Digital platforms have democratized our ability to share and consume ideas, access previously inaccessible products and services, and do so with greater ease than ever before.
Many marketplaces in their current form have, as we all know, also come at a steep cost. Often at the expense of our personal health and that of our civil society, social platforms have driven teens to depression and suicide while overwhelming our senses to the point where we can’t separate what’s real and what’s fabricated. Service-based platforms have grown while many in the labor force they’re built upon struggle. Too many product-based platforms actually increase workload for consumers and customers (e.g., how to find the best X, how to avoid the worst Y, how to check out without a frustrating user experience?), who have to sift through a sea of options and reviews, without full transparency into the backstory of what they’re getting. We are targeted by tools engineered to addict and keep us on site.
There’s good news: a new wave of purpose-driven marketplaces are on the rise, building businesses that inform, inspire, and nourish us as consumers, creators, and our communities.
These purpose-driven marketplaces are anchored by values that permeate the entire company operation, from their business models to their product offerings. This is enabling them to build category-leading businesses, defined by three key characteristics: an inspiring purpose, curated convenience, and thoughtful personalization.
I. Inspiring Purpose
People today make purchase decisions with a company’s purpose in mind, full stop. Operationally, an inspiring purpose binds the company together (it was our backbone at Patagonia) in ways that keep teams focused on delivering the greatest caliber product as well. Five marketplaces that embody this ideal:
- Good Eggs: “Reinvent the way people feed their families in today’s world.”
- Medium: “Deepen readers’ understanding of the world and empower writers to share their best work and biggest ideas.”
- Incredible Health: “Helping healthcare professionals find and do their best work.”
- Block: “Simplifying the chaos and costs of construction by bringing design, sourcing, and management all under one roof.”
- Etsy: “Keep commerce human.”
By bringing their purpose to life authentically, it’s no coincidence that all of these platforms are resonating: Good Eggs is expanding, Medium is growing, Incredible Health’s increasing client list speaks volumes, and Etsy’s stock has risen eightfold since early 2016.
These marketplaces also cultivate a deep connection to the communities in which they operate. Good Eggs is opening up new markets at higher margins for farmers and artisanal food makers. Medium is creating new onramps for aspiring writers with thoughtful perspectives and ideas. Incredible Health is dramatically reducing time-to-hire, creating a demonstrably better experience for both healthcare job seekers and hirers. Etsy is powering a new global economy for unique, creative goods. And Block is enabling a more consistent pipeline of work for the long tail of contractors.
II. Curated, (Full-Stack) Convenience
We have all felt the frustration of jumping on a platform seeking something — the right restaurant, an informative read, or a local pro for household help — only to realize that our work had just begun. Purpose-driven marketplaces recognize that we need help not only with a more curated set of choices, but in “making it all happen” — whatever that “it” may be.
This is ultimately based on trust with the platform first, which Andrew Chen articulates succinctly here: “Managed marketplaces take on additional work of actually influencing or managing the service experience, and in doing so, create a step-function improvement in the customer experience. Rather than just enabling customers to discover and build trust with the end provider, these marketplaces take on the work of actually creating trust.”
A purpose-driven marketplace builds on trust and takes it one step further, through a full-stack orientation that delivers frictionless convenience. A great example here, Block, is an emergent player in a massive sector known for its pain points more than its pleasures: home construction. With bathroom renovations as its beachhead, Block begins the process with a tightly curated set of designs and takes it forward from there: fully transparent pricing, 3D renderings, material procurement, and the hiring/management of a vetted, licensed, and experienced builder — all with end-to-end customer support.
Good Eggs, again, takes the full-stack approach here. Their strategy is to solve the week for consumers by enabling a suite of curated offerings that includes everything along the “ease of use” spectrum consumers access daily: ready-to-eat (entrees and sides), some assembly required (meal kits), and all the staples (from the freshest produce, baked goods, and meat to pantry basics and more). Their delivery and packaging pickup system is seamless, creating an extraordinary customer experience.
III. Thoughtfully Personalized
In our digital lives there remains quite a gap between the hyper-personalized targeting of advertisements on one end, and the onus of total self-selection on the other. Within that gap are opportunities for companies to take a more managed approach to personalization that anticipates needs — one that helps us to be more productive with our time (functional benefit) and/or more personally fulfilled (emotional benefit), all while respecting our privacy.
Nearly all the companies listed above are doing this. Medium with a careful combination of self-selection and editor-recommended stories, their daily digest being a go-to for millions of readers. Medium’s combination of articles from paywalled sites (e.g. Financial Times, The Economist, MIT Technology Review, etc.) and original editorial content for $5/month addresses subscription fatigue while freeing itself from the tyranny of targeted advertising. Good Eggs surfacing healthy, in-season produce and new meal kit options that consumers might not have otherwise been aware of. Block providing to consumers just enough (and the right) design options, without being too narrow, leaving too much to be imagined, or a contractor to find and manage themselves.
They are all optimizing for the right kind of personalization — real value creation for their consumers and customers — and as a result should see a longer, healthier lifetime value with them.
We’re passionate about investing in entrepreneurs helping people live better lives leveraging digital platforms. We’re just at the beginning of this world positive shift, and if you’re jumping in, drop me a line @vishalvasishth on Twitter.