This presentation was given in 2015 to second-year MBA students at the Samuel Curtis Johnson Graduate School of Management at Cornell University, as an update to those given in 2013 & 2014.
This presentation provides a background on the rise of P2P marketplace model, as one of the most dominant digital business models to emerge in the past two decades, and this trend of "Uberification" is poised to disrupt every global service industry. To better understand the drivers behind this macro trend, I outline my 10 keys to building marketplaces, and describe the 7 fundamental marketplace types.
We apply these frameworks to the specific industry case, of how Sittercity moved from a "1.0" based business model to this new on-demand model.
Child care in the on-demand economy: 10 keys for building successful P2P marketplaces
1. Child care in
the on-demand
economy
Current Topics in Marketing
October 27, 2015
Rishi Dean
Sittercity.com
2. Case Readings
§ HBR Article: Strategies for Two-Sided Markets (Oct 2006)
§ Steve Schlafman (RRE Ventures): Uberification of the US
Service Economy
§ MIT Sloan Management Review: Strategic Decisions for
Multi-sided Platforms (2014)
13. 63 countries, 300+ cities
Market creation vs. market share
5 years to $60-70B valuation*
14. Playbook for next generation businesses
§ Collision of underlying tech trends
§ Integrated consumer experience
§ Labor force changes
15. Welcome to the new, “uber” inspired economy
§ Mobile apps that
aggregate consumer
demand, then fulfill
via offline services
§ Delivering a “closed
loop”, end-to-end
experience
16. Incumbents innovate via incremental improvements
Focus on improving
existing (premium)
products
TIME
QUALITY
minimum
customer
need
sustaining innovations
17. The “next big thing”, looks like a toy at first
Initially, “cheaper”, “low quality”,
“just a feature”, or “unattractive
market”
TIME
QUALITY
minimum
customer
need
sustaining innovations
disruptive
innovations
18. “Good-enough” is the tipping point
Eventually reach a flashpoint
where they begin eroding share–
focus and depth accelerates this
TIME
QUALITY
minimum
customer
need
sustaining innovations
disruptive
innovations
24. Can we “uber-ify” the child care vertical?
On-demand mobile
services to
“professionalize” the
supply and to participate
in the transactional
market
$50B annually
5MM “entrepreneurial
sitters”
27. The internet makes markets efficient
§ Aggregate long-tail supply and demand
where offline would be inefficient
§ Tools to seamlessly communicate
§ Platform-mediated payments /
transactions
29. Examples of Platform businesses
Strategies for Two-Sided Markets, HBR ARTICLES | Thomas R. Eisenmann, Geoffrey Parker, Marshall W. Van Alstyne | Oct 1, 2006
31. And the market has proven this
§ ~20 years of consumer internet
§ 24 public companies >$1B x 2 for
acquisitions
§ 140+ private “unicorn” companies
§ 2/3 are “platform” businesses
Source: James Slavet, Greylock
33. 2-sided market incentives
Demand Supply
1) Initial Adoption 1) Initial Adoption
2) Same-
side
Effects
2) Same-
side
Effects
3) Cross-Network Effects
o Increase in liquidity Cross-side Effects o Increased liquidity
Platform
Strategies for Two-Sided Markets, HBR ARTICLES | Thomas R. Eisenmann, Geoffrey Parker, Marshall W. Van Alstyne | Oct 1, 2006
o Why do seekers initially adopt? Initial Adoption o Why do providers initially adopt?
o How do more seekers help one
another? Same-side Effects o How do more providers help
one another?
40. Not all marketplaces are created equally
Transaction initiator § Buy-side, sell-side, hybrid
Transacted Item
§ Product or service
§ Commodity or high-consideration
Market scope § Horizontal vs. vertical
Revenue Model § Subscription vs. transaction
44. Describe how you (Sittercity) will disrupt the child care
vertical, by leading it into the on-demand economy
Provide a brief outline of the key dynamics of two-sided platforms (HBR article) you would
leverage to ensure initial adoption (overcoming chicken & egg dynamics of establishing trust),
and to ensure long-term sustainability through network effects (e.g. staying on platform)?
ALL
COMPETITION: Discuss why your offering will win, and guard against imitation from
competitors (Care & UrbanSitter)?
4
1
ADOPTION: How would you help consumers overcome the initial “trust hurdle” to adopt
Chime at-scale?
2
RETENTION: What tactics would you use to keep consumers using Chime, and avoid
“disintermediation” – to the point where users would recruit their personal networks?
3
GROWTH: How might Sittercity “unlock” non-vetted supply, in order to scale Chime more
quickly and reach new geographies, while balancing the need for quality & safety.
PRODUCT: What relationship should the new “Chime” product have with the core Sittercity
business line?
5
47. Disrupting yourself is hard
1. Core revenue streams
2. Comfort & complacency
3. Cost of doing business
4. Controls over operations
5. Culture / lack of precedent
56. P2P marketplaces can reduce “economic
slackness” (i.e. unemployment)
§ Change lives for parents and children
§ Provide meaningful economic opportunity
and empowerment to sitters
57. Child care is a national problem
§ 71% of moms work
outside the home
§ Only 1 in 5 U.S. kids live in
a house with a married
stay-at-home mom
§ 61% of kids 0-5 yrs are
cared for by adults other
than their parents