Wout Withagen

Online marketplace: the team, the shack, and the money (3/5)

Innovate & digitalize

Marketplaces

Mar 2, 2021

Wout Withagen holds his book Build a Successful Online Marketplace in his hand

A perfect team, ideal conditions and a rock-solid budget. A successful online marketplace cannot do without. If you've reached this step in the development of your plan, then you've already completed the essential thorough analysis and validation from blog 1 and 2. Your idea is a good one, you can proceed. Time for the big wrap-up of your concept. On one side is the team and the setup, and on the other side the money — your budget.

The team and the tent

Who, what, and how much do you need to make your platform a success? Setting up a team and a business case for your online marketplace comes with a number of specific conditions. Below you will read about the three most important ones:

1. Flexibility is key

Describe your validated idea in a business case that is as concise and concrete as possible. With an extensive business plan, you are actually fixing things too much. How does that work? With online businesses, flexibility is essential — they sometimes need to pivot faster than a leaf on a tree. And for online marketplaces — where instant success is rare — this is definitely the case. There are so many levers you can and must pull to make your marketplace ‘fly’.

So: include no more (and no less) in your business case than your idea (in one sentence), your revenue model, your planning, and your budget. A great tool you can use for this is the Business Model Canvas. It is particularly suitable for online marketplaces, because the intended win-win-win situation that every marketplace should strive for (for provider, consumer, and the marketplace itself) is excellently represented. Want to know more about how to create a budget at this stage? Later in this article, I delve deeper into this.

2. Perfect team fit — the three H’s + L

Building a successful online marketplace depends on the right people. A small team — especially at the beginning — that steers your plans in the right direction. What does that perfect team look like?

A handy mnemonic you can use are the three H’s: the Hacker (critical developer), the Hipster (strategic thinker and visionary), and the Hustler (fixer and networker). I add a fourth type, especially aimed at marketplaces within corporates: the Lobbyist. Which type (or types) are you? And what competences do you still need? Build a team with the right people around you. Ensure that together you possess all the skills.

3. Roadmap

Preferably divide your planning into manageable portions, in the form of a roadmap. Start at the end: where do you want to be in five years? Think in terms of revenue, number of transactions, margin, employees. What is needed for that? Then plan backwards: where should you be in four, three, and two years? And next year? In three quarters, two, one? End of the month? And finally, what are you going to do now to get there?

Calculate as generously as possible, both in time and in money. The success of a platform depends on the flywheel you need to get going. A flywheel where the demand and supply sides reinforce each other, and together create a network effect. This does not happen automatically. You need to experiment, learn, and adjust. Give yourself the time and financial space to do that.

Want to read more?

This article is part of a 5-part blog series. Step by step, I'll guide you through what you can and need to know about building a successful online marketplace.

The money

Okay, setting up an online marketplace takes time and money. And however unpredictable setting up a marketplace may seem, you can't do without a good budget, as a guideline for yourself and as an indispensable document with which you connect potential investors and partners to your marketplace. And yes, creating such a budget is super difficult, since you do not yet know exactly what your income will be. Here are a few tips to properly structure your budget:

Substantiated guesswork: Creating a budget for multiple years is difficult. However, there are ways to do this as well as possible. You combine your costs and benefits in one overview. For online marketplaces, there are a number of specific items you need to consider. This special marketplace P&L, already filled in by us for a fictional business case, helps you on your way.
Work with scenarios: Not feeling good after filling in the P&L? Then don't settle for it! You must stand firmly behind your budget. Need just a little more control over the matter? Then working with different scenarios of the budget is a good option. In our book you can read more about this.

Ready, set, go! By going through the steps in this blog, your online marketplace is already far along. You can (and want to) no longer turn back. It's time for the next step: building your online marketplace. More on that in the next blog in this series.