In 1998, I co-founded Handshake.com, a marketplace that connected buyers and sellers for all sorts of services – from carpet cleaners to auto repair shops. Since Handshake came and went with the go-go days of the late 90s, I’ve spent a lot of time thinking about the mechanics of such marketplaces. Today’s online service marketplaces have been generally more successful than our foray. Recently, I tried a few to help with the construction of Founder Collective’s new office at 27th St in NYC.
First, I used TheSweeten, a site that matches projects with contractors/architects. I posted images of our current space and a crude mock-up of the build-out I envisioned. I received 3 bids from vetted contractors and ultimately selected one of them. We then needed furniture moved from our Cambridge office, so I hired a Taskrabbit to bring it to NYC. Once the build-out was complete, I used Handybook to schedule and coordinate a plumber to fix an old water purifier and a handyman to assemble IKEA furniture. And last and most importantly, we hosted our kick-off party with catering from Kitchensurfing (a portfolio company). These services aren’t yet one-click and done, but they have come a long way in making it easier to coordinate moves, construction, catering and transportation.
Last week, at an ERA event, I was asked to share my lessons learned about these types of marketplaces. Here’s what I said:
1) Pick a vertical, not many – One of the mistakes we made at Handshake was that we offered every service we could find in the yellow pages. However, we spent way too much time and money marketing the idea of an online service marketplace. If you’re trying to create a national brand, it’s hard enough to get consumers to keep you in mind for a particular service, let alone many.
2) Control the money flow Much of the frustration around hiring service providers stems from challenges making payments(many want cash or don’t accept credit cards), whether to pay a deposit, and how much to tip. Additionally, if the marketplace doesn’t hold the money, it is far too easy for the service provider and customer to work around the system, and avoid fees or commission. If the marketplace isn’t stepping into the money flow, it’s likely because it’s not creating enough value for both customer and supplier.
3) Delight both customer and supplier (but hold each accountable). Uber (also a portfolio company) does a fantastic job of this. The app knows where I am and where the cars are. Its just two clicks to call a car, my credit card is on file and there’s no tipping. But I’m most impressed (and surprised) by the driver’s reactions. They love the fact that they can rate me (1 to 5 stars) … the customer!
For the full Handshake story, click here.