Monday, January 7, 2013

Marketplaces

Bill Gurley of Benchmark posted to his blog a couple of months ago about a new investment his firm made in a new online marketplace, Dogvacy. Essentially, the company is similar to an Airbnb for pets. Here, people who are looking to board a pet are matched with individuals who would take it in, for a fee.

Along with his announcement of the investment (note, Benchmark was the first investor in the online marketplace Ebay), he posted the marketplace screen which the firm uses as a guide to determine if they are interested in an investment in the marketplace arena.

I am a big believer in marketplaces, especially ones where services are sold. I see a huge pool of underutilized talent (supply), available to meet the price and convenience needs of people who are increasingly comfortable with interacting online, have online payment capabilities and the infrastructure (e.g. broadband, VOIP, chat, and video) to effect online commerce (demand).

With one marketplace successful and a second now early in its launch, Bill's post gave me an interesting few minutes to look at what we are up to through another investor's eyes. So, here's his screen applied to our new venture:


Marketplace screen used by Benchmark
Rated (A-F)

New Experience vs Status quo
(  (A)   Users of GG reach counselors via the internet. It’s not simply cheaper or closer, it’s a whole new alternative. Location and identity are no longer tied together and this reduces anxiety about the timing to reach and a background to trust counselors dramatically. This should fuel word of mouth demand

Economic Advantage vs status quo
(  (A)   Economics are better for both sides of the equation; buyers and sellers. Prices should be better for consumers (can be 50% lower) as you are working with incremental time for counselors who alrady have practices and the rates should not upset local in-office billings. 

Opportunity for technology to add value
(  (A)   Offering a seamless, closed-loop, experience from search to trial to consult to payment should add great trust and transparency for the consumer

Fragmentation of suppliers
(  (A)   The American Association of Christian Counselors has grown from 15,000 to 50,000 members over the past decade. Specialized services from eating disorders to trauma or life coaches are under the umbrella of just this one organization. Other Associations exist specifically for Christian Coaches, Pastors and Mental health professionals. Perhaps, as interesting, is that availability of counselors should not be an issue since cross-time zones work in favor of finding someone who is available for a consultation.

Friction of supplier sign-up
(  (A)   All a supplier needs to do is to fill out a profile, download Skype, and attach their Paypal accounts

Size of market opportunity
(  (A)   According to Pew, nearly one-third of Americans identify themselves as Evangelical Christians, though the opportunity clearly spans a global market. This site sits at the intersection between religion, mental health, and coaching. The need spans all demographics, for example 46% of college students felt that ‘things were hopeless’ at least once in the previous 12 months and 31 million US adults received mental health services over the past 12 months  (NY Times survey)

Expand the market
(  (A)   Making it easier to find a professional to provide a service at a lower expense and from the comfort of your home should expand the number, and frequency, of consultations clients seek.  This is complemented by the mismatch in the professional training and client requirements. For example, the majority of traditional counselor training programs have no courses dealing with spiritual matters, while three-fourths of Americans say religion is critical to their life approach. Many Clients look for a faith based Advisor for two key reasons; one is faith perspective; they want a therapist who resonates with their worldview. The second is moral ethics; they want a counselor who understands what guides their decisions." It is incredibly difficult for clients to find counselors who are accessible, share their view, and are affordable. In one marketplace, GG bridges these difficulites.

This should directly impact the top reasons people don’t see counselors;  44% of people who are not getting help could not afford the cost, and 21% did not know where to go, 15% did not have time and 10% did not want their friends to know they were seeking help. (National Statistics on Mental Health)

Frequency
(  (A)   The frequency of Advisor visits varies by individual, requirements, and type of service required. Often counseling sessions are monthly, lasting for a period of years, while coaching may go for an intense, shorter duration, followed by quarterly check-ups.

Payment flow
(A) GG is in the payment flow and as the revenue represents a new economic opportunity for the caregivers, which can only be achieved by being on the system, the relationship is symbiotic

Network effects
(B+) Religious adherence is highly social as has been demonstrated via  early Facebook results. Caregivers develop a reputation and it’s transparent for all to see and reputation has real value in the marketplace. The best providers are rewarded with better placement and more business. Therefore, a high premium is placed on providing a quality service.





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