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How Billion Dollar Marketplaces Are Built (nfx.com)
145 points by domrdy on Jan 5, 2020 | hide | past | favorite | 38 comments


A marketplace startup is a tough business, because you not only have attract buyers and sellers, you need to police scammers.

Even Ebay/Amazon doesn't have a handle on this completely and they ARE billion dollar marketplaces.


It would be interesting to see examples of the alternatives. That is, marketplaces that failed due to scammers, marketplaces that succeeded by heavily curating to block scammers, and marketplaces that failed due to excessive curation while trying to stop scammers.

I wonder if scamming is actually a symptom of a successful marketplace. Scammers presumably have to think through their opportunity costs and would want to focus on marketplaces with many buyers and sellers and high transaction volume.


> I wonder if scamming is actually a symptom of a successful marketplace.

For new marketplaces the risk and reward are pretty low. For mature marketplaces the reward is much higher and the risks probably vary based on your home country.

The ideal for a scammer is probably a site with good enough security to remove most scammers but not good enough to remove you.


> marketplaces that succeeded by heavily curating to block scammers

Think about Uber as a marketplace which heavily curates scammers, success is a matter of many discussions though.


Nothing big or complicated is easy


I'm not sure why your comment was flagged / dead. It seems pertinent and on point.


I'm not sure why it's been flagged either. For me, it shows it's been upvoted. Very strange behavior on HN.


Just a new user thing probably. It’s been resurrected.


I had to click "vouch", because the comment was dead :/


Sometimes new accounts get (mistakenly) caught in anti-abuse filters. If it was [dead], that’s likely what happened. If it was [flagged][dead], it was the result of user action. In those cases, vouch as you did. You can also email the mods using the Contact link in the footer to make them aware so they can take a look at what’s going on.


You're being targeted. This comment was dead too. :(


"Dead" indicates an account-level filter, not flags applied to a specific comment.

Often this is based on prior history, based on exchanges with admins. It's possible for accounts/users to be rehabilitated. "Vouch" actions or emailing mods can have effects.


Sad thAt this kind of immature behaviour is on HN. Mods should be easily able to search for this kind of behaviour


How nice to be downvoted for this comment.


Can't this be summed up with making it super attractive for sellers (or the content creators) early on, grow really fast and then completely screw your content creators after you're somewhat established?

This is what it seems like for just about every marketplace. Marketplaces seem like one of the most corrupt / shady / backstabby lines of businesses I've ever been a part of. This is coming at it from a content creator on some video course platforms in the past.


Can you give some examples? I feel like that's not the case: eBay, AirBnB, etc are some of the iconic marketplaces and create massive income opportunities to people who didn't this option before the platform existed.


TripAdvisor. I deal with small business (owner-operator) resorts every day and what they all seem to have in common is a hatred for TripAdvisor.


What do they hate about it?


I've only been on the visitor side of things, but I've come to not trust ratings on TripAdvisor. People come in with a set of expectations based more on past experiences than their current destination. The reviews reflect this (sometimes wild) mismatch and there's often nothing a hotelier/restaurateur can do about it. The gap is biggest when there are cultural and economic gaps between visitors and hosts.

It's not unique to TripAdvisor, but they're a 800lb gorilla in that market.


Public accountability for terrible guest experiences, at least somewhat.


Food Delivery services. The lure family restaurants to the platform in small towns, the ease of accessibility cause footfall to fall but this is replaced by delivery revenue. But now the family restaurants are beholden to the delivery services who slowly jack up the cut, they can't quit or they lose all the delivery revenue that has replaced walk-ins.

This is even before considering how they squeeze gig economy riders.


> eBay, AirBnB, etc are some of the iconic marketplaces

I know several eBay merchants. They all gripe at the high fees, ever-changing UI and rules, etc.

Recently ebay bucks was reduced from 2% to 1%, and now sales tax is collected across all purchases.

> create massive income opportunities

Are you a shill, or do you believe all the PR?


I'm increasingly convinced that building a marketplace or a social network is the wrong way to think about it.

Rather it should be conceptualized as moving or consolidating an existing market or network.

The best ones actually lower the friction for socially beneficial outcomes.


A good example of this that comes to mind on a very small scale is a marketing slack community (TTT) that essentially took a loose network that already existed and gave them a home.


Has anyone interacted with NFX and Gigi Levy-Weiss? Especially with respect to seed/pre-A investing?

I have seen plenty of NFX ads on reddit and twitter, but I guess it just a PR push.

We are B2C, web-based, with some starting revenue, growing. But with out any "stars/reputation" on the team. So that's our main weakness.


I cold emailed them once, hoping to pitch a business matching what I beloved their thesis was. That didn't go anywhere and I never got to properly pitch to them. We had minimal traction, no pedigree or track record of success.


Fabrice Grinda has some interesting content on YouTube and his website regarding marketplace/platforms. Does anyone know of any Shopify equivalent marketplace model that would enable one to build a niche version of Thumbtack?


I'm positioning SaaSHub as a "software marketplace"; however, I've been told it isn't a marketplace if there aren't financial transactions happening through it.

What do you think, could there be a marketplace without facilitating direct fin transactions?


I've seen your site and I think it's more of an aggregator or even a hub. It could be a marketplace but instead all of the $ is escaping to the vendor sites. It's akin to the difference between amazon and google shopping in my mind.

(admittedly google shopping probably gets a referral fee or something but maybe you do to?)


I think you make me ponder what's a reasonable limit to forcing commercial spam into threads for self-promotion purposes.


Can you say online communities (e.g. Reddit) are like marketplaces?


A marketplace by definition has to be a "market", e.g. have some form of prices and supply/demand. The currency doesn't have to be dollars -- it can be an imaginary videogame currency, for example -- but there has to be one.

So no, Reddit isn't a marketplace, any more than a library or editorial magazine or "letters to the editor" are marketplaces (which they aren't). Upvotes aren't currency -- you can't buy and sell them.


After a fashion. The "buying" party would be the readers, and the "selling" party would be... the rest of the Internet. The twist here is that some of the "sellers" don't know their content is being posted. But many do, which makes clickbait and marketing in general an example of the scammer problem that afflicts regular marketplaces.


Would say no as their is no economic transfer on Reddit... Yet anyway.


But they sure do drive a lot of economic transfer one way or another.

You can post all of your retirement investments there and actually get pretty good advice in a lot of parts.

That’s bad for a lot of « no-fee » financial planners.

Just for example.


I should have added, similar in what it takes to get them started?


It might fit. It's the buying and selling influence. Mod accounts being bought and subs being taken over.


I've been told that it isn't a marketplace unless there's a financial transaction facilitated by it. However, I don't agree.




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