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How To Build A Two-Sided Marketplace | Dan Martell

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Interested in building a marketplace startup like Uber? Then you’ll want to watch this. All great two-sided marketplace company (Ebay, Uber, Airbnb, Instacart, etc) follow these principles. In this video, I share 3 strategies to improve your chance of being successful. + Join me on FB: http://FB.com/DanMartell + Connect w/ me live: http://periscope.tv/danmartell + Tweet me: http://twitter.com/danmartell + Instagram awesomeness: http://instagram.com/danmartell Are you an entrepreneur? Get free weekly video training here: http://www.danmartell.com/newsletter Here are the 3 things to look after in order to build a successful marketplace: 1) Deciding if you’re a version 1.0, 2.0, or 3.0 marketplace? 2) Starting with an uncomfortably narrow niche in the beginning. 3) Cracking the customer demand side of the marketplace first. Missing one of these 3 strategies could cause you to spend time focusing on the wrong part of your business and potentially failing before you get to escape velocity. ---------------------------------------- ABOUT DAN MARTELL ---------------------------------------- Dan Martell is an award-winning Canadian entrepreneur and founder of Clarity, a venture-backed startup that makes it easy to connect with top business minds over the phone. He previously co-founded Flowtown, a San Francisco-based social marketing product which raised funding, grew to over 50,000 small business customers and was eventually acquired by Demandforce in 2011. In 2012, he was named Canada's top angel investor having completed over 33 investments with companies like Udemy, Intercom, and Unbounce. He believes "you can only keep what you give away" and is heavily involved in many charitable organizations & community events.
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Text Comments (101)
Umer Amjad (6 days ago)
Woooowwww... Guys stick to this guy 👦 . He is really a genius.
Dan Martell (9 hours ago)
Thx Umer! :)
Alisson Reinaldo Silva (1 month ago)
Awesome advice. I'm trying to figure how I'd "fake" my suppliers, it's very challenging.
Alisson Reinaldo Silva (1 month ago)
@Dan Martell however I had a different idea. I'm going to build a product focused on solving the service providers problem (not necessarily bringing more customers). As soon as I get a reasonable number of providers in a region, I'll launch the customer's app for that region :)
Alisson Reinaldo Silva (1 month ago)
@Dan Martell it's not that simple. I'm building a marketplace for service providers, but I can't do like Uber and hire a company to provider "drivers", that worked for them because customers don't care who is the driver, they just needed the service done. In my case, customers do care about who is providing the service, and they want to choose by finger, so I can't really fake :(
Dan Martell (1 month ago)
It's not hard to fake suppliers. Just make em' up, sell to the demand and email appologizing saying that you're out of supply.
Mehbs Remtulla (2 months ago)
Great tips Dan. I am involved in start up ...a 2-sided digital marketplace where we are trying to help "Transitioners" (55-75 year old professionals) lead an engaged, productive and purposeful life in what is their "third act" of life! We are looking at engaging a digital strategist who can help us plot out a strategy for this venture. Any suggestions, advice or connections you can make would be appreciated. Thanks
Dan Martell (2 months ago)
Keep up the hustle. Not really a market I know :) All the best. DM
BRITANNIA007 (3 months ago)
shut up
Vani Kumar (3 months ago)
Excellent video Dan! All of your tips were very useful. Excited to apply them! I am hearing more about the importance of building a community for your marketplace. Do you have anything to add on this? Is a FB Group the best way to go? Reddit? Thanks for your channel!
Vani Kumar (3 months ago)
Thanks Dan! I’ll start there.
Dan Martell (3 months ago)
Vani, Facebook group is the easiest.
Phil Pask (4 months ago)
Hey Dan, great video. I’m soon to be launching a marketplace for vacation rentals owners to advertise their deals and guests search for a great vr deal. I started a Facebook group connecting vr owners to guests, I noticed how popular these types of groups are and mine has grown to over 4000 members. So decided to build a marketplace. The supply side is initially coming from my own fb group and I’m using social media and micro influencers to build brand awareness and get the message out on the demand side. Revenue will be earned by a saas model, charging owners a monthly subscription. I would be interested in your thoughts. Thanks Phil
Andrew Horowitz (5 months ago)
Hey Dan! I am looking to build out a functional alpha version of a platform - any ideas of tools / templates to use? I have engineers to build out long term in house, but initially we want something to prove the concept WORKS first?
Dan Martell (4 months ago)
I would just fake it by offering a done for you match making service. Manually. No code. Spreadsheet if you must. Hard part is building demand and high quality providers willing to share in their revs. Hope that helps. DM
harshal lonare (5 months ago)
Thanks Dan, Would you comment on a new SAAS based service for selling event tickets online. We just want to be active in UK but there are many other providers. How should we go forward with it? https://www.bylde.com/
Samesh Wijeweera (5 months ago)
Great video. Thanks for the tips. We are just starting up as well!
Dan Martell (5 months ago)
Samesh, so great to have you part of the community! DM
Phil Chatterton (6 months ago)
How do we define what an uncomfortably narrow focus looks like? For us, our focus is on B2B communities and 3 specific verticals ... but is that narrow enough? We focus on connecting Enterprise SaaS buyers with Enterprise SaaS sellers. Our vertical focus is on financial services, education, and tech companies. But is that too broad?
Omosuyi Edomwonyi (4 months ago)
How do I Partner with you in Africa, especially Nigeria which is the most populous black nation.
Dan Martell (6 months ago)
Phil, that's too broad. Of the 3 you have, ask yourself Which has the largest unmet need, and are quickest to buy? That should help you narrow and focus. DM
Sp Sp (7 months ago)
What about the fatal flaw for the rest of us mortals: coding. What white label platforms do u recommend for the noncoders but with savvy business skills.?
Dan Martell (7 months ago)
https://blog.producthunt.com/7-tools-to-help-you-build-an-app-without-writing-code-cb4eb8cfe394?gi=864aa18608d DM
David Mitchell (8 months ago)
Check article on this topic https://axisbits.com/blog/How-To-Launch-Your-Own-Freelance-Marketplace-Like-Upwork
Dan Martell (8 months ago)
David, solid article / thanks for sharing.
Ahmed EL-esseily (9 months ago)
very helpful video
Dan Martell (9 months ago)
Thx Ahmed!
Peter White (11 months ago)
Hey Dan. I wanted to see what would be your opinion as far as choosing a free lancer or a company for building a site such as ebay or amazon? 3k or 15k? Thank you
Dan Martell (10 months ago)
Peter, it'll cost a lot more than 15K to build an ebay or amazon... that being said, if you want the functionality, looking a wordpress theme. Example like https://themeforest.net/item/listingpro-multipurpose-directory-theme/19386460 Could be cost effective for you to test the idea. Long term, always bring development in house. DM
Peter John (1 year ago)
Multi vendor marketplace software is best and it comes with free source code,multi domain with while label product Visit https://www.pofitec.com/multi-vendor-shopping-cart-software
Zuo Wang (1 year ago)
What platform is the best to build a 3.0 business and how much is the cost
Peter John (1 year ago)
Multi vendor marketplace software is best and it comes with free source code,multi domain with while label product Visit https://www.pofitec.com/multi-vendor-shopping-cart-software
Dan Martell (1 year ago)
Any programming language will work... if you’re starting off, consider going mobile only. DM
Michael Fensterstock (1 year ago)
Awesome video, definitely need some type of "AA" for marketplace building - it seems as though the spend can be limitless. Trying to bring the storage and swap shop model into 2018 with a great digital interface and amazing customer service with www.bathwaterkids.com - would love your initial thoughts on strategy. You concluded by advising us to tackle a niche, which we are...but is it too niche?
Dan Martell (1 year ago)
Smart niche ... but marketplace requires so much more than just that. Work backwards from the customers and see if it might scale or you could just become a transactional / booking site. All the best. DM
So Many Errands (1 year ago)
SoManyErrands.com is a two sided marketplace connecting Employers with Errand Runners. Its been really challenging to build a community. Thank you for the tips in this video
Dan Martell (1 year ago)
Focus on the Demand Side. DM
Can I get someone who can give me specific information on how to get sellers in my supplements and herbal market place? This is my email address : [email protected] What'sapp :+2348159987444
Pardeep Kumar (1 year ago)
Hello, Great content! Learned a lot. You look quite professional and experienced. Can you share views about Codexclub - https://www.codexclub.com/managed-marketplace/ I liked there offer but still not sure. Can you please help or suggest which platform to use?
dubi186 (1 year ago)
really good video. I want to develop two way marketplace but don't know where to start! no knowledge of coding and web development.
Peter John (10 months ago)
Check here https://www.pofitec.com/solutions/airbnb-clone-for-car-rentals.php for developing two way marketplace and you can start your rental marketplace with in minutes
Stephon Frazier (1 year ago)
Check out Sharetribe.com it is supposed to be software that helps you create two-way marketplace websites without having to know coding (or very little). They even have a free instructional book on how to make two-way marketplaces (non-technical). You definitely don't need to be a programmer to start now. There are a lot of software solutions out there now.
Tobin Ansong (1 year ago)
Great video, whats your opinion on building a two-sided market for an app that helps people find popular bars/clubs?
Dan Martell (1 year ago)
Great marketplaces work where the supply side is hard to find. Bars & clubs have been solved. So not an idea I think would be strong, unless there was a unique angle. (ex: Tinder did w/ left swipe, location, FB only / UX innovation) DM
Arvin Orubia (1 year ago)
Thank you for thia tip. Your a great guro
Dan Martell (1 year ago)
Arvin Orubia thx man!
Roberto Saraiva (1 year ago)
Very good!!!!
Jim Murray Jones (1 year ago)
Good video. Having worked on a number of marketplaces myself, I would suggest an additional factor to consider is the value-adds (bells and whistles) that you provide sellers in order to: 1. Lock in their loyalty / ongoing spend 2. Raise barriers to entry for competitors; making it hard for new entrants to compete on a pure advertising level alone. Brands like autotrader.co.uk did this very well in the UK - providing stock management tools, dealer web sites and business intelligence tools that entrenched the bond dealers had with Auto Trader as a platform.
Tom Psillas (1 year ago)
You hit the nail on the head Dan. I started www.wetcrow.com, which is a hybrid 2.0/3.0 version of a marketplace. We are focusing on top 20 categories in one metro area first, then expand from there. We target suppliers first, talk too them, build out infrastructure to support how they work best, then generate customer traffic, sell that traffic and pay our suppliers.  We expand verticals in that metro area and when at 500 categories, we move to a new city and repeat signing suppliers and market to customers. Infrastructure is done. After 5 to 10 metros, we scale out more verticals and sign up suppliers in all metros we serve.Having only one vertical is difficult in the beginning, because you can go out of business before you scale out to multiple verticals. In our case, we can now cross sell customers in each metro area. The key is for us to be agile in software development, signing up suppliers, then emailing customers in each metro.
Dan Martell (1 year ago)
Tom Psillas oh the fun of marketplaces! Keep up the hustle. DM
Lynn Financial, LLC. (1 year ago)
Thank you for the tip to narrow your focus to begin with. I am uncertain that my niche is "uncomfortably narrow' like you say in this video, but it is good to be validated by an expert that this is a good way to start.
Mailbnb (1 year ago)
Lyft, Uber, Airbnb, Now Mailbnb – Make Easy Revenue TodayWelcome to the digital age in full swing! A friend is always within reach, a pizza is a click away, and your car regularly receives software updates beamed down from a satellite. It wasn’t long ago when the interconnected world with which we have become so comfortable was anything but connected. If you’re lucky enough to have known the analog world and watched its transition then you are quite familiar with the feeling of tracking down a payphone to collect-call your mom to pick you up from the beach. Or, trusting that someone you hadn’t talked to in three days will remember you had plans to meet. In a short timeframe the advent of the mobile phone evolved into the smartphone giving rise to a high powered, connected computer in your pocket. This created a new world, a new economy, and a new way of doing business - drastically slashing all former barriers to entry.Crushing Obstacles To SuccessStarting a business or generating a freelance income on the side has never been as easy as it is today. With websites being the new storefront you are no longer hampered by large overhead costs. However, even websites have become unessential. A new economy has sprouted in the last decade allowing individuals to lease to others the resources they already own and use every day, all with a single tap. Lyft and Uber have brought convenience back to transportation in crowded cities with an on demand, private car delivering you from door to door with only a few minutes notice. Airbnb upset the hotel industry by allowing residents to sublease their houses, apartments, rooms, and couches to weary travellers and tourists. Each one of these on demand services empowers the average person to tap into the earning power of resources they already have in order to offset costs, or even generate a full time income. No additional overhead. No marketing. No risk. Although it may look as if all of the low hanging fruit has been picked, there is still an underexploited industry that is only just beginning to go digital. It involves the office you sit in every single day. Do you own or lease an office? If you answered “yes” then you have all that you need to start generating yet another stream of income for something you already possess. Make Money From Your Address AloneThere is a fast growing demand by entrepreneurs, freelancers, and home-based professionals for the digitization of essential business resources. More and more people are seeing the cost saving benefits of working out of home offices and coffee shops in order to run a lean business and avoid superfluous overhead. However, this demographic still needs what a home address and Starbucks can’t provide: Credibility. This is where you come in! Airbnb, Lyft, and Uber all have something else in common. In order to earn, you - the service provider - have to be willing to accept a level of inconvenience. You have to give strangers access to your most personal spaces. But with Mailbnb, you can earn just for having a business address. Mailbnb is a way to make money wherein you never have to meet face-to-face with those paying you and most importantly you won’t be put out of your office. All you have to do is rent your prestigious address to a professional in need and forward them their mail. No marketing, no sales, no negotiation. List. Rent. Send.There Is No Limit To The Income You Can GenerateThe obvious benefit to Mailbnb that other marketplaces don’t offer lies within its inherent scalability. You can only drive one car at a time or lease your house to one guest at a time, but with the digital plasticity of Mailbnb you have no limit to the amount of virtual guests to whom you can simultaneously rent. Your business address suddenly transforms into a cash minting machine that makes you money whether you’re at work or not. It frees you of punch clocks while adding a little more financial security to your pocket book. Mailbnb gives you a way to make your office space work for you. You can eliminate the monthly costs tethered to leasing an office while concurrently helping an entrepreneur establish themself within a market, boost their professional image, and save on costly business expenses.You Are Always In ControlFrom the term lengths you choose to offer to the fees and types of mail forwarding you will implement, you get to choose. You are in control of everything, and you can offer as much or as little as you are willing to provide to your virtual guest. Do you have a meeting room you’d like to add as an upsell? Done! Would you rather not have people come into your place of business to pick up mail? Just deselect the option and you will never have to lay eyes on a virtual guest if you so choose. Mailbnb is dedicated to helping you succeed. There is an ever growing demand for mail forwarding and virtual office services. As the telecommuting workforce increases, as businesses are established solely in cyberspace, as entrepreneurs continue to innovate from their garages, the demand for these essential business solutions will escalate. It’s not too late to start capitalizing on your untapped resources and position yourself to profit as the industry flourishes.Now Is The Time To StartAs our world becomes increasingly digital it becomes easier to profit from new opportunities and previously unrealized sources. As the digitization of the classic workspace takes root, the remotely operating workforce will require these services to provide a much needed physical presence to their businesses. Mailbnb makes it easy to eliminate your traditional expenses associated with leasing office space by listing your business address on the platform and allowing professionals just like you to benefit from your prestigious location. Without any additional effort, you can benefit from a new way of earning that you may not have previously thought was an option.  Mailbnb makes you the link between the digital and the physical universes.
Sp Sp (7 months ago)
can i use it as a my fiscal address? Can the IRS locate me there? Virtual addresses r against the law in some countries such as Mexico: One fiscal address per registered business or person. Do ask my why. Regus is been shut down in Mexico cause they sold 1000 fiscal addresses to one address.
Jake Tunney (1 year ago)
My free fitness marketplace, GiveFit, is uncomfortable niche (free fitness in Baltimore, atm). If I'm a 3.0, where I have to curate supply, is it enough to understand that demand is contingent on the availability of supply? I'm working in a highly supply-constrained environment, where demand has largely been demonstrated. Is it reasonable to conclude that if I can hack the supply-side, to the right type of supply, we can deliver the demand? When you say focus on demand, what would that mean in my case?
Jake Tunney (1 year ago)
Dan Martell thanks for your response! I completely agree :) we've got some novel supply delivery ideas... getting ready to test atm!
Dan Martell (1 year ago)
Jake, I'd need to dive in to give something more concrete but heads down on some new projects ... that being said, free always scares me ... and regardless, just because your demand has been proven with an existing market, it's your supply (and the way you're delivering it) that's different and that specific demand needs to be proven. Ex: People eat sushi, but would they eat sushi ordered from an iphone with no physical store/presence or friend recommendation? Prove that. DM
mokauroots (2 years ago)
Thanks mate. Very helpful from the get go. Regards
Dan Martell (2 years ago)
mokauroots 👊🏻
Strategic Thinker (2 years ago)
I'm gonna curse. Fuck, this is good.
Dan Martell (2 years ago)
Strategic Thinker thx!
Calum (2 years ago)
How do I go about building my marketplace website?
Peter John (6 months ago)
@Sp Sp Are you looking to develop online rental marketplace such as "Vacation Rental" "Car Rental" "Bike Rental" and more.We have ready made online rental marketplace software solutions.If you are interested kindly share your contact no & mail id.Thanks
Sp Sp (7 months ago)
@Peter John What do u think of this instant solution to coding?
Peter John (10 months ago)
Check here https://www.pofitec.com/solutions/airbnb-clone-for-car-rentals.php for developing two way marketplace and you can start your rental marketplace with in minutes
Kalaluka Katungu (1 year ago)
@zeinab you have a source code I could use>?
Zeinab N (1 year ago)
are you still looking for a web developer?
Jaret Stavrouss (2 years ago)
Thanks for the video, it was insightful. I did have a doubt what is the difference between a 2 and a 3 sided marketplace.
Jaret Stavrouss (2 years ago)
Yes. I'm sorry that wasn't clear. I would like identify if my start up is a 2 sided market place, which I was pretty sure it was, until a few days ago that I saw a conference of Bastion Lehmann.
Dan Martell (2 years ago)
Jaret Stavrouss is that a question?
Søren Maigaard (2 years ago)
Dear Dan feel free to contact me at [email protected] founder www.sharebnb.dk
Flying Geese (2 years ago)
Great vid Dan and it was very well explained. I definitely agree with you that a marketplace startup is definitely among the hardest ventures. Clearly you've done your research on this business model! Looking forward to checking out more content from you. Thanks!
Dan Martell (1 year ago)
Flying Geese thx!
Nick Artunyan (2 years ago)
Thanks for the video! Question: When you said focus on the demand side first, would that also be a good suggestion for version 2.0? When you don't have the supply side how would you approach the demand?
Dan Martell (2 years ago)
Fake the demand side. You can just find 10 suppliers or you can make it up and then promote it ... get creative :) DM
olddayallstar (2 years ago)
Great vid and great advice. How about Pinterest ? Is it also two-sided market ? But when it got started, I think they promoted to the heavy Pinners only. They did not promote much to the average users who just browse but not pin
Dan Martell (2 years ago)
Pinterest is a social network of content ... I wouldn't say it's a two-sided market. Hard part is getting contributors, same with Medium, Twitter, etc.
Beviaart (3 years ago)
What software do you use to build a multi vendor marketplace?
Dan Martell (3 years ago)
I'm not sure / all my projects are custom coded. You could use Drupal though if you wanted a platform to customize. DM
iLearned toCode (3 years ago)
What is a one-sided market? Are one-sided markets possible?
Dan Martell (3 years ago)
1 sided market is when you set the price (think Uber, or HomeJoy), but when the supply side sets the price (ala AirBnB) then things get interesting.
Fida Rana (3 years ago)
Dan, great video. Thanks a lot. One quick question, is there any recommended freelancer or web development company who specializes in developing marketplace ?
Matthew Baker (1 year ago)
Yes - one of our focuses is marketplaces growthdrivers.io
D. M. Cook (2 years ago)
Hey, Fida, I know it's been over a year ago since you asked Dan your question but I have a local buddy building an online marketplace with a proprietary platform. I think he outsourced to India while simultaneously having that compliment his small veteran stateside team.
Dan Martell (3 years ago)
+Fida Rana I don't hire web shops / everyone on my team was either a freelancer or working at a company when I got them. Sorry. Checkout www.upwork.com if you're in a bind. DM
rocketpark (3 years ago)
Great vid. Yep, we're building a two-sided market place. What I'm trying get tips on is, how do you pitch a two-sided market place business/app to investors. How do you explain the 2 problems, and the 2 solutions, in a pitch that barely leaves time to explain a single market. I've already had some investors say "oh no, not a two-sided market place, good luck with that". But there are so many of them around, and many successful ones, why so risk averse? Would I be safe in assuming traction was key element to these "successful" two-sided market place businesses raising capital?
Dan Martell (3 years ago)
+rocketpark great question. Truth is, traction is always required... but it doesn't always mean product metrics... can just be product + team, etc. The hardest part for most marketplaces is scaleable demand. That's what investors want to know... how to do you get customers for your supply. Getting supply is infinitely easier if you get them paid at a fair price. If you can do that, investors will love you. The reason they're scared is that it's twice as hard to build a marketplace than a traditional startup like a SaaS product. Hope that helps. DM
Dan Martell (4 years ago)
3 Strategies to Building a Two-Sided Market
Aaron Afrifa (4 years ago)
This is the exact advice i needed. I've been feeling lost for the past two months. Is there a way i can speak to you. I would truly appreciate it.
Andrew Korf (4 years ago)
Great post. Who do feel is doing the best job on "curation" an area of interest of mine... as in lead with curation, set the tone of the marketplace through curation, then let the flowers bloom. The RealReal got this right for womens clothes, poshmark on the other hand has dropped the ball according to my fashionista wife... thoughts? Who else nails the curation side of things? 
Andrew Korf (4 years ago)
@Dan Martell Thanks totally agree on curation being a required key ingredient for success, especially in that it sets the tone and level of discourse for the marketplace the achilles heel of ebay, craigslist, and other older marketplace offerings. Ive been thinking about the future internet enabled marketplaces through the lens of design fiction (http://www.kedgefutures.com/casestudy/case-study-3/), I'd encourage others to do the same ... much work to be done here. Thanks Dan!
Devin Heiner (4 years ago)
Love how you actually run through examples of each marketplace type (1,2, &3) and how they all relate; it definitely helps paint a picture. Thank you
Anne-Marie Kovacs (4 years ago)
Thanks for this. Just what I needed to hear. Confirms that our process is headed in the right direction.  
Raymon van der Velde (4 years ago)
Morning Dan! First off it's scary how you pick these topics... Within my startup we're working on 2 propositions, you guessed it one is a two sided marketplace. You 're really making me think this morning... Niche: with ya on this one. Demand: i am focussing on supply because this is already a niche market and I want to be the quick to secure supply. It makes sense what you've explained, i'm gonna noodle on this one... (maybe both... need more time Argh!) 1/2/3.0: great new insight, gonna take this one to the whiteboard Till next week, have a great weekend!
Taylor Jackson (4 years ago)
Great video, Dan! 
Srikanth Gorthy (4 years ago)
Great as usual Dan.. Was looking for ideas on this exact problem.. Gave a deep overview!!
Srikanth Gorthy (4 years ago)
@Dan Martell The narrow niche idea amidst all the possible scenarios in the broader market with clarity.fm example.
Yazin S (4 years ago)
Loved the 1.0 / 2.0 / 3.0 explanation Dan -- I never thought about it that way! Reminds me of a saying by one of the Kickstarter founders: "If you find yourself stuck in a chicken-egg scenario, fake the chicken!"
Sara Ahmadian (4 years ago)
totally agree with you!

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