When building your marketplace or platform, you need all the information available to you in your decision-making. Remember these six tried-and-true tips.
Building companies is hard. Building marketplaces and platforms can be even harder. Over the past few years, as I've scaled SimpleCharters.com into the leading platform for booking private charter flights, I've taken note of several key lessons and reminders that can be applied to any company.
1. Learn from past failures: Conduct competitor post-mortems.
Despite what you may think, very few products and services are unique. Someone, somewhere, at some time, has thought of it and most likely attempted to execute it. If you're familiar with the space, you may know of these already, but you still need to conduct proper market research. Understanding what companies or products came before yours is incredibly useful.
Develop a simple framework for understanding what went wrong, what went right, and what environmental factors could have brought a company to failure. It's easy to say that a product wasn't shiny enough, fast enough, etc. It's another thing to understand why these factors had an impact on the company, what led it to design the product that way, and what implications that had on growth.
Take note of the product's shortcomings, strengths, target demographics, value propositions and marketing execution. You'll find that when you conduct a proper post-mortem, it's necessary to take a step back and think bigger.
2. Can't see the forest for the trees: Think on a systems level.
We're all guilty of getting laser-focused on one facet of a project, whether it be a piece of content, an engineering challenge or a single customer's feedback. But building products, services or apps doesn't happen in a vacuum, and the effects of your decisions reach further than some of the best marketing strategies.
Taking a step back and leveraging different viewpoints can help you solve many problems across many disciplines. My favorite vantage point is the systems level.
A system contains a set of independent units that work together to achieve something greater than the sum of its parts. Every part of the system has a potential impact on another part of the system, which can cascade through many levels of abstraction, even causing unexpected properties to emerge.
By employing this method of critical thinking, you can better understand how and why certain things happen, whether within a single startup or a multinational organization. Maintaining this consideration as you examine competitors, product decisions, marketing strategies, etc. can help you gain that competitive edge.
3. Take it with a grain of salt: Set up advice filters.
"The customer is always right" may be correct in customer service, but not for making business decisions. As Henry Ford famously put it, "If I had asked people what they wanted, they would have said faster horses."
As you continue customer development, you're bound to hear countless suggestions and feedback for your company. Your customers, whether they're organizations, governments or individuals, have specific needs or problems they are trying to solve. Their suggestions are typically heavily biased toward fulfilling those, and it's your job to understand if solving those problems benefits your core value propositions and to determine if the business case exists for implementation.
By setting yourself up to take all of this feedback and digest it into actionable pieces, you can determine if it makes sense to add to your strategy or product. The important part is to ensure you're trending in the right direction – which is generally far away from feature bloat.
4. Avoid the noise: Test, test, test.
With all of this advice you receive from your customers, advisors and investors, you ultimately must determine if it benefits one thing: your core competency.
If you feel that a suggestion holds merit and might be beneficial, it's crucial that you test this hypothesis. Load up an A/B testing platform, of which there are many, and put it to work. You don't even need to build the feature yet – simply use an opt-in signup form to gauge customer interest.
As you continue to learn from your customers, your model might evolve, change or pivot entirely. The critical distinction is your sustained focus on the model. Distractions are plentiful and show themselves in endless ways.
5. The chicken and the egg: Balance growth.
Marketplaces are hard. You have to do everything twice – understand the pain points on both sides, market to each, and potentially engineer two separate products that come together to form your company.
There are local minima on both sides of the platform that enable success. Whether the metric is users, products or vendors, you can quantify it and develop your plan to reach that threshold.
The trick is to make sure your early customer development efforts aren't spoiled by the lack of one side of the market. If you're building a marketplace but have no products to sell, your users aren't going to be very happy. Alternatively, if you have a marketplace with products but no users, both you and your vendors are going to be disappointed.
Finding unique ways to balance the growth of both sides can help the growth process. It may seem counterintuitive, but doing things that don't scale will (in my experience) grow your company much faster than you thought possible.
6. Don't leave it to memory: Take notes.
It may seem like you can remember everything now, but as your system becomes more and more complex, it'll be absolutely necessary to offload thoughts, questions, feedback and more into a notebook. Being able to review my past mistakes, lessons and more has made the process all the more efficient. If I can avoid making the same mistake twice, it's worth it.
I review these reminders periodically in my day-to-day work, ensuring that I don't become complacent in the process of scaling my company. I hope that they benefit you as much as they have me.