businesses.

There are somethings (e.g. Android, iPhone) that are both marketplace and platform. In general building a platform requires building a core product which by itself can have a lot of value and thus platforms are tougher to pull off. However creating a new marketplace is more about understanding which product or service have enough latent (i.e. unmet) need on both demand and supply sides and then reducing the friction to capture more of that demand and supply.

The MVP of all marketplaces is a classifieds app. Startups should track existing classifieds and identify which products or services have a latent need.

Craigslist, the world's most famous classifieds service, has now been unbundled into hundreds of marketplaces by startups.

Image source: http://supplydemanded.com/post/36811852661/onmarketplaces

The first version of the startup's product should also be more of a classifieds service focused on the niche that is identified. The product should obviously be a mobile app and reduce friction via one or two key functionalities implemented really well. These functionalities can broadly speaking be ~

  1. Search
  2. Email (mailing list)
  3. Chat (voice or text)
  4. Booking (calendar sytem)
  5. Bidding (submit proposals)
  6. Community (seek advice, share experiences)
  7. Bookmarking (create wish lists)
  8. Feed (browse visually, window shopping)
  9. Comparison (help with deciding what to buy quickly)

Fashion marketplaces need a feed, project outsourcing marketplaces will need bidding systems, healthcare marketplaces may need a booking system and so on.

Once there is minimum critical mass of users on both demand and supply side of the marketplace then the startup can move on to focusing on managing expectations of users better and driving user engagement. Fiverr may not provide high end services but it does a great job of managing expectations of what someone can get done for just $5. But the first job is to get the MVP out which is more of a classifieds mobile app with one or two key functionalities which reduce friction in the marketplace.