Today there are so many marketplace platforms, including the biggest one of all – Amazon – that we can sometimes forget that there was a time that not even one of them existed. They’ve become so integral to our daily lives and such a part of the conversation of business that we now see a number of startups seeking to become their own marketplace platforms. In this article we’ll examine a few of these game-changing companies and how they continue to evolve their business model (and respective industries).
The now-legendary story of the friends who started up a business with an air mattress in an apartment is well-known, but unlike many founding stories, it’s not a myth. The founders of Airbnb were originally seeking to provide alternative, lower-priced temporary housing to those visiting a particular locale. In all likelihood they never imagined how far ranging their disruption would be. The most obvious casualties were the traditional hospitality industry players, hotels and hostels, who had undergone significant regulatory hurdles as well as infrastructure costs, who overnight found themselves with thousands (sometimes tens of thousands) of competitors right in their backyards. But soon, neighbors and cities fought back as well. Citing concerns about neighborhoods being turned into playgrounds for tourists as well as an exacerbation of an already challenging housing situation, residents and officials passed laws and levied taxes on Airbnb. At the moment, Airbnb is generally trying to work with local authorities worldwide, but in the meantime it has already pivoted to offering something beyond accommodations with their “Experiences” section of their website. A much less contentious offering (one that can’t be fought by hotels, cities, or residents), the platform offers locals a chance to offer a unique and special experience not available elsewhere. The company is also close to profitability it will need to hit before IPO, which is expected in the near future.
Uber, too, has been undergoing its share of pivots, for similar reasons to Airbnb. Uber transformed the centuries-old private transportation industry using technology and machine learning. Cabbies, once part of a type of monopoly, found hundreds and thousands of overnight amateur competitors, offering competitive rates that were difficult to match. Not content with push-button transportation, Uber has also been investing heavily in driverless technology, and has publicly stated on numerous occasions that their goal is not to provide a lifetime opportunity for their human drivers, but to pioneer a change in how we, as humans, get around. Like Airbnb, they’ve had messy public disputes with localities, but they’ve also had some self-inflicted wounds due to poor behavior by employees (all the way to the top). While the valuation of Uber has in recent months dropped, it is still one of the most highly valued private companies in the world. Unlike Airbnb, they are still some way away from profitability, and it remains their single biggest problem to solve. Whether they succeed in solving it won’t change the fact that they forever changed the transportation industry and numerous other companies that were influenced by their platform design and pricing.
Amazon and Ebay are so-well known and were already well established when Etsy was founded in a Brooklyn apartment in 2005. Treading on ground established by those giants, Etsy became a place for creators to sell their goods to an audience hungry for unique pieces and desirous of supporting the nascent “maker” industry. They weathered early problems with their founders to put together a financially secure model backed by a strong engineering team and eventually IPOed in 2015, and while the stock has been volatile, it is currently trading above its IPO price.While Etsy did pivot away from only featuring handmade goods on their site (they now allow manufactured goods) they have been intentional in how they are structured. They are a B-Corporation, which means they are held to strong environmental and social standards. They also have strong diversity numbers, with over 50% of their workforce being female and 33% of its leadership and tech teams comprised of women.
Friendster and MySpace paved the way for Facebook to build a better mousetrap. So too the major legal tussles faced by Napster and other peer-to-peer music sharing networks gave an opening for a beleaguered music industry to be proactive rather than reactive with the digital music revolution. By being a middleman between those who wanted music and those who provided it, iTunes decimated the CD industry as well as the music stores that hawked its wares. As it gained market share and changed consumer behavior it pivoted to becoming a content creator itself and recently offered original content like Planet of the Apps on its subscription-based service, Apple Music. The dawn of streaming meant that people no longer cared about owning content but about access to curated content and Spotify was 9 years ahead of Apple in pioneering this market, though Apple is fast on its heels, having acquired 50% of the number of the paying subscribers of Spotify in a very short time, trading on its brand name and integration with the other Apple platforms and products.
What started as a platform for people to post a dynamic form of their resumes has become a social network, publishing company, and e-learning platform (via the acquisition of Lynda.com). In a certain sense, LinkedIn has simply reflected the changing state of play in employment. The gig economy has changed how many companies choose to staff (which we at VocaWorks are proud to help with) and LinkedIn has naturally adapted to those changes, providing opportunities to both recruiters and job-seekers. It’s also continued to offer itself as a content marketplace, trying to offer more business-relevant information than Facebook and Twitter.After strong worldwide expansion, it IPOed in 2011 and was acquired by Microsoft in 2016 when the website boasted well over 350 million members (it now has over 450 million). Microsoft has a checkered history with its acquisitions (Skype and Nokia, for example) but LinkedIn continues to be an industry-defining platform and will be a player in the business networking space for some time to come.